Options Trading in Singapore
What is Options Trading? Before we look at the definition of Options Trading, lets look at the definition of an Option.
For example, when a buyer is interested in a house, the buyer can pay an Option amount to the seller, for the right to choose to purchase the house at a specific price before a specific date.
In the financial market, the underlying asset are usually Stocks (i.e. shares of a company) or Commodities (e.g. Gold). Options Trading is the trading of these Options, where the prices of these Options can rise or fall, depending on the value of the underlying assets and market conditions.
Options Trading is speculative vehicle and is considered to be of higher risk compared to other forms of investments. Not only does this form of trading require more technical skills, it is also being leveraged. For example, with only an leverage of 10 times, a 10% market movement can wipe out one’s entire capital!
Stocks and Shares also usually does not become worthless overnight unless the company became bankrupt. When the price of stocks and shares drop, one can hold on to it till the market turn around and the value increase again. In the case of Options, when the value of it drop, one can only wait till the expiry date, which could be a few days or a few weeks away. Once the option is not exercised before or on the expiry date, it became WORTHLESS! Thus, It is important that anyone trading options monitor the trades very closely.
Options Trading, with a reliable broker, but itself is a good form of speculation if one understand the risk involved, exercise proper money management and use the right skills and strategies. Although it is important to learn the right strategies for Options trading, it is important to ensure that the trainer has a minimum track record of a year of profitable trading. It is important to note that most of the Options Trading trainers are merely teaching some trading strategies which they have created themselves which may not always work The main source of income from these unscrupulous trainers are actually high course fees and not from trading.
A form of Options Trading that has became popular lately is Binary Options. Please be careful as these platforms sell the idea that very little skills are required and uses a computer software or robot to trade for you continuously. The company is not interested whether you make money or not. All they are interested is to make a commission from every trade the robot makes on your behalf.
We will be updating you on the various Options Trading Training available locally and will also be coming up with articles on Binary Options shortly.