Easily buy options at incredibly low fees

Options are derivative financial instruments linked to an underlying asset, such as a share, an index or a commodity. When you buy an option, you obtain the right, but not the obligation, to buy or sell a specific amount of the underlying asset at a predetermined price within a set period. When you sell (write) an option, you take on an obligation to buy or sell the underlying asset if the buyer chooses to exercise the option.

The value of an option is derived from the price of the underlying asset and can be influenced by factors such as price movements, volatility and the remaining time until expiration. Options always have a fixed expiration date and strike price. Trading options involves risk, and you may lose more than your initial investment. Carefully consider your risk appetite before investing.

There are two main types of options:

• Call options give you the right to buy the underlying asset at a predetermined price before or at the expiration date. Investors typically buy call options when they expect the price of the underlying asset to rise.
• Put options give you the right to sell the underlying asset at a predetermined price before or at the expiration date. Investors typically buy put options when they expect the price of the underlying asset to fall.

For every option contract, there is a buyer and a seller. Buyers and sellers have opposing expectations about the future price of the underlying asset.

Options are leveraged products. This means you can gain exposure to the price movement of an underlying asset with a relatively small initial investment compared to investing directly in the asset itself.

Leverage can amplify potential gains, but it also increases risk. Small price movements in the underlying asset can lead to significant changes in the value of an option, and losses can occur quickly.

The premium is the price paid by the buyer of an option to the seller. It represents the cost of acquiring the right to buy or sell the underlying asset under the terms of the contract.

The premium is influenced by several factors, including the price of the underlying asset, volatility, the strike price and the time remaining until expiration. For option buyers, the premium is the maximum amount they can lose if the option expires worthless.

Both options and futures are derivative products, but they differ in terms of obligation:

• Options give the buyer the right, but not the obligation, to buy or sell the underlying asset at a set price.
• Futures involve an obligation for both parties to buy or sell the underlying asset at a predetermined price on a specific date.

Because futures involve mandatory execution, they are considered to carry higher risk than options. Options offer more flexibility but still involve significant risk and complexity.

Investing in options can offer growth opportunities, but it comes with high risk. Options involve specific rights and obligations, and their value depends on factors such as the price movement of the underlying asset, volatility and the remaining time until expiration. You may lose more than your initial investment.

Key risks to consider include:

• Leverage risk: Options use leverage, meaning small price movements in the underlying asset can lead to large gains or losses. Losses can occur quickly.
• Expiration risk: Options have a fixed expiration date. If an option expires out of the money, it may lose its entire value.
• Obligation risk when writing options: When you sell (write) options, you may be obliged to buy or sell the underlying asset at the strike price if the option is exercised. This can lead to significant losses.
• Market movement risk: If the underlying asset moves in an unfavourable direction, the option’s value can decline rapidly.
• Complexity risk: Options are complex products and are generally not suitable for beginning investors.

Before investing in options, it is important to understand how they work and the risks involved. Consider your knowledge and experience when making investment decisions. Carefully consider your risk appetite before investing.