ETF options are financial derivatives that give traders the right, but not the obligation, to buy or sell shares of an exchange-traded fund (ETF) at a predetermined price within a specific time frame. These options function similarly to stock options but are based on ETFs, which represent a basket of assets like stocks, commodities, or … Read more
Option trading profit is derived from changes in the price of the underlying asset. For option buyers, profit is realized if the asset’s price moves in their favor before expiration, allowing them to sell the option for more than the premium paid. Call option buyers profit when the asset price rises, while put option buyers … Read more
Rolling option trades involves extending the duration of an existing options position by closing the current contract and opening a new one with a later expiration date, often at a different strike price. This strategy is typically used to avoid assignment, lock in profits, or manage losses while maintaining exposure to the underlying asset. Traders … Read more
Option trading carries significant risk due to the inherent leverage involved. Buyers can lose the entire premium paid for the option if it expires worthless, while sellers may face unlimited losses, especially when writing uncovered options. Market volatility, unpredictable price movements, and time decay can erode the value of options quickly. Additionally, options have expiration … Read more
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