Online investing in options, what are the pros and cons of these instruments, and should you invest in them?

Investing in options has grown considerably in recent years. The investment product is particularly popular among private individuals. This is mainly due to the low financial entry threshold and the fact that little knowledge of the investment market is required. Online option investing may also be something for you certainly when you are thinking about comprar acciones en EspaƱa as all the spanish speaking people would say.

What exactly are options?

With options you do not invest so much in the gold, the oil or the currency itself. Options are in fact derivatives. This means that you are concerned with the rise or fall in value of the underlying asset. Options are always mentioned in the same breath as their term. At the beginning of this term the price is determined. At the end of this period you only really buy or sell the options. At the agreed price of course. To be able to buy options, you pay an option premium by default. If you want to sell, you will receive an option premium.

The value of the options

How much an option is worth at the time of buy/sell depends on three factors. The first (and most decisive) factor is the price of the underlying asset. If this is higher than the agreed option price, the option automatically represents a high value. Another important element is the duration. The longer the term of the options, the greater the risk. This risk is compensated by the higher value of the options. The third important factor is the volatility of the options. The volatility is the degree of mobility of the options. When the difference between the highest and the lowest price is large, there is a high volatility. When the difference is small, there is a low volatility. Products with a volatile price run a higher risk. The value of the options will increase as a result.

In fact, there are two types of options:

  1. Call options: this gives you the right to buy options after the agreed period.
  2. Put options: after the agreed period you can start selling options
  3. Put options carry the most risk. This is because both types of options are subject to different conditions. As a selling party you are obliged to deliver the option if the buyer asks for it. At least, if the agreed term has expired. The buyer, on the other hand, is free to buy the options or not. As stated above, options always come with a price agreed in advance. If the product turns out to be worth less than this amount after the term has expired, the purchase will not take place. The option premium still has to be paid to the broker di opzioni binarie.

Binary or digital options

Investors can trade in ordinary or binary options (also called digital options). At first sight, both variants have a lot in common. However, if you are more familiar with them, you will soon notice that trading in binary options is a lot easier. You do not need any special knowledge to be able to invest in binary options. In addition, options have a low financial entry threshold. So it is not strange that many people opt for this form of investment.

  • Binary options are known in the investment world as ‘all or nothing options’. There are only two possible outcomes. If you make a profit, you receive a fixed percentage and if the price is below the entry point, you lose the entire investment. The trick is to correctly predict whether the final price will be higher or lower than the starting price. For many people this is a gamble. Binary options are therefore seen as a relatively risky investment product. It is therefore important to handle your money wisely so that you limit the risk as much as possible.