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๐Ÿ‡ฎ๐Ÿ‡ฉ What are the risks of Options Trading?

What are the risks of Options Trading?

Silvya Dewi avatar
Written by Silvya Dewi
Updated over 5 months ago

Options Trading carries high risks and is not suitable for all investors. Major risks include:

  • Capital Loss: You can lose the entire premium paid if the price does not move as expected before expiration.

  • Time Decay: The value of options decreases as the expiration date approaches, especially for out-of-the-money (OTM) options.

  • Market Volatility: The value of options is highly influenced by market fluctuations and the volatility of the underlying asset.

Itโ€™s vital to have a sound risk management plan before starting to trade.

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