Options Trading

Introduction

The trading of stock options over an exchange is known as Option Trading/Options Trading. Since options trading is happens many a times through online option trading brokers, it is also known as Online Options Trading.

At times options trading and futures trading are clubbed into one term known as Options Futures or Futures Options or even Futures Option Trading and are believed to be the same thing. However, it must be noted that Options and Futures are two different forms of financial instruments and cannot be considered as one. Futures Options are options written on futures contract and is a distinctly different trading instrument. The options which are traded in the stock exchange are the index options or equity/stock options.

Types of Options

There are basically 2 classes of options, Call Options and Put Options.

• Call Options gives the buyer the right to buy an underlying asset.

   

   

• Put Options give the buyer the right the sell an underlying asset.

Creative use of both these classes leads to a limitless combination of possible option strategies. Options trading strategies are able to perform wonders like profiting from both an up or down move, or profiting even during the times when the underlying stock remains stagnant.