1. The basic concept of options

An option is a monetary subordinate that gives the holder the right to trade the basic resource at a particular cost on a particular date from here on out, however it isn't upheld. The basic resources can be stocks, bonds, wares, and so on. The purchaser of an option pays a charge (called an option premium) for this right. As indicated by the idea of options, they can be partitioned into call options and put options. The holder of a call option is granted the right to purchase the underlying asset at a predetermined price at a later date, whereas the holder of a put option is granted the right to sell the underlying asset at a predetermined price at a later date.

2. Options dealing strategy

Buy call options: Investors can buy call options when they expect the price of the underlying asset to rise. If the price of the underlying asset rises and the price of the option rises, investors can make gains.

Sell call options: Investors can sell call options when they expect the price of the underlying asset to fall. If the price of the underlying asset falls and the price of the option falls, the investor can make a gain.

Buy put options: Investors can buy put options when they expect the price of the underlying asset to fall. If the price of the underlying asset falls and the price of the option rises, the investor can make a profit.

Sell put options: Investors can sell put options when they expect the price of the underlying asset to rise. If the price of the underlying asset rises and the price of the option falls, the investor can make a profit.

3. The risk of options trading

Market risk: Option prices are affected by market supply and demand, and market fluctuations may lead to large fluctuations in option prices.

Liquidity risk: Some options may not be easy to sell or buy in the market, which may result in investors being unable to close their positions when needed.

Credit risk: When choosing a counterparty for trading, it is necessary to ensure that the credit status of the other party is good to avoid losses caused by the default of the other party.

Operational risk: Due to technical failure, human error and other reasons may lead to trading failure or loss.

Legal risk: Changes in trading rules due to legal changes or policy adjustments may affect investors' returns.

4. How to trade options

Choose the right trading platform: Choose a reputable and experienced trading platform to trade options.

Understand the market situation: Before trading, you need to understand the market situation, including the price of the underlying asset, volatility, interest rate and other indicators.

Develop trading strategies: According to market conditions and expectations, develop appropriate trading strategies, including the type, quantity and expiration date of options to buy or sell.

Risk control: Risk control is required in the trading process, including setting stop loss points, diversification and other measures.

Continue to pay attention to market dynamics: In the process of trading need to continue to pay attention to market dynamics, timely adjust trading strategies to adapt to market changes.

Generally speaking, options trading is a complex form of financial derivatives trading that requires an understanding of basic concepts, strategies and risks. When trading options, it is necessary to choose the right trading platform, understand the market situation, develop a suitable trading strategy and control risks. Through continuous learning and practice, investors can better grasp the skills and strategies of option trading and achieve investment goals.