Index Options Trading Archive

  • Binary Options Glossary

    Binary Options Glossary

    A binary option is when a buyer enters into a contract to purchase an underlying asset at a fixed price at a pre-determined time in the future.

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  • Index Options: Advantages in Trading Index Options

    Index Options: Advantages in Trading Index Options

    Index options are those whose underlying asset is not a single stock of a company, but an index comprising of many stocks. When an investor chooses to purchase index options, he wishes to diversify and gain exposure to a wider section of the market than he would do with a single stock option. To obtain this same level of exposure with individual share would be costly and complicated. When investing in index options, a buyer gains leverage since he can control more shares in an option that he could do if he bought the shares outright. It is possible to receive large percentage gains from relatively small changes in the underlying index as it is the direction of the price change that is important rather than its magnitude.

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