Schaeffer’s Investment Research Review recently described four major advantages to choosing options trading.
Options trading has a reputation strongly associated with being too risky. For years, this style of trading has been seen as so risky that it should only be left to the professionals. However, options trading has been around and available to retail traders for roughly 50 years, and it can be extremely advantageous for individual traders as well. The experts at Schaeffer’s Investment Research Review recently discussed the four major advantages of options trading.
The first advantage outlined by Schaeffer’s Investment Research Review is that options trading is more cost-efficient than stock trading. The experts explained that options can be leveraged easily and effectively. An individual trader may be able to purchase an options position for a drastically lower price than a stock position. The Schaeffer’s Investment Research Review team explained that the strategy of purchasing calls to mimic stock position is known as a stock replacement, and it can be incredibly cost-effective.
Another major advantage offered to options traders, according to Schaeffer’s Investment Research Review, is that options trading can actually be lower risk than stock trading when done properly. Options provide significantly less time exposure than stock trading due to their much shorter holding periods. Schaeffer’s Investment Research Review experts explained that there are instances when options can be riskier than equities, but you can also make a lot of money with options when the market crashes, where you would normally lose big with just stocks.
Higher potential returns are another advantage outlined by Schaeffer’s Investment Research Review. This, again, is because buying options can be more cost-effective. Spending less money with the ability to make a greater profit means a greater percentage of return on investment. According to Schaeffer’s Investment Research Review, this is why so many traders love options.
Finally, Schaeffer’s Investment Research Review team explained that options trading offers more strategic alternatives than other investment routes. They are extremely flexible and can be used to recreate other positions in numerous ways. This means traders enjoy numerous paths to achieving the same goals with their trading, regardless of what direction the market is currently headed.
Schaeffer’s Investment Research Review experts explained that many times, investors are forced to trade in “black and white” when using brokers who charge fees and margin requirements. However, it is well-known that the market trades are far from black and white. Options trading lets the investor trade in every type of market, even volatile or stagnant ones. For this reason, investors who choose options trading may have the opportunity to reach their financial goals more quickly.
Of course, the experts at Schaeffer’s Investment Research Review recommend speaking with a trading expert before making any decisions regarding options trading, especially if you’re an amateur trader. They can help you decide if options trading is right for you.