It is risky but if handled well, it can give higher than normal income in the form of a premium. Leverage : Options contract help in a significant reduction in costs and is attractive for small budget traders. Tax Management : Option trading also helps a lot in managing taxes as the tax paid on the entire capital gain would be way higher than the tax paid on just the premium. A person who holds certain shares and knows that the prices are going to decline, he might as well sell the stock and buy later at the lower prices; but by doing so, he will have to pay huge taxes on the capital gain from the sale of the stock.

Instead, by using the put option, he is only going to end up paying taxes only on that put option trade. As the bottom line, Option Trading is a smart and efficient way of trading in order to maximize the profits from short-term investments and to limit the risks. If handled well, option trading can make the trader take limitless profits while conserving the capital to a large extent. Apart from this, you can review our detailed article on Pros and Cons of Option Trading to reap its benefits.

So, in case you are looking to gear up for the share market trading, and especially for derivatives trading — just fill in the details below. If you wish to learn more about option trading or stock market investments in general, here are a few references for you:. Your opinions on trading are remarkable, I am going to send many of my fans to your web site. Your email address will not be published.

Now Trending: Online Trading in Angel Trailing Stop Loss Zerod Types of Derivatives What is Futures Trading? What is Options Trading? What is a Strike Price?

How Options Work? Why Use Options? How to Trade Options?

What is Option Expiration Date? What is Margin Trading? Is there any Margin Payable in the Options? How are the Options Contracts Settled? Why are Derivatives Important? Are Derivatives an Asset Class? What is Put Call Ratio?

Types of Options

What is Call Option? What is Put Option? Free Demat Account If you are human, leave this field blank. Web Trading Application. Terminal Software.

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Any Other Requirement please mention? Your Name. Set a Callback. Types of Derivatives Why are Derivatives Important? What is Futures Trading? What is Strike Price of an Option? What happens if an Option Expires Out of the Money? Here We Talked About:. No Comments. Rivu ghosh July 4, Reply. This one of the profound site on share market.

It offers the advice that truly benifit people.

The basis of this trading tactic is a breeze to see. I appreciate you for sharing this with us as we speak. ForexSteam March 7, Reply. Add a Comment Cancel reply Your email address will not be published. Module 1: Introduction to Share Market. Module 2: Demat Account. Module 3: Intraday Trading. Module 4: Derivatives Trading. What is Derivatives Trading? Types of Derivatives. Different Types of Options. Futures Vs Options Trading. Module 5: Online Share Trading. Module 6: IPO Basics. Module 7: Share Market Analysis. Module 8: Currency Trading.

Get Quote. It is available through RSS feed reader or through some browsers. It will show you what's new since the last time you checked the feed, without having to visit the website. How to Subscribe this feed? Download any online RSS reader of your choice. What are the important terminologies in Options?

What is Assignment?

What are Call Options? What are Put Options?

How are options different from futures? What are Covered and Naked Calls? What is the Intrinsic Value of an option?

Explain Time Value with reference to Options? What are the factors that affect the value of an option premium? What are different pricing models for options?