Although there is a huge variety of options, they all involve a seller of an option the writer granting certain rights to the buyer of an option the taker in return for a payment the premium. A call option gives the taker the right, without obligation, to buy a specified trading instrument at a specified price, on or before a specified date.

The writer of a share option must deliver the underlying shares, at the specified price, if the taker decides to exercise their option to buy.

A beginner's guide to options trading in Australia | Finder

The writer receives a payment, known as a premium, for granting the taker this right. A put option gives the taker the right, without obligation, to sell a specified trading instrument at a specified price, on or before a specified date. The writer of a share option must buy the underlying shares, at the specified price, if the taker decides to exercise their option to sell.

The risks involved in using options depends on the strategy employed. Option strategies may involve a single option series, or a number of option series, both puts and calls.

One little understood aspect of options is that when they are used in conjunction with other investments they can lower overall market risk. At the other end of the risk spectrum, writers of options can face large or even theoretically infinite risk. Its vitally important that users understand the risks of any particular strategy before transacting.

Just as in every other investment choice, circumstances of the individual are important in determining the "right" options strategy. However the sheer power and versatily of options does multiple the ways options can be traded for both investors and trades. Here are some of the reasons that investors and traders may want to trade options:. Most share options are deliverable.

This means if they are exercised a stock transaction occurs. If the taker of a call option decides to exercise, and buy the underlying shares, the writer of the call option must deliver those shares at the strike price. In contrast most index options are cash settled. The difference between the strike price of the option and the expiry price of the index is paid or received in dollars.

Investors and traders seeking to harness the power of options must have a suitable depth of knowledge. A structured study and exam program is available to all. Intended users must demonstrate they understand the characteristics of the strategies they wish to implement by passing a short quiz. There are five levels of option qualifications.

At level 1, users are restricted to well-known and lower risk option strategies. Users qualified to level 5 may implement any strategy. Click here for more information. Disclaimer Investing in CMC Markets derivative products carries significant risks and is not suitable for all investors. You could lose more than your deposits. You do not own, or have any interest in, the underlying assets. We recommend that you seek independent advice and ensure you fully understand the risks involved before trading.

Spreads may widen dependent on liquidity and market volatility. The information on this website is prepared without considering your objectives, financial situation or needs.

Integrated Options trading

Consequently, you should consider the information in light of your objectives, financial situation and needs. It's important for you to consider the relevant Product Disclosure Statement 'PDS' and any other relevant CMC Markets Documents before you decide whether or not to acquire any of the financial products. Our Financial Services Guide contains details of our fees and charges. All of these documents are available at on this website or you can call us on Apple, iPad, and iPhone are trademarks of Apple Inc. App Store is a service mark of Apple Inc. Android is a trademark of Google Inc. Proud 3 year charity partner of Learning Links, helping children with learning disabilities and difficulties across Australia.

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What is options trading? What is an option? What are call options? What are put options? Risks to trading options The risks involved in using options depends on the strategy employed. Reasons to trade options Just as in every other investment choice, circumstances of the individual are important in determining the "right" options strategy. This document outlines how the product operates; overview, benefits, risks and complete costs. It also provides details about the application process and next steps. The information on this site has been prepared without taking into account the objectives, financial or taxation situation or needs of any particular individual.

Legal Australian Binary Options and Brokers – Laws & Regulations

For this reason, any individual should, before acting on the information on this site, consider the appropriateness of the information, having regards to the individual's objectives, financial situation and needs, and if necessary, seek appropriate professional advice. There can be high levels of risk associated with trading in Options; only investors familiar with the risks of Options trading should consider these products. Client ID Forgot? Password Forgot? Options Find opportunities whichever way the market moves with support of our dedicated Options trading team.

Your Options Trading Account. Rates and Fees. Brokerage Fees. Trade Execution. Internet also charged upon exercise or assignment of the option. Phone also charged upon exercise or assignment of the option. ETO Contract Fees. ETO Contract fees per contract. Amount per contract 1. Other fees and charges. Option fail fee per day. Late settlement fee.

Equity fail fee per day assignment and exercise. Rebooking fee. Get started. Already a CommSec customer? Not a CommSec customer?

Frequently asked questions. How do I place an order on my Options account? What is exercising an option?