Stock options are viewed as complex and risk-filled investment tools by some people. Though they have risk, this trait is common throughout many kinds of investments. Options have improved greatly in 50 years and are now more widely understood. However, scandal has been responsible for some of that knowledge, making it more important to explain the reasons for trading options.

Options trading has a leverage aspect that makes the tool appealing to many investors. With much less capital than is required for individual share purchase, option traders can control equivalent amounts of stock. Using leverage, investors can earn money by trading options featuring only minimal price movements. Leverage is the primary reason that options are added to portfolios, according to experts.

With stock options, investors may place a leveraged bet regarding stock price movement direction. When specific option trading strategies are used, they can make money when the stock price does not experience any movement. Investors should not discard the benefits of being able to trade volatility based on stock price movement, or lack of, and up versus down direction when trading options.

Commissions for options are higher than for stock trades but in recent years, these have experienced sharp price declines. The increasing volumes in options trading have put downward pressure onto commissions. Heavy competition resulting from the recent addition of multiple online options discount brokers should allow commissions to remain low in the future.

Leverage, decreasing commissions, and the possibility of trading down, sideways, and up are three attractive aspects of trading options. Additional benefits are derived from leverage, such as the ability for investors to use options as a hedge or for portfolio security. Traders can completely control risk exposure using various option trading strategies, which makes options even more attractive as an investment tool.

Every successful investor that trades options has option trading strategies outlined before they ever make their first move. If you would like to learn about successful option trading strategies, check out WallStreetOptionTrading.com today!