Vanilla options may complimentyour trading portfolios; liberating you from simple up and down trends and opening up an expansive hub of trading strategies to seek more opportunities and diversify risk. Here are three benefits of trading options:
Normally, traders position themselves in the market with a view on direction. They believe it will go up or down and place trades accordingly. This article explains why it’s also important to consider volatility as part of your trading portfolio.
Volatility is how much an asset, such as a currency pair, fluctuates with no regard to direction. It’s an important aspect of trading since it provides investors with an idea of potential profit or risk. Through analyzing option prices it’s possible to see how much volatility the market are expecting. This is because an option price is not only driven by market direction, it is also driven by volatility.