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Glossary

LEVERAGE

Leverage, a form of utilizing margin, allows an investor to execute a transaction without paying the full cost of going long the position. There are many ways to incorporate leverage into your trading strategies, some of which include selling naked options or utilizing spreads.  An investor should have a complete and thorough understanding of leverage before considering the use of it as part of any trading strategy. Utilizing leverage may increase risk and creates the potential for an investor to lose more than their original principal. Leverage provided more exposure than could be afforded, which was ultimately responsible for the failure and bankruptcy of many financial companies in the 2008/2009 market decline. The Option Profit encourages any investor that leverages their portfolio to limit any exposure to funds they can afford to lose in the event the market or position moves against them. An investor that utilizes leverage has the potential for increased returns, as well as, exposure to a position without paying the full cost and can avoid inccuring margin interest in many cases.
 

 

Refer to Glossary for terms and definitions

Option Profit members can elect to have trade ideas sent to them via secure email notification and have unlimited access to the features of their respective memberships.  All Option Profit Trade Ideas:

  • Are sent in a timely manner
  • Include strike prices and symbols
  • Have estimated returns assuming expiration of the trade

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RISK is inherent in any investment. No individual or entity should invest with funds they cannot afford to lose. Option trading is time sensitive and involves risk including, but not limited to, loss of gains and principal. A leveraged investor risks the loss of  more than principal. Options do not have to be held until expiration and can be exercised at any point.  Option trades can be closed prior to expiration with a gain or loss being realized. It is important that you understand all trades and the risk associated before executing a transaction. The Option Profit provides broad ideas, not individual recommendations, and is not responsible for any losses incurred. Diversification is important with any strategy and should be considered when investing  Before trading consult with a financial advisor to determine if option trading is appropriate for you and your financial goals.