Talk about risks. One of the notable things that most people would commonly say about option trading, or other types of trading for that matter, is that it entails risks. A lot of them. Some of them are discussed in this article.
First off, any trade, in fact almost anything that promises much profit surely carries with it lots of disadvantages. You only get what you pay for. As they say, you dont get free rides. When you give more then you would most likely get more. The same principle works with the trade. With higher promise of profit come higher and greater risks to be taken.
So what makes option trading a high risk venture? Its definitely the leverage. Leverage, in trade speak, is one of those crucial things that could make or break your trade. It gives you the advantage while taking away your potential profit if you pick the wrong option or the wrong timing to trade. Leverage is so attractive that it is among the things that make people want to enter trading but it is also disadvantageous when not properly used. In the case of options trading, there is higher leverage offered. Depending on which side of the coin you look, leverage could either mean boon or...
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