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CandleFocus Glossary Editor
An outright option is a financial instrument that involves the purchase and sale of a distinct option contract. It is one of the simplest forms of options trading and can be used by investors to hedge against potential risks or capitalize on pricing movements of the underlying asset.
Outright options provide the investor with a variety of benefits that are distinct from other financial instruments. Outright options allow the investor to leverage their portfolio, obtain exposure to increased profits with limited capital and provide liquidity to the market. Additionally, all options traded through the exchange, including outright options, are put through a clearing process that is designed to reduce the overall risks associated with these types of trades.
Outright options are generally purchased in the form of calls or puts. A call option grants the investor the right, but not the obligation, to buy an asset at a predetermined price, while a put option grants the right, but not the obligation, to sell an asset at a predetermined price. Outright options are also typically traded on an exchange alongside other instruments like stocks.
When trading outright options, the investor will set the expiration date, the strike price and select either a call or a put option. The investor will also need to be aware of the fees associated with trading options and the potential risks, like liquidity and market risk. When trading options, time value is an important factor as the time remaining until the expiration date will eat away at the value of an option contract.
Outright options provide investors with the option to purchase a contract on a single underlying security without having to enter into a multiple-leg options trade. By entering into contracts on individual underlying assets, investors can diversify and hedge their portfolios while also taking advantage of pricing movements in the underlying asset. Outright options are a low-cost way to use technical or fundamental analysis in order to increase the value of your portfolio.
Outright options provide the investor with a variety of benefits that are distinct from other financial instruments. Outright options allow the investor to leverage their portfolio, obtain exposure to increased profits with limited capital and provide liquidity to the market. Additionally, all options traded through the exchange, including outright options, are put through a clearing process that is designed to reduce the overall risks associated with these types of trades.
Outright options are generally purchased in the form of calls or puts. A call option grants the investor the right, but not the obligation, to buy an asset at a predetermined price, while a put option grants the right, but not the obligation, to sell an asset at a predetermined price. Outright options are also typically traded on an exchange alongside other instruments like stocks.
When trading outright options, the investor will set the expiration date, the strike price and select either a call or a put option. The investor will also need to be aware of the fees associated with trading options and the potential risks, like liquidity and market risk. When trading options, time value is an important factor as the time remaining until the expiration date will eat away at the value of an option contract.
Outright options provide investors with the option to purchase a contract on a single underlying security without having to enter into a multiple-leg options trade. By entering into contracts on individual underlying assets, investors can diversify and hedge their portfolios while also taking advantage of pricing movements in the underlying asset. Outright options are a low-cost way to use technical or fundamental analysis in order to increase the value of your portfolio.