Classic Options are a simple tool for a powerful trading instrument. Watch our video to find out how to trade Classic Options to reap their full potential.
Now that you’ve watched the video, there are a few key points we have to highlight:
- The first parameter of any classic option deal is the strike price.
A strike price is the projected value the asset is expected to achieve or surpass.
Most assets offer up to 5 strike price options to choose from. The further one is from the current market value, the more risky the investment is. The beauty of classic options is that higher risk actually lowers the price of an option while increasing the profitability.
- The second parameter that will determine your profitability is the expiration date.
The expiration date is the deadline for exercising the right to buy or sell the asset for its strike price. The expiration falls on the end of the work week (Fridays ending at 21:00 GMT). You can purchase an option for the end of the current week or the following week, or for the last week of the selected month.
The further the expiration is from the current date, the more likely the price of the asset will move in the direction the buyer wants, so the more expensive the option.
- The third parameter is the price of a single option.
The cost of an options is determined by the market. IQ Option scans through 13 stock exchanges to pick the best offers for buying and selling prices. You could say it’s serving as a hub where you can pick the best deal on every trade.
The market conditions that can also play a role are supply and demand among traders, past price volatility and the time left till expiration.
If you are lack of experience, try classic options on your practice account first. Need additional help figuring out Classic Options? Contact our friendly Support team.