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If you have a trading account, it’s safe to assume that you at least know your way around buying and selling stocks. But how about options trading? Have you heard of it, and have you started dabbling in them?
For the uninitiated, options are a kind of contract that can be bought and sold. These contracts give you the option to buy or sell the underlying asset — which can be a particular security or a basket of securities at a specific price (the strike price).
This means, if you bought an option, you can exercise the option to buy or sell the securities at the strike price as long as it hasn’t expired. It’s kinda like a voucher you purchase, with terms and conditions attached.
So…why do people trade options? One reason is that it lets you trade on leverage, while limiting your risk. Leverage lets you trade higher volumes than you are putting down the money for. In other words, you have the potential to earn more than your cash would allow for without leverage.
However, trading on leverage means you can lose more money than you put up. That’s where the second advantage of options trading comes in — they can also be used to limit risk.
For those of us who are just beginning or looking to begin options trading, here’s how to get an edge with an app such as moomoo that offers good support, tools and features.
Key product features that matter to options traders
To set yourself up for success, always use a platform with features that enable you to effectively place, monitor and analyse options trades. Moomoo is a great choice for trading options thanks to the following features:
Real-time options chain with customisable filters
An options chain lets you see all the options contracts for a particular security within a particular maturity period, including pricing information. A real-time options chain is essential to helping you see and evaluate the options available to you at any given point in time.
To access, click Detailed Quotes (of a stock) > Options > Chains.
Unusual options activity
Moomoo helps you spot unusual short-term price fluctuations in underlying stocks. These could be price movements caused by big players buying or selling call or put options. By spotting and analysing unusual options activity, you might be able to discern price trends and profit from them.
To access, click Detailed Quotes (of a stock) > Options > Unusual Activity
Options price calculator
Lets you see the theoretical price of an option, which you need in order to work out the viability of a trade.
To access, click Detailed Quotes (of a stock) > Price Calculator
Options P/L Analysis
Lets you calculate Profit and Loss analysis for your desired options strategy.
To access, click Detailed Quotes (of a stock) > Analysis > P/L Analysis
Options Volatility Analysis
Viewing an options’ volatility chart can help you better predict price movements of underlying securities.
To access, click Detailed Quotes (of a stock) > Analysis > Volatility Analysis
Support for your options strategies
In order to trade options successfully, you’ll need to come up with strategies that work for you. And of course, you’ll need a platform like moomoo that supports all the common option strategies, including covered calls, spreads, straddles and strangles.
Having all the tools you need on hand is key to managing your risk and locking in profits, as well as hedging your portfolio in a downwards and volatile market.
The moomoo mobile and desktop apps offer professional-grade options trading tools, including advanced volatility analysis, unusual options activity, moomoo’s exclusive options price calculator, options P/L analysis and more. No matter what your strategy might be, you’ll be able to find the tools that let you execute them.
Lower margin requirements for your options trading
Margin refers to the amount of cash you are trading. Lower margin requirements means that your initial outlay of cash is lower for trades of a particular size.
Reduced margin requirements can help you improve your capital utilisation efficiency. In other words, you can improve how much you are getting for the same amount of money you’re putting up.
In other words, you can place bigger trades and enjoy higher profit potential while putting up a lower amount of cash. How’s that for maximising your resources!
As of Sept 2022, moomoo SG has reduced their margin requirements for the covered call strategy. The greatest margin reduction is as much as 100%.
Reduced margin required for options strategy
Covered call strategy
Vertical spread strategy
Calendar and diagonal spread strategy (For universal accounts only)
Iron butterfly strategy
Iron condor strategy
For non-universal accounts: 0 margin is charged for short call positions.
For universal accounts: calculated based on margin rate of the underlying stock.
More information here.
Other support and tools in the moomoo app at your fingertips
The moomoo app, though simple to use, is a dynamic platform with a plethora of advanced options trading tools, including 38 powerful drawing tools that let you track movements of your preferred options. Technical indicators and similar charts are also available for options trading.
Knowledge is power in the world of trading. Luckily, the moomoo app offers no shortage of data, including complimentary real-time, in-depth options data. An options trading account gives you access to the latest NBBO and transaction details with customisable filters.
Moomoo SG also offers many ways to obtain support for your options trading. This includes 24/7 customer support, all-day global news, options educational courses, and a global community of over 19 million users. All of this support is free of charge.
Moomoo SG’s exclusive promotions
Looking to start trading options? The moomoo desktop and mobile apps offer the tools and support you need for the greatest chances of success.
The information and data used in the articles are for illustration only. Past performance does not indicate or guarantee future success. Returns will vary, and all investments carry risks, including the loss of principal. All views expressed in the article are the independent opinions of MoneySmart Singapore. Neither moomoo Singapore or its affiliates shall be liable for the content of the information provided. This advertisement has not been reviewed by the Monetary Authority of Singapore.
The post Tools and Features That Help to Step Up Your Options Game appeared first on the MoneySmart blog.
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Original article: Tools and Features That Help to Step Up Your Options Game.
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