Unlike other investments where the risks may have no boundaries, options trading offers a defined risk to buyers. An option buyer absolutely cannot lose more than the price of the option, the premium. Because the right to buy or sell the underlying security at a specific price expires on a given date, the option will expire worthless if the conditions for profitable exercise or sale of the option contract are not met by the expiration date.
An uncovered option seller sometimes referred to as the uncovered writer of an option , on the other hand, may face unlimited risk. This options trading guide provides an overview of characteristics of equity options and how these investments work in the following segments:. Enter up to 25 symbols separated by commas or spaces in the text box below.
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Among a few of the many ways, options can help you: Benefits of Trading Options: Orderly, Efficient and Liquid Markets Standardized option contracts allow for orderly, efficient and liquid option markets.
Flexibility Options are an extremely versatile investment tool. Leverage An equity option allows investors to fix the price for a specific period of time at which an investor can purchase or sell shares of an equity for a premium price , which is only a percentage of what one would pay to own the equity outright.
Limited Risk for Buyer Unlike other investments where the risks may have no boundaries, options trading offers a defined risk to buyers. This options trading guide provides an overview of characteristics of equity options and how these investments work in the following segments: To overcome this hurdle, a trader can instead look for a regulated firm that is based offshore.
To help traders find a reliable and regulated broker to work with, we have compiled a list below of those operators that are regulated and have earned a good reputation for reliability.
While there are several regulatory agencies in Hong Kong, Hong Kong Monetary Authority and the Mandatory Provident Fund Schemes Authority that are responsible for regulating the financial industry in Hong Kong, the main body that is tasked with regulating the securities and futures markets in the territory is the Securities and Futures Commission.
Established in after the market crash of October , the SFC was tasked to ensure the stability and integrity of the securities and futures markets. It is also responsible for protecting investors and the promotion of Hong Kong as a leading financial center. Primarily, its area of responsibilities include:. However despite the close scrutiny that the SFC has over the Hong Kong financial markets, it does not have any legal framework for overseeing binary trading in Hong Kong.
Normally before any financial services provider can operate out of Hong Kong, it must first be authorized and licensed by the SFC. However the problem faced by the SFC is the same as that which most financial regulatory bodies are encountering when trying to license binary options trading in their country. This trading type being a relatively new market innovation suffers from a lack of clarity with its legal definition and this means that regulators are having a hard trying to decide if binaries fall under gaming or under financial investments.
As such, there are essentially no licenses dedicated binary brokers in Hong Kong. Although the SFC discourages Hong Kong residents for dealing with offshore brokerage firms, traders in Hong Kong are still free to sign up with any binary company that they want. However, it is highly recommended that traders who want to sign up with offshore brokers do so with companies that are regulated by competent regulatory agencies such as the Cyprus Securities Exchange Commission CySEC. As one of the top 5 financial centers around the world, Hong Kong is able to offers traders in the territory a wide variety of payment methods which they can use to deposit funds into their trading account with an offshore broker.
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