Part 3 Learn Institutional Trading

Introduction to Option Trading

Option trading is one of the most powerful tools in the financial markets. It allows traders and investors to speculate on price movements, hedge risks, and generate income in various market conditions. Unlike traditional stock trading—where you buy or sell shares directly—option trading gives you the right but not the obligation to buy or sell an asset at a predetermined price within a specified period.

In simple words, options give you flexibility. You can profit whether the market goes up, down, or stays flat—if you know how to use them properly. However, this flexibility also brings complexity. To understand option trading deeply, one needs to grasp how options work, the factors affecting their price, and the strategies traders use to make consistent returns.