What Are the Risks of Options Trading?

Options trading involves higher risk compared to traditional investing. Key risks include:

•Options can expire worthless
•Market volatility can significantly affect options pricing
•Time decay may reduce option value as expiration approaches
•Complex strategies may increase exposure to losses

Because options are leveraged financial instruments, they can amplify both potential gains and losses. For this reason, options trading is generally more suitable for traders who understand market mechanics, derivatives risk, and capital management principles.

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