The basis for many profitable trading approaches is the diversification of the investment portfolio and options serves this purpose perfectly. This is not surprising, since options trading gives the opportunity to use high trading leverage, hedge the risks of their other trades and the risk strategies.

Today some traders show interest in that but have no idea where to start. The others believe that it is risky for beginners as well as for trading veterans. The risk is posed by particular trading approaches, which are employed by the ones who either do not understand the risks involved or increase the risk level on purpose, aiming to get bigger returns. So in order to protect oneself against destructive losses one must obtain necessary proficiency in terms of options trading, its main aspects along with basics.
 
First of all, let`s see what an option is. An option is a derivative financial instrument that gives the right (but does not oblige) to buy or sell a particular asset within a specified period of time and at a price that is set in advance. It is a bilateral contract, so for the writer who grants it, it means an obligation to perform the prescribed action at the time of expiry. It is not even the derivatives themselves that are of great interest to execute but to trade options to profit from speculation.

There are two types of options - CALL, with this one, you can buy shares later: PUT option - is the one that gives you an opportunity to sell.