Definition: An options trader is a trader who invests in the options market. A stock options trader buy and sell stock options puts and calls, while a future options trader buy and sell futures options puts and calls.
The options are derivative instruments. They are called derivative because they are derived from other assets (Example: Stocks or commodities).
Examples of how options can be used:
An options trader can buy calls instead of directly buying the underlying asset to profit from the leverage that is offered in the options market.
An options trader can buy puts to profit from a decline in the underlying asset (It is sometimes easier to buy a put than to short sell a stock).
An options trader can use calls and puts as a way to protect its assets or portfolio from a decline (hedge strategies).
An options trader can profit from an increase or decrease in the underlying asset volatility
An options trader can buy/sell options if he/she thinks that the underlying asset will not increase or decrease a lot during the options' lifetime.
An options trader can also combine options contracts to create different strategies to meet different goals
Trading financial instruments, including foreign exchange on margin, carries a high level of risk and is not suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in financial instruments or foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.
