Why the US Options market is more attractive than Australia's Options can be used to maximise profits gained from a rising or falling market. However, the Australian Options market is tiny compared to the main market in the United States. Daniel Kertcher of Platinum Pursuits explains how this larger market presents better opportunities to maximise your profits... Option trading gives traders the ability to make significant profits using leverage. Option trading can also be used to hedge (or insure) trades and precisely control the amount of risk held in the market. When understood and used properly, Options are extremely versatile and useful tools. But why is the use of Option trading so rare? Simply put, Options are widely believed to be risky by people who have a lack of understand of them. In fact, Options are commonly used by traders as a way to reduce the risk in their portfolio. The USA Options market turns over trillions of transactions every year, making it one of the largest and most popular instruments to trade in the stock market. It totally eclipses the Australian market, being 100 times larger than our local market. Also, US traders can trade smaller amounts, down to 100 shares per contract, whereas the Austrlalian market limits options to 1000 shares per contract, sometimes meaning that Options can be a lot more expensive. Furthermore, there are less than 10 highly-liquid Australian Options, whereas in the United States there are over 500. Regardless of the large size of the US market, it is still highly regulated, much like Australia. So, what other distinct advantages does investing in US Options offer? There is far more information readily available about US companies than Australian companies, allowing investors to make more discerning choices about their portfolios. This is because of the size of the market. Companies are competing more for investors, and therefore provide as much information as possible to potential clients - meaning they are more informed to make better decisions and more educated trades. |
