Options trading has become an increasingly popular way of earning passive income and hedging risk in the UK. It allows investors to speculate on the future movement of a stock or security without owning it outright. Therefore, beginners can take advantage of low-risk investments while still having the potential to make significant profits if they correctly predict how their chosen asset will move in price. This article will discuss everything beginners must know about options trading in the UK, including types of options available, associated risks and rewards, tips for success and more.

Types of options
Options trading involves contracts between two parties, giving the buyer the authority to buy or sell a security at a predetermined price and time. The options available in the UK include calls, puts, covered options and straddles.
Calls
Calls are options that give the buyer the authority to purchase a security at a specific price before the expiration date. It is an ideal option for investors who believe the price of an asset will increase by the time of expiry. If their prediction is correct, they can exercise their options and make a profit.
Puts
Puts are options that give the buyer the authority to sell a security at a specific price before the expiration date. It is an ideal option for investors who believe the price of an asset will decrease by its expiry date. If their prediction is correct, they can exercise their options and make a profit.
Covered options
Covered options … Read More