Trading options is an exciting way of betting on the direction that stock prices will move. You do not have to put up the total amount required for purchasing shares with listed options.
You only need to pay a fraction of it with your option premium and hope for profits when you sell it off at a higher price than what you bought it for. Hence, this can be very profitable but also high risk. Before embarking on any futures or options trading, learn how Singapore brokers list their options contracts so that you know exactly what is in store before plunging into this potentially lucrative business.
Most brokers list option contracts that are closest to ITM (in-the-money). However, each broker has different levels of ITMs in their product offering. Some brokers offer higher ITMs while some lower. Some even have different in-the-money levels within other option series. It is thus essential that you choose a brokerage that provides the most in-the-money contracts to reduce your risk of incurring significant losses when prices fall below your strike price before the expiration, you can check here for a broker that ticks all the boxes.
When looking to begin trading options, it can be not easy to choose which broker to go with. There are numerous benefits and disadvantages of choosing one over the other; some provide low commissions, while others offer more advanced order types such as ‘covered calls.
Decide what you need from a broker
Investors need to consider what they require from a broker before deciding which one best meets their needs such as:
There are two types of brokerage fees;
- the first refers to the commission paid each time an option is traded, and
- the second covers transaction costs such as clearing fees and GST.
Generally, there should not be any additional charges involved; if so, the company should clearly state this. An excellent way to compare brokers is to look at the online brokerage fees calculator provided by comparison websites.
It is essential to choose a broker that provides an easy-to-use and informative trading platform to determine how much time and effort needs to be spent on managing trades.
Platforms such as Saxo offer extensive educational resources such as simulated accounts, allowing investors to practice with fake money before placing live trades; they also provide technical analysis tools such as charts and scanners paired with news feeds from Reuters and Market News International (MNI).
Most brokers will have their platforms: it is up to the investor to decide which one works best for them. It might be necessary for potential investors to try out the demo version before opening a real account. It will allow them to test out the platform and ensure that it does not have any issues with speed or functionality that may affect their trading experience.
In the event of unforeseen circumstances such as technical issues, investors should turn to customer support for help. Some brokers include live chat as part of their services, while others provide free phone numbers and email addresses for contact purposes.
The best option is a combination of all three: a live chat system ensures a quick response time while email and phone numbers allow users to quickly resolve common questions independently rather than waiting in line at the other end of a live chat session.
The above criteria should be considered a general guideline as what suits one investor may not suit another. It is important to note that the most critical factor for choosing one brokerage over another is understanding the needs of the individual and finding a company that matches those requirements.
With hundreds of options on hand, it can be difficult for investors to choose which broker best meets their needs. Still, they can find a company that provides unparalleled customer service and reliable trading experience with a bit of research. To make this research more efficient, investors need only consider the above criteria before deciding which online brokerage firm best fits their trading style.