If you want to buy a currency option to protect a price for an upcoming physical conversion, you need a currency broker that offers OTC FX options. However, if you are more interested in speculating on currency prices with options, most forex brokers have forex options trading on major forex pairs. A call option gives you the right to buy a certain amount of something at a certain date in the future and are bought when you think the underlying asset will rise. A put option gives you the right to sell a certain amount of something at a certain point in the future and are bought when you think the price of an underlying asset will fall.

A strike price is a price at which you can buy or sell an underlying asset at a certain point in the future. The premium is the price you pay when you buy an option or what you receive when you sell an option. It is a combination of time and intrinsic value. Time value is determined by how close the option is to its settlement date or expiry. Intrinsic value is based on how far away the price is from the strike price. The date of an option is the date at which the option settles or expires.

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If you have bought an option, you have two choices at the expiry date. You can either let the option expire worthless if it is out of the money or exercise it if you are in the money. Options trading is available for clients in most countries and in most markets around the world. UK investors can trade options with brokers based anywhere in the world. London-based brokers provide some of the most robust trading infrastructure and regulation globally and provide access to global markets. Most London-based brokers will have offices in different countries, so if you are trading overnight markets, there will be dealer support available.

Here is how to trade options as spread bets online. Any broker claiming to offer options trading that is not regulated by the FCA is breaking the law and may well be a scam. We also only include brokers in our options broker comparison table that are regulated by the FCA. US residents are only allowed to trade options with a US regulated options broker. UK brokers will not open an account for a US resident. US traders are not allowed to trade on leverage through products like CFDs of financial spread betting. There is some form of margin trading permitted through margin loans and ETFs.

If a US trader wants to increase their leverage on a position, options are one of the only ways to do it. In the UK, margin trading is readily accessible, so options markets are not as liquid and are therefore more expensive. All options trading except for financial spread betting is subject to capital gains tax. Financial spread betting is unique to the UK and is free of capital gains tax as trades are structured as a bet. However, it is important to speak to an independent financial advisor or tax specialist as tax can be different based on individual circumstances and is subject to change.

You can trade options on most large-cap shares listed on the London Stock Exchange. The smaller the market cap of a listed company, the less likely there will be liquidity or a market maker making prices for smaller-cap shares. We have produced a comprehensive guide on how options work and how to trade options but essentially, you need to have the below to start trading options:. If you are looking for a broker to trade options and want to compare options trading brokers in the UK, here are the main things to look out for:.

Finding the best options broker in the UK depends on your needs and experience.

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Options trading can be both high and low risk, depending on how you trade and who you trade with. It's important that if you are a complete beginner to investing, you should accept that options may not be for you. Options can be quite simple and quite complex, and in many cases, there is the risk of losing your entire premium. So, if you are a beginner options trader and looking for a platform, make sure you have significant experience in trading and investing.

And most importantly, make sure your broker understands that you are a beginner to options trading.

Many options brokers can provide advice on strategy and execution although not on what to buy or sell. Options brokers also understand the market well, so don't be afraid to trade over the phone to make sure that you explain exactly what you want to do. For beginners, it may be more appropriate to trade options where you are limited to buying equity options and have your risk limited to the premium you pay for an option. Just ask. All commissions with brokers especially options brokers are negotiable.

Furthermore, for sophisticated traders who care about live-data API connection and margin financing, it might be crucial to understand the different product offerings in the market to make sure that they get the best deal on everything they care about.

Not every broker will provide this information up front; but usually, companies that have the best rates tend to make the most disclosure. Additionally, some brokerages have teams of analysts that provide research reports for companies and markets, which could be valuable to some investors depending on their investment style and aptitude. Finally, if are interested in investing directly in local startups or SMEs or would prefer to allow the experts to build your portfolio, it is worth considering crowdfunding platforms or robo advisors.

Online trading is safe as online brokerages have a high level of platform security and strive to create a safe trading environment. If you're investing online, you should check that your online brokerage is regulated and licensed by the Monetary Authority of Singapore.

That being said, there are risks you should be aware of before you start trading. For instance, every investment comes with a risk of losing all the money you put into the investment. Moreover, because it's very easy to top up your account and make a trade, those prone to gambling may be more at risk of losing money.

Moreover, because online trading relies on the individual to make a trade and not a broker or professional investor, it's up to you to do proper due diligence and it may be difficult to get the financial advice you need. Investment portfolios include aggressive, defensive, income, speculative, and hybrid portfolios. These portfolios usually contain a collection of stocks, bonds, and other financial instruments that help you diversify your investments.

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There are pros and cons to each, though generally speaking, you should choose a portfolio based on your risk tolerance. For example, those who can afford to play around with their money could invest in an aggressive portfolio, which includes financial products that have greater price fluctuations and the ability to have high gains.

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On the other hand, more risk-averse investors or those who are closer to retirement and are looking to secure more funds should consider a more defensive portfolio. Put simply, stocks are a type of financial product that represents your partial ownership in a company.

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When stocks appreciate, you can sell the stock for a profit. Moreover, some stocks pay annual dividends some of the company's annual profit to shareholders. On the other hand, bonds are fixed-income securities that represent a loan made by an investor to a borrower. For example, when you buy a government bond, you are lending money to the government for a risk-free return.

When you buy a Contract for Difference CFD , you are essentially buying a contract that allows you to predict a share's price movements.

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You make money on the difference in price between the opening and closing trades. These short-term investments are very popular for foreign exchange and commodities like grains, gold, oil, and natural gas. Finally, an "option" gives investors the opportunity to purchase a share at a specific price in the future. A "future", however, requires the investor to purchase the shares in the future at the previously agreed-upon price.

Because of the speculative nature of these products, they are popular with more experienced investors. A mutual fund is a portfolio consisting of securities like stocks, bonds, and other financial assets. A primary benefit of mutual funds is that they offer professionally managed solutions for individual investors. Moreover, mutual funds are a good option for passive investors looking for longer-term investments.