This process, identified as leverage, offers you a chance to take on additional threat and attain a lot more publicity for prospective gains with a lot less cash upfront. But leverage really should not be taken frivolously, as that more danger signifies you have a larger opportunity to shed The cash you've got invested. In addition, you ought to meet specified prerequisites to margin trade.
A longer expiration is likewise helpful as the choice can keep time value, regardless of whether the stock trades beneath the strike rate. A more info choices time benefit decays as expiration methods, and options prospective buyers dont want to watch their ordered options decline in worth, likely expiring worthless In the event the stock finishes under the strike rate.