Options Trading: Opportunities and Pitfalls for Physicians
With rising market volatility and more physicians exploring side investments, options trading has become an increasingly common topic in financial discussions.
Although options can offer flexibility, leverage and income opportunities, they also carry significant risks. A clear understanding of the basics is essential before getting started.
Options are financial contracts that give the buyer the right — but not the obligation — to buy or sell an underlying asset (usually a stock) at a predetermined price within a set time frame.
Unlike stocks, options do not represent ownership; they are derivatives, meaning their value is derived from another asset.
Two primary types of options exist:
- Options can be purchased (long positions)
- Options can be sold (short positions)
Each strategy carries unique risk and reward profiles.
Author's summary: Options trading offers flexibility and income opportunities.
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