Home > Interactive Brokers adds options trading to IBKR GlobalTrader & IMPACT Apps

Interactive Brokers the US-based online brokerage with operations in Europe and Asia has launched introduced options trading on it’s IBKR GlobalTrader and IMPACT apps.

What options trading tools have interactive Brokers introduced?

The new tools are designed to help retail traders negotiate the world of options and include an Options wizard and Option chain tools, which will help them to understand how options work and are priced.

Options are a derivative product, invented to spread risk and facilitate hedging, however, they also allow traders to speculate o. the rise and fall of a securities price.

Options come in two forms Puts and Call.

Put options give the buyer the right but not the obligation to sell a fixed amount of a security at a given price, within a specific time frame.

Whilst a Call option gives the buyer the right but not the obligation to buy a fixed amount of a security at a given price, within a specific time frame.

Options trade in what are known as series, for example, weekly, monthly or quarterly and each series will contain a number of strike prices, these are simply the levels at which the owner of an option has the right to buy or sell the security, which the option is over.

Option prices are calculated using a number of factors that include the option’s strike price relative to the price of the underlying security, the time left to an option’s expiry date and the level of market volatility.

IBKR IMPACT and GlobalTrader Options Trading

Why have Interactive Brokers launched these new options trading tools?

Options have proved to be increasingly popular with retail traders since lockdown and this is particularly true in the USA, not least because there are far fewer regulatory hurdles for private clients to overcome in the US before they can trade what UK regulators consider a complex product.

The are numerous strategies that investors and traders can deploy using options and both the Interactive Brokers Options Wizard and Options Chain tools can help retail traders to identify strategies and strike prices that best meet their needs.

Users are asked to answer a few questions about their view on a security to establish whether they are bullish or bearish, and once that’s ascertained they are shown a selection of potential trades and strategies, together with indications of the likely cost of that trade or strategy. As well as the breakeven point for the trade, based on the price of the underlying security.

Should you use the new tools from Interactive Brokers to trade options?

These new tools from Interactive Brokers look to be a good starting point for those that are interested in learning to trade options. However, there is no substitute for doing one’s own research, not least because there are asymmetric risks in options trading.

Buyers of options have a limited risk position with losses confined to the purchase price or premium of the option, however, short sellers of options face potentially open-ended risks.

With that in mind, we would suggest that you get a good understanding of exactly how options work and are priced before you attempt to trade them.

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