Leverage

Options are contracts that can be traded just like stocks. The reason you should trade options is because of the powerful leverage they offer. To fully know the leverage we can look at an imaginary stock called XXX

This stock might be trading at a value of $40.00. To buy 100 of XXX it would cost a total of $4000, plus brokerage costs. If the stocks go up $5.00 then we have a profit of $500. So then we look at what options can do

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