1. HOME
  2. Derivatives
  3. Risks Associated with Derivatives
  4. Risks of Options Trading

Risks of Options Trading

Options trading has inherent risks that are not present in equity investment.
Please fully understand the risks involved when trading and do so at your own risk and discretion.

Principal and profit are not guaranteed

Options premiums fluctuate due to changes in prices of the underlying asset and other factors. Principal and profit are not guaranteed.

Entire premium may be lost (Buyer)

Options buyers may lose the entire premium paid if the market moves against their forecasts.

Losses can be significant (Seller)

Depending on market conditions, the margin initially deposited may not be sufficient and trading may not be able to continue unless additional margin is deposited in cash. Even if margin is added, further losses may be incurred and the margin may not be returned, or the losses may become even greater.

Significant losses may be incurred due to fluctuations in premiums

Depending on series of the options contract, premiums may fluctuate significantly compared to the volatility of underlying asset prices. While large profits can be expected, there is also the possibility of large losses if the market moves against expectations.

You might not be able to trade at the price you expected

Options premiums are determined by supply and demand factors. There is a possibility that there will be fewer orders on the other side, and you will not be able to trade at the price you expected.

You may have to deposit additional margin

If any irregularities in trading are found, measures such as margin increases and restrictions on substitute securities may be implemented. In such cases, it may be necessary to submit additional margin or replace substitute securities with cash.

Information distribution and trading may be delayed, interrupted, or suspended due to system failure

In the event of a system failure in OSE or of a market participant, or a failure of the communication lines connecting OSE, market participants and traders, order placement or distribution of information may be delayed, or trading may be interrupted or suspended.

Understand how the product works and conduct transactions

Please fully understand the nature of the product, trading mechanism and other basic matters before starting options transactions, and do so at your own risk and discretion.