At the core, the options arena operates as a market within a market — and with the contracts representing 100 shares of the underlying asset, they may offer tremendous upside potential. Of course, there’s no such thing as a free lunch, especially on Wall Street. While it’s true that, say a 3% move in the open market can sometimes yield a 100% payout in the options market or more, that upside doesn’t come free.
Obviously, such trades need to go according to plan for you to collect your outsized reward. However, the process isn’t easy because, unlike buying a garden-variety security, options force you into certain complexities:
