CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved. CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved.

Option definition

Option has a particular significance in relation to IG's platform. Here, we define option in general investing and explain what it means to you when trading with IG.

An option is a financial instrument that offers you the right – but not the obligation – to buy or sell an asset when its price moves beyond a certain price with a set time period.

They exist in the form of a contract, between the writer and the holder. The price at which the holder can exercise the option is referred to as the strike price.

There are two types of option:

Calls give the holder the option to buy an asset at or above the strike price
Puts give the holder the option to sell an asset at or below the strike price

In options trading, the writer of the option makes a profit if the asset involved does not meet or move beyond the strike price, because the holder has to pay a premium in order to buy the option. The holder makes a profit if the asset’s price moves beyond the strike price by more than the premium they initially paid.

Options tend to trade in lots, with the size of the lot varying depending on the type of option. In equity options, for instance, each contract represents 100 shares of the stock underlying the option.

Options can be used to both speculate on the movements of markets and hedge against already open positions.

With IG

Our CFD products offer the ability to trade on the price movements of a variety of options in different markets.

Visit our options trading section

Visit our options trading page for more information.

A - B - C - D - E - F - G - H - I - L - M - N - O - P - Q - R - S - T - U - V - W - Y

See all glossary trading terms

Contact us

Support line is available 24hrs a day from 8am GMT Saturday to 10pm GMT Friday

+65 6390 5118

You can also email us helpdesk@ig.com.sg

Disclaimer:

All forms of investments carry risks and trading CFDs may not be suitable for everyone. CFDs are leveraged instruments and can result in losses that exceed deposits, so please ensure that you fully understand, and are aware of, the risks and costs involved. Refer to the Risk Disclosure Statement and Risk Fact Sheet.

IG Asia Pte Ltd (Co.Reg.No. 200510021K) is regulated by the Monetary Authority of Singapore and holds a capital markets services licence for dealing in capital markets products that are over-the-counter derivatives contracts and is an exempt financial adviser.

IG provides an execution-only service. The information in this advertisement does not contain (and should not be construed as containing) investment advice or an investment recommendation, or an offer of or solicitation for a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. You should consider your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

The information on this site is not directed at residents of the United States or Belgium and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

This advertisement has not been reviewed by the Monetary Authority of Singapore.

Option definition

With IG

Visit our options trading section

Contact us

+65 6390 5118

Markets

CFD Trading

Trading platforms

IG analysis

Contact us