Risk tolerance is a spectrum. It refers to the amount of variability you are willing to accept within your investment portfolio. Investors with a higher risk tolerance are willing to risk greater losses for the possibility of a higher return. Investors with a lower risk tolerance are less willing to accept losses, and generally are taking a more conservative approach to investing.
Options trading is risky by nature and, in most cases, is better suited to investors with a higher risk tolerance.
You should consider your risk tolerance in light of your investment objectives to determine if trading options fits your overall goals. Your time horizon, income, net worth, and investment experience are all factors that will impact how much risk you are willing to take in your portfolio.
Risk tolerance options
- Low
- Medium
- High
Comments
0 comments
Please sign in to leave a comment.