What is my 'Risk Tolerance'?

Risk tolerance generally refers to the amount of variability an investor is willing to accept within their investment portfolio. Investors who have a higher risk tolerance are willing to accept and take on higher losses, with the goal of getting a higher return. These investors are more willing to take on the risk that their investments could become worthless.  Investors with a lower risk tolerance are less willing to accept variability in their portfolio, and generally are taking a more conservative approach to investing. 

Options trading is risky by nature, and in most cases is associated with investors that have a higher risk tolerance. That said, options may be used to hedge positions and generate portfolio income (although Gatsby only supports Level 2 trading at the moment, which is not consistent with income generation). 

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, among other factors, all weigh on how much risk you may want to take in your portfolio. 

Risk Tolerance Options

1. Low
2. Medium
3. High