The risk of loss in trading the markets (stocks, options, mutual funds, ETFs, etc) can be substantial. You should, therefore, carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should be aware of the following points:
(1) You may sustain a total loss of the funds that you deposit with your broker to establish or maintain a position in the market, and you may incur losses beyond these amounts. If the market moves against your position, you may be called upon by your broker to deposit a substantial amount of additional margin funds, on short notice, in order to maintain your position. If you do not provide the required funds within the time required by your broker, your position may be liquidated at a loss, and you will be liable for any resulting deficit in your account.
(2) Under certain market conditions, you may find it difficult or impossible to liquidate a position. This can occur, for example, when the market reaches a daily price fluctuation limit.
(3) Placing contingent orders, such as stop-loss or stop-limit orders, will not necessarily limit your losses to the intended amounts, since market conditions on the exchange where the order is placed may make it impossible to execute such orders.
(4) All market positions involve risk, and a spread position may not be less risky than an outright long or short position.
(5) The high degree of leverage (gearing) that is often obtainable in options trading because of the small margin requirements can work against you as well as for you. Leverage (gearing) can lead to large losses as well as gains.
(6) You should consult your broker concerning the nature of the protections available to safeguard funds or property deposited for your account.
ALL OF THE POINTS NOTED ABOVE APPLY TO ALL MARKET TRADING WHETHER FOREIGN OR DOMESTIC.
THIS BRIEF STATEMENT CANNOT, OF COURSE, DISCLOSE ALL THE RISKS AND OTHER ASPECTS OF THE MARKETS.
GAPAT, its employees, contractors, officers, or stockholders do not guarantee any specific outcome or profit. Past performance is not indicative of future results. There are risks associated with all equity markets, and it is possible to lose money. You should be aware of the real risk of loss in following any strategy or investment discussed in this forum or any other seminar or classroom. Strategies or investments discussed may fluctuate in price or value. Investors may get back less than invested. Investments or strategies mentioned in this forum may not be suitable for you. This material does not take into account your particular investment objectives, financial situation or needs, and is not intended as recommendations appropriate for you. You must make an independent decision regarding investments or strategies that may be mentioned in this forum of any other seminar or classroom affiliated with GAPAT. Before acting on any information, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from your financial or investment advisor.
GAPAT is an education company, specifically designed to teach methods and theories about trading the stock market. In no way is GAPAT a financial advisor. Representatives of GAPAT make no claim that their primary source of income is made from the stock market. GAPAT, its employees, contractors, officers, and stockholders will be held harmless for any action that occurs after any investment decisions that are made by viewers of any website owned or operated by GAPAT or participation in any event affiliated whatsoever with GAPAT.
ALL ABOVE REFERENCES TO GAPAT INCLUDE GROWAPAIRANDTRADE, GROWAPAIRANDTRADE.COM, ALL EMPLOYEES, OFFICERS AND SHAREHOLDERS.
Characteristics and Risks of Standardized Options
Written and published by The Options Clearing Corporation, this booklet must be read by an investor prior to buying or selling options contracts. Explains the purposes and risks of exchange-traded options and options transactions. February 1994 (1997 through 2012 Supplements)