You can say trading stocks is suitable for investing long term in valuable companies by fundamental analysis, while options trading is suitable for taking advantage of short term trends based on chart analysis. Premium/Buying Power depends on the strike price and time to expiration Larger fluctuation leads to larger return On the other hand, options trading allows you to create a price range that has >50% chance of profitability and be profitable as long as the stock price stays within that range. The directional change also needs to be large enough to make your profit worthwhile. In simple terms, trading stocks is only profitable when you guess the direction of price right, either up or down, so you only have a 50% chance of profitability. You might also wonder what's the point of trading options? Is it more complicated than trading stocks? Well, the US stock market lets you trade options, not just stocks, so you have the additional flexibility to trade options through TSMC's ADR in the US stock market. You might wonder what's the point off trading in TSMC's ADR if you can buy the same stock in Taiwan's stock market? How to Be Profitable Trading TSM No Matter the Stock Prices Rise or Fall?.
How to Predict Stock Price Trends With Implied Volatility (IV)?.
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