Mathematical and analytical analysis is possible with any option, and they will reduce the risks involved. There are a few tested and proven strategies to calculate the risks.
We already mentioned a few times the risks involved in option trading. The gains can be enormous, but the losses can be enormous too. Black model and Black-Scholes model definitely work and have work for over a century. Monte Carlo model is a tested model too and works on the principle of simulations.
Variety – an option trading strategy
There are a few different main options models, there are many more, but these are a few of the basic ones; European option, American option, barrier option, exotic option, Bermudan option and vanilla option.
Option trading is an exciting instrument in the financial world. For small time investors not always the best to start with, but an opportunity for later ventures.