Multi-asset trading and investment platform provider Saxo Markets has added exchange traded options to its platform, giving clients the ability to gain exposure to the ASX without having to purchase shares directly.
Options allow investors to hedge against possible falls in value ahead of expiry in order to take a profit or limit loss; particularly helpful in a volatile environment to manage risk.
This helps to provide diversification to an investor's portfolio, helping them manage and enhance their exposures throughout uncertain times.
The addition of ETOs to the platform would provide Saxo clients with greater diversification and risk management during the current unprecedented period, Saxo Markets Australia chief executive Adam Smith said.
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"We are incredibly excited to be able to provide our clients with even more choice on the platform now via the addition of ASX-listed single stock options, which complements our international stock options offering," he said.
"With the current market volatility and general mood of uncertainty with the economy and society, we have not only seen an increased level of client activity as well as trading volumes, but also a demand for more content and choices to help them make more informed decisions.
"For traders and investors who are looking for enhanced risk management and equity portfolio strategies, ETOs serve as a powerful tool for hedging risk and generating income on ASX shares."
The ETOs, available over stocks ranging from BHP to WOW, will allow clients to build a diversified equity portfolio for a lower initial outlay than would be the case if they purchase shares directly, Saxo said.
They also provide potential yield enhancement, with clients able to elect to sell options to earn additional income over and above dividends, it said.
They can also be beneficial in both bull and bear markets, Saxo said.
"ETOs are a powerful tool for equity portfolio protection. Options can be traded without the investor necessarily having to exercise them," it said.
"Put options, for instance, allow clients to hedge or insure against a possible fall in the value of the shares they hold and can be sold prior to expiry in order to take a profit or limit a loss."
The ASX ETOs were added to Saxo Market's platform on July 15, with the fintech taking commissions from $1 per lot.