Who Trades Options?
Two broad categories of players exist in the option markets: risk seekers and risk avoider’s.
A risk seeker, also known as a speculator, is the type of trader that is trying to profit from a prediction in market direction. A speculator will have his or her own method of analysing the market and then use the options market to make a bet on his/her analysis.
Hedgers will almost always engage in option spread trading, which is something we haven’t covered yet. But it is basically simultaneously buying and/or selling different options/shares together to provide an ideal risk/reward profile.