Options have been available to trade for nearly 35 years. However, it has only been recently that they have reached the forefront. The same options strategies exist now that existed then. Among other uses, options were the same great hedging vehicle then that they are now. Options have always helped manage risk and “smooth” profitability.
What advantages do options give the investors? Well, first off, the markets move up, down and “sideways”. Options strategies can be employed to profit from all type of market environments. PUT options allow an individual to conveniently profit from downside movement in stocks. The returns you can make from trading options are phenomenal. Everyone is aware of success stories, where individuals have taken a few thousand dollars and turned it over 100 times from trading options.
Options are also a true hedge. An option position is less risky once the total dollar risk between a stock position and an option position is balanced. Realize that this requires payment for a little time premium to own the option, but when executed properly, it is normally pennies compared to what you could lose in a gap of the stock.
Options are infinitely more flexible than stocks and may be employed in many ways. Options allow you to trade not only an up market and a down market, but also a sideways market by trading volatility or time decay. Options have many advantages over simply trading a stock. Profit protection, risk management and flexibility are compelling reasons for investors to investigate them and the many advantages they can offer. If you are looking for a financial opportunity that can impact your future, then you should learn about options and allow OptionRun to assist you.
Finally, words like "risky" or "dangerous" have been incorrectly attached to options by the financial media and certain popular figures in the market. It is important for the individual investor to get both sides of the story before making a decision about the value of options.
There are four main reasons to investigate options and the advantages they can provide to your portfolio: