Wednesday, 22 July 2015

Advantages of Options


Options can provide these advantages to your portfolio
Cost Efficiency Options have great leveraging power. As such, an investor can obtain an option position that will minimize a stock position almost identically, but at a huge cost savings.
Higher Potential Returns you don't need a calculator to figure out that if you spend much less money and make almost the same profit, you'll have a higher percentage return. When they pay off, that's what options typically offer to investors.
Flexibility Options can be used in a wide variety of strategies, from conservative to high-risk, and can be tailored to more expectations than simply "the stock will go up" or "the stock will go down."
Hedging Options allow investors to protect their positions against price fluctuations when it is not desirable to alter the underlying position.
Volatility The use of options also allows the investor to trade the market's "third dimension" Options allow the investor to trade not only stock movements, but also the passage of time and movements in volatility. Most stocks don't have large moves most of the time. Only a few stocks actually move significantly, and then they do it rarely.

 
 

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