Some great things about stock options are that they can be useful tools in the hands of experienced traders. But Options can also be risky in the hands of a gambler. These contracts can be useful to manage risk or to expose your account to too much risk, which can lead to financial ruin.
Options have the potential to turn small accounts into fortunes or to bring fortunes accounts to a halt. They are powerful tools in the hands of a knowledgeable person. It can be a dangerous weapon in the hands of the ignorant person, so do your homework before using them.
Great Things About Stock Options
- With a small amount of money, you can control a large number of shares.
- When compared to stocks, option contracts allow you to significantly reduce the amount of money you put at risk.
- You can structure trades based on time, strike price, and volatility, which is something you can’t do with just stocks.
- Stocks can be protected from loss by purchasing put options.
- You can make extra money by selling call options on a stock you intend to hold for a long time.
- A strong trend in a particular direction is possible to bet and make an unlimited profit. (Strategies like Stranglements and straddles)
- To limit your losses, you can hedge your bets.
- You can either sell or purchase lottery tickets. (Deep out of the money options)
- You can create synthetic stock positions that mimic the effect of owning stock but with a lot less money.
Stock options can be very profitable . Beforetrading options we needs lots of hardwork and research. It has potential to make to rich, it can also take your capital to zero, if used like a gambler. So research well and trade carefully before starting option trading.