15
Oct
Why Investors Trade Options

Reasons Why Investors Trade Options

It’s time to throw out the “options are risky” sentiment and truly understand why many investors actually trade them. Contrary to popular belief, options can be used in safer ways when used correctly. In fact, that is why they were invented – to offset inherent risk in stock portfolios.

Options offer investing flexibility. Options can be used in any market environment or personal circumstance. They can be used for any time frame strategy: short, medium, or long.

Here are reasons why options are traded:

a. Risk Reduction – You can hedge out risk in your portfolio with options. Using options are one of the only ways that a retail investor can protect themselves from markets that move against them.

b. Leverage – Instead of owning 500 shares of ABC company at $15 for $7500, with options you can have the right to control 500 shares for a fraction of the cost. With options, you can benefit from changes in the underlying price without having to own the underlying outright.

c. Income Generation – You can create a steady cash flow through existing owned underlying.

d. Limited Risk – Some option strategies, like the ones taught at sjoptions.com, limit trading risk while having high probabilities to succeed.

e. Insurance – You can protect yourself from downward moves in the market.

f. Low Barriers of Entry – Options can be traded by anyone that has access to a computer now that most online brokers offer option trading. Commissions are much lower than what they were 10 years ago. Most brokers even offer option analytical tools and advanced technical analysis tools for FREE when you open a trading account.

g. No More One Way Trading – With options, you do not always have to be bullish.

h. Many Strategies – You have multiple trading strategies to choose from which will allow you to play to your trading strengths.

So you see, options are not as risky as many people perceive them to be. With the right option strategy and education, you can have the peace of mind that your portfolio can be safer in ANY market environment.

recent posts

Karen The Supertrader and James Cordier

Are You Picking Up Pennies IN FRONT OF FREIGHT TRAINS? Today’s topic is “Picking up pennies in front of freight trains.” Most option traders are guilty of doing this at some point, especially traders new to options.” Experienced traders usually stop after they get ran over or after they understand the risk involved. Most of […]

Bearish Options Strategies

  AN AWESOME APPROACH TO BEARISH MARKETS We do not see bearish markets too often, but when we do, we have to be fully prepared to: Protect our capital. Profit from market declines. More often than not, traders are not ready for bearish markets, so when they suddenly appear, they experience irreversible damages to their […]

icon
icon

tags

atm, bearish options strategies, Best Options Course, butterfly spread, calendar spread, call credit spreads, charm, credit spread, credit spread back test, credit spread options, credit spread strategy, credit spreads, day traders, defective imac, delta, full time options trading, gamma, greeks, high order greeks, imac, imac problems, implied volatility, iron condor, iv rank, james cordier, karen the supertrader, learn options, learning options course, leverage, low risk options trading, mirage, option strategy, option trading, option trading checklist, option trading lifestyle, option trading mindset, option trading myths, option trading profits, optioncolors, optioncolors software, options analysis, options course, options learning course, options strategies, options trader, options trading, options trading course, options trading newsletter, options trading performance, options trading software, otm, pop, popular option trades, portfolio margin, portfolio margin trading, probabilities, probability of profit, profitable, review, San Jose Options, san jose options review, scalable, short strangles, sj options review, spread, spreads, strangle, strategies, tasty trade, tasty trade credit spread, tasty trade credit spreads, tasty trade iv rank, tasty trade ivr, tastytrade, tastytrade credit spreads, tastytrade strangles, tastytrade verticals, technical, testimonial, theta, time decay, trading volatility, training, unbalanced condor, vanna, vega, veta, vomma, weekly credit spreads