Options trading is a flexible strategy for risk and reward. Options are contracts that give investors rights but not obligations.
**Two main types of options**
– **Call options:** Used when expecting prices to rise. Example: Buying a call on Apple if you believe its stock market will increase.
– **Put options:** Used when expecting prices to fall. Example: Buying a put on Tesla if you expect a decline.
**Why trade options?**
– Efficient use of funds.
– Insurance against downturns.
– Flexibility: profit in rising, falling, or sideways markets.
**Risks of options trading**
– Not suitable for everyone.
– Leverage magnifies risks.
– Options expire worthless if misjudged.
**Conclusion**
Options are not for beginners without study. By learning calls, puts, spreads, and hedges, investors can manage risk. But discipline and education are essential.
