Skip to main content
Message Font: Serif | Sans-Serif
 
No. of Recommendations: 0
1. Is the benefit of simple call or put options as described above simply the ability to control a large block of stock with less money? Is that it?

No. The benefit of options is the ability to transfer risk (either positive or negative) from someone who doesn't want to bear it, to someone who does.

If you don't need a huge payday from your stock, sell calls on it -- this will limit your upside.

If you don't want to consider the possibility of your stock dropping, buy puts on it -- this will limit your downside.
Print the post  

Announcements

When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.