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IMHO options are only traded "regularly" by experienced day traders and/or momentum players, and not by most LTBH investors. There are exceptions.

As a LTBH investor I will occasionally use options or LEAPS as a way to protect downside risk as long as the premium is not to high. In other words, I can lock in a certain percentage of profit without selling any of my shares. These are called purchasing "puts".

The opposite is true of purchasing "calls". You're betting that the stock price will go up so that you can sell the "call" at a profit.

Options are also known as "derivitives". The main reason for purchasing them is that you can play a greater number of shares for less investment $$$, and thus, increase your profit potential.

Statistics show that the overwhelming percentage of option contracts (sorry, I can't recall the exact figure) are never excersized. Meaning the underlying stock is never bought or sold. Some options are sold before the expiration date at either a profit or loss. Most options expire worthless.

With owning an option you are subject to time constraints. You could have a really great company, that due to market conditions, etc., may have a temporary rise or loss in price. Combine this with the time constraint and it is a recipe for disaster. If you own the underlying issue, there is no time constraint, and you merely hold onto the stock (assuming LTBH attitude) until the market or driving force recovers.

Sorry for the long post. A short options lesson. Ooops, sorry for the pun!

Hope this helps in your decision.

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