What are the advantages and disadvantages of options?
Put Options are financial tools that allow investors to trade with options to sell 100 shares of specific shares in the future in the future. Providing investors of this possibility allows them to take a positive or negative position on stocks at a relatively small price. In addition, they teach options for good locking tools against other shares. The disadvantage of putting the possibility of putting the price of basic safety is in the opposite direction, where the investor expects it to work, could be a significant loss. In the future, the call options allow investors to buy shares in the future, while the options give them the right, but not an obligation to sell the shares of the underlying shares. This option can only be applied if the share price reaches a level known as the strike price listed in the option contract. The contract also includes Premium, which is the price that the option of the option pays for the contract, and the expiry date, which is at a time when the contract becomes worthless.
The main advantage of purchasing options for PUT is that they give investors a chance to speculate on securities they believe that they could be aimed at a fall in price. Imagine, for example, that the investor buys the opportunity to sell 100 shares of a $ 20 strike stock (USD) per share. If the price drops to $ 10 per share, the option holder will apply this option, buy shares for $ 10 per share and then sell them to the seller of the option for $ 20 per share, which is a difference for a nice profit.
It is important to realize that PUT can be purchased or sold, which means that investors may have positions depending on the direction they think the price of the underlying shares will go inside. In addition, the purchase of an option for PUT is an Adoby way to provide investors. The investor with lots of shares in specific shares might want to buy an option that will protect against the price of this falling.
how is the case with whatEven investment opportunities, options can give damage if the price goes in the opposite direction from what the investor hopes. This could be particularly harmful in the case of those who sell these possibilities. While options options are threatened only by bonuses paid for the option, option sellers or writers may suffer unlimited losses.