What are the advantages and risks of options?
Options are cost-effective and highly leveraged. Investors can trade options to obtain similar stock positions without trading the stock, while the volatility risk is magnified accordingly.
Options are common ways of hedging risks. However, options also carry more risk factors than stocks, such as time values and extended volatility.
Options have the potential to amplify returns and losses for investors.
Options provide a strategic choice for investing in stocks. There are many strategies that can be used to restructure a portfolio through options. However, the risks of options trading are higher than stock investments.