Top 7 Reasons to Trade Options

Affordability and flexibility are among the benefits

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Top 7 Reasons to Trade Options

4. Options are a good add-on.

If you are planning to hold a stock for a number of months, or even years, writing options can be an excellent way to add value to your investment without selling your stock. Of course, you will have to choose the right option, but if you do, you can pocket most of the premiums (cash), if not all of them.

5. Options are affordable.

If you are fully invested in other areas, options can be a way to invest in stocks without having to fork over a lot of cash. At the same time, they limit your losses if the trade goes against you.

6. Options offer flexibility.

While stocks can only be purchased at the current market price, options offer a variety of packages based on different strike prices and expiration dates. Because of this unique feature, you can implement a number of different strategies and tactics to generate income.

7. Options are leverage.

When you buy an option contract, you have bought the ability to control 100 shares of stock. It’s a form of leverage, and it gives you the potential for significant returns.


Article printed from InvestorPlace Media, http://investorplace.com/2010/12/reasons-to-trade-options/.

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