Why use options?

Speculation: One advantage of using options is the reality that you will not be limited to making a profit only when the market is successful. Because of the adaptability of options, you can create a profit even when the market outlet goes down or even sideways. Think of speculation as betting on the movement of a security. Using the speculation option in this way is the reason why they have the reputation of being unsafe where big profits are made or lost. When buying an option, you must be accurate in determining not only the direction the stock will go in, but also the degree and timing of the movement. To be successful, you must correctly forecast whether a stock will go up or down. You also need to be right about how much the price can fluctuate and how long it will take for this process. Remember not to forget brokerage and other costs. The mix of these factors means that the odds are stacked against you. Think about why investors speculate with options if the odds are so unpredictable? In addition to their versatility, it’s all about using leverage. When you’re responsible for 100 shares with one contract, it really doesn’t take much of a price change to create big profits. Hedging Another function of options is hedging. Think of this as insurance. Just as you insure your belongings, options are used to insure your investments against a downturn. Critics of options comment that if you are not sure about your stock picks you need a hedge, you should reconsider making the investment. On the contrary, there is no concern that hedging strategies can be helpful, especially for large institutions. Even the individual investor can benefit from it. Let’s say you wanted to take advantage of technology stocks and their upward trend, than say you also wanted to cut possible losses. By using options, you will be able to limit your downside while enjoying the full upside in a cost-effective way.

A word about stock options

Although stock options are not available to everyone, this type of option can somehow be classified as a third reason for using options. There are many companies that use stock options as a way to attract and retain talented employees, especially management. They are similar to normal stock options. For example, a holder has the choice but not the obligation to buy the company’s shares. However, the contract is between the holder and the company, where a regular option is a contract between two parties completely unrelated to the company.

About the Vikingen

With Vikingen’s signals, you have a good chance of finding the winners and selling in time. There are many securities. With Vikingen’s autopilots or tables, you can sort out the most interesting ETFs, stocks, options, warrants, funds, and so on. Vikingen is one of Sweden’s oldest equity research programs.

Click here to see what Vikingen offers: Detailed comparison – Stock market program for those who want to get even richer (vikingen.se)