OPTION PURPOSES

Options are used for the following purposes
- Leverage tool,
- Insurance policy,
- Hedging and
- Advanced strategies.
• Leverage
Options allow you to buy a stock at, let say, 50 dollars for only 5 dollars. This
means a 1:9 leverage of the stock.
• Insurance Policy
Options allow you to protect your stock for the current months at a certain amount
of dollars. If you have a 100 shares of Google, you can choose to protect it by
selling (to open) the current month of the Google options.
• Hedging
Options allow you to hedge to maintain a non-directional position. The Iron condor
is one of many examples that allow you to hedge.
• Advance Strategies
Options allow you to trade bi-directional and even sideways trends.
WHAT ARE THE COMPONENTS OF OPTION?
Options come in only 2 variables:
- CALL
- PUT
Options are made up of only 2 types of retailers:
- Buyer
- Seller
Options have different strike prices, mainly classified as
- ITM (In The Money)
- ATM (At The Money)
- OTM (Out Of The Money)
Options have different contract months (Time)

let talk about this in the future ,please keep a look out for the next few post to see this further