How will introduction of Options in Specific Stocks benefit an investor / Trader ?

Options can offer an investor / trader the flexibility one needs for countless investment situations.
An investor can create hedging position or / an entirely speculative one, through various strategies that reflect his tolerance for risk.
Investors / traders of equity stock options will enjoy more leverage than their counterparts who invest in the underlying stock market itself in form of greater exposure by paying a small amount as premium.
Investors can also use options in specific stocks to hedge their holding positions in the underlying (that is long in the stock itself), by buying a Protective Put.
Thus they will insure their portfolio of equity stocks by paying premium. Employees stock options(ESOPs) have become a popular compensation tool with more & more companies offering the same to their employees.

ESOPs are subject to lock in periods, which could reduce capital gains in falling markets - Derivatives (F and O) can help arrest that loss.
Share:

No comments:

Post a Comment

Popular Posts

Blog Archive

Recent Posts

Featured Post

Mutual Fund Investment Tracing and Retrieval Assistant – MITRA – SEBI

Mutual Fund Investment Tracing and Retrieval Assistant – MITRA – SEBI   SEBI proposes MITRA to reduce unclaimed amount in mutual funds...