Hedging Your Bets With Puts and Calls

If you’re engaging in the practice of hedge-hunting, knowing where to place your bets in the stock market is an imperative piece of knowledge. You’re going to want to revisit stocks that have shown continuous growth in the past in order to determine the bet with the highest probability of succeeding. Risking too much on stocks that do not illustrate a definite pattern throughout their history can be extremely risky and counter-productive when it comes to overall costs.

Key Takeaways:

Options trading as a trading tool has its seasons and its flexibility is expressed as the ability to profit on a leveraged basis from its upsides and downsides.
When one can be able to sell option premiums in combination with stock positions or with long option positions, the flexibility of options trading is expanded.
There are several challenges though to buying options although there can be a number of successes, but the losses sometimes are enough to offset this.

“And premium sellers are always dealing with the very real concern that their bankrolls accumulated from a series of modest gains that can be more than wiped out by a single unexpected price surge (or price implosion) that can occur in the wink of an eye, especially in the current extremely choppy trading environment.”