Why Trade Options

Generating Income Regardless of Whether the Markets Are Bullish or Bearish

Bullish on a particular stock? Buy a call option and earn when the stock prices grow above the strike price.

What about when you feel bearish on a particular stock? Buy a put option and earn when stock prices fall below the strike price.

Diversify Your Portfolio with Options

We are all too familiar with the ‘don’t put all your eggs in one basket’ term. With options, you have access to more sectors and a more diverse spread and exposure for a smaller amount of capital, even within your preferred sector.

In addition, diversifying your exposure will also assist in hedging against losses mentioned in the above stated scenarios.

Position Hedging to Minimise Potential Downside Risk and Limit Potential Losses on Other Open Positions

For example, if you own some stocks in your POEMS Account and are concerned about the fluctuation in pricing of this particular stock, or if the markets will turn bearish, you can consider using options to hedge.

In this scenario, buying a put option, with the strike price near the stock entry price covers some losses, while risking the cost of buying the put option only.

Limited Risk

When you buy options, you limit your risk to just the premium that you pay, which is a fraction of the cost of the underlying stock. Furthermore, it also helps to reduce the cost of holding a stock by allowing you to sell higher call options to earn premium.