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Why use options?

Hedging vs. Speculation

There are two reasons as to why you should use options. These reasons are called “to hedge” and “to speculate.”


Hedging is considered to be an insurance policy when it comes to options trading. You
are able to insure everything from your house to your car, but you are also able to insure
your investments from any downwards slide there might be in the market. You will find people that say that you shouldn’t trade the stock if you think that you need to have a hedge.

However, you can benefit from having a hedge on your investment. Using the options in your stock, allows you to restrict any loss you might experience on your stock if the market decides to crash.


The best way to look at speculation is as if you are betting on any movement security will or will not make. Options will give you the advantage of not being limited in only making a profit as the market is trending upwards. Since options are so versatile, you can make a profit even if the market is trending downwards.

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