Options are a powerful tool for investors, they can be utilized for many different reasons including, but not limited to the following:
- Leverage – Options provide leverage for investors. Investors can control a large quantity of shares with small dollar amounts using options.
- Protection – Options can be used by investors to hedge their positions. The investor can use options to minimize or eliminate risk in their holdings.
- Income – Options can be sold and therefore can be used by investors to generate income.