Buyers of puts are betting that the price of the stock will fall before the option expires, thus enabling them to sell it at a price higher than its current market value.
There is no free lunch with stocks and bonds. Options are no different. Options trading involves certain risks that the investor must be aware of.
Options are investment tools with built-in risk-measuring/risk-management tools. Option combinations often give the trader a good potential.
Trading options involves buying or selling a stock at a set price for a limited period of time. But options are useful for long-term buy-and-hold investors, too.
Another useful feature of stock option investing is the ability can add on insurance into any trading plan. In times of great market uncertainty, protective put.
Buying and selling stock options is certainly not a beginner investing strategy, but is one that could slowly be added to an overall investment portfolio over time.