Part 6 Learn Institutional Trading

Why Trade Options?

Options offer several strategic advantages:

a. Hedging

Investors use options to protect their portfolio. For example, buying a put option can insure against a fall in stock prices, similar to buying insurance.

b. Speculation

Traders can bet on price movements—up, down, or even sideways—using options.

c. Income Generation

Many traders sell options (covered calls, cash-secured puts) to earn regular premiums.

d. Leverage

Options allow control of large positions with a relatively small amount of capital.