Conservative Options Strategies That Might Be Safer Than Stocks
A stigma attached to options is that they are extremely risky financial instruments. The truth is that options are only as risky as the strategy built from them. You can actually create a highly conservative strategy with options despite their risky stereotype, resulting in a position that is even safer than a pure long stock position.
Option Investing Can Increase Your Overall Returns
Buying a call option gives you control over many shares of stock with a limited amount of cash. You cannot lose more than you pay for the options contract. For conservative investors, a covered call on an existing position can boost the overall expected return. Buying put options can limit your losses in the event of a market downturn, acting similarly to an insurance product.
Although investing in stock options can be a conservative or speculative strategy, this article examines only conservative options strategies.
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