Part 7 Trading Master Class

Why Traders Use Options
1. Hedging

Investors use options to protect their portfolios from downside risk.
Example: Buying a put option acts like insurance.

2. Speculation

Options allow traders to take directional bets with limited capital.

3. Income Generation

Selling options (covered calls, cash-secured puts) generates regular income through premium collection.

4. Leverage

Options enable traders to control large positions with small capital.