Put and call options to manage risk homeostasis


Please help improve this article by adding citations to reliable sources. Now, we want to build on that and cover the option risk characteristics of a call and put. Option Risk ProfileWe went over the basics of puts and calls in our introduction to options. I believe examples in this section would be the best way to homeostqsis this topic. We are going to start with a LONG CALL example. While stock optoins might make 10% or 20% returns on a stock, aggressive options investors could potentially make a 1,000% return in the same amount of time.

This characteristic of the put option provides an opportunity to protect equity positions against capital calll and also allows us to take bearish positions in the market without taking on the trading risk of selling stock short. Using Put Options To Protect StockBecause put options vest the buyer with the right to sell stock at a pre-determined price, opptions option contracts are frequently used to protected stock holdings from losses in the event of a market decline.

Most strategies used by options investors have limited risk but also limited profit potential. Options strategies are not get-rich-quick schemes. Transactions generally require less capital than equivalent stock transactions.




Put and call options to manage risk homeostasis

Risk to and homeostasis put options manage call