Options are a common yet highly misunderstood part of the investing world. In short, an option is recognized as an investment asset just like bonds, stocks, and ETFs. When leveraged properly, options can yield higher returns than trading these other assets. To give a more in-depth explanation, options are contracts allowing an investor the ability to buy or sell an asset at a predetermined price on a specific date. Investors can strategically use options to hedge against market volatility and to increase their overall returns. At times, options are referred to as derivatives since these transactions derive their worth from the asset. There are two different kinds of options: call and put.

Call options give an investor the ability to purchase an asset while put options give an investor the ability to sell an asset. The type of option an investor will leverage depends on what they anticipate will happen on the stock market and what kind of strategy they’re implementing. It’s important to note that an option doesn’t obligate an investor to buy or sell the underlying asset. Instead, this investment strategy gives investors the option to make a transaction or not.

Whether you’re interested in making call or put options, Lacy Financial can help. Our experts are highly experienced in this area and would be more than happy to guide you throughout the process.