Business

5 Benefits of Options Greeks

Written by AngelaJohn

As a trader, you will always want to make the maximum profit almost every time. However, with the volatile market, you often cannot achieve what you want. You wish that there were a tool that could spell a twist and helps you in making profits. As a matter of fact, this is what Options Greeks exactly do. They give you an evaluation of an underlying asset’s current and future values, and how and when you should make your investment. By doing this, you could yourself tell how much profit or loss you would make because of your investment in the near future.

First off, you must understand how call options and put options work. Call option defines an option to buy a set of assets at a mutually-agreed price on or before the option’s expiration date. A put option, on the other hand, is an option to sell a set of assets at a mutually-agreed price on or before the option’s expiration date. It must be noted here that put option gives the stock owner the right to sell options, however, he is not obligated to do it. Call option works the other way, and gives the stock buyer the right to buy the options, but without any obligation to do it.

Dealing in Options Greeks can benefit you in several ways. These include:

  • They are cost-effective: Generally, an investor has to pay the current value of the stock to buy it. However, with a call option, he only has to pay the true market value for it, which is usually much lesser than the actual trading value. This way, the investor is able to gain similar profit margin without investing that much money.
  • There is a lesser risk: There is always a risk when you are making an investment, and no one can assure you of a safe return all the time. However, since you know the market trends and have to make a lower investment over a stock, you are able to save a lot of money, putting only a part of it in the line of risk.
  • You are almost assured of a higher return: Because you know the market trends, you will most likely get a higher return whenever your stock fares as it should.
  • You get many ways of trading options: Options give you as an investor a number of possible combinations to invest your money. This way, even when one of the parts does not do well, you can still cover it up and make more money using the other part of the investment.
  • There is always the ease of trading: There is a high transparency in Options Greeks, which is why most of the investors prefer to go for it today rather than the conventional methods which used to put a lot at risk.

About the author

AngelaJohn

Leave a Comment