Purchasing stocks carry with it risk. Your money could be lost if the company goes out of business. You could lose money if the company is losing sales. What if you could own a ticket that would allow you to purchase a company if it did well? Would it not be kind of like having insurance policy that you could exercise if the conditions were right? Film or theatrical producers often buy the right – but not the obligation – to dramatize a specific book or script. That is what a stock option is. A stock option is the right to buy (call option) or sell (put option) a specific number of shares of a company, at a certain price, by a specified date. They add a delay effect to the normal direct purchasing and selling of companies. This delay if used wisely, can give you added advantages as an investor. Because of this, Options are very sophisticated financial instruments and should only be done once you have a working understanding of the stock market. Options Help Limits Losses Consider this for a moment; two men invest in the same stock. One man invests $10,000 and he hopes the stock […]