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Why are Options Useful ?

Options are useful for hedging or protecting investment portfolios. They also facilitate liquidity for shares in the market.

An investor who has purchased 1000 shares of ABC Company may want to protect the portfolio from the risk of a fall in the price of ABC Company shares. To do so he or she can purchase Put Options on ABC Company shares at the appropriate Strike Price which he or she can exercise whenever ABC Company shares fall in price.

This is an advanced concept in Investing that may not be suitable for all kinds of investors.


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