The Train Will Come Eventually

This is how many investors operate. If you wait long enough the train will arrive. This is a sure way to lost a good portion of your portfolio. If a stock declines 50% it must move up 100% to get even. It is important to limit your losses. This is one of the reasons we believe you should learn to use options.

If you buy a call option your maximum loss is whatever you spent for the option. This is usually a fraction of what it would cos you to buy the stock and hold it. So if you believe a stock is going to jump due to earnings, management change, political changes, or other issues. You may want to consider using a call option to maximize your leverage. The same can be said for buy a put. If you believe the stock is going to continue to fall this may be a valid option.

For those of you that are holding and bleeding a little each day, we encourage you to learn to use options to protect your portfolio.

Options are not suitable for all investors and you should consult your investment professional before investing of any kind. Options can be risky, people can and do lose money.

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *