View Single Post
  #8  
Old 04-05-2005, 01:24 PM
edtost edtost is offline
Junior Member
 
Join Date: Feb 2004
Location: Princeton
Posts: 15
Default Re: newbie question about options

[ QUOTE ]
Name some, silly boy. Options (and all forms of insurance) are used by people who have more risk than they are compfortable with but cannot simply stop the activity they are engaged in. People buy homeowners insurance because they cannot face the risk of a fire, but cannot sell the home as they need a place to live. They sell the risk to insurers that are better able to manage the risk.

[/ QUOTE ]

yes, hedging risk is ONE possible use of options, but you're telling me you can't think of a derivitave position that's (for example) long volatility? options can also be used to circumvent margin requirements, as they are (in general) inherantly leveraged positions.
Reply With Quote