[center][b][size=5]How to Make Money Using Put or Call Options[/size][/b][/center]
Now, we will discuss how to make profit using a call option in unfavorable market conditions. A call option is simple the right to buy the stock of a predetermined company in the future at a price determined today. A gain we will use the hypothetical stock XYZ in our example. Be aware that in order to execute the call option strategy, an investor does not require any shares of company XYZ in hand as we are betting against the market to buy the shares at hopefully a lower price using the call option and selling it to the stock market at the current ongoing price.

So, again, let us say stock XYZ is currently selling for $17 and in three months time it you predict that the price of the stock is going to increase to $19. So we will buy a call option giving us the right to buy 1000 unit of shares XYZ in three months time. Again we incur a premium of $200. If the price rises to $19 per share we will make a profit of $1800 by exercising the call option and buying the stock at $17 and selling it to the stock market at $19. However, if the stock price reduces, we will only incur a lost of $200. Note that this strategy can also be used for investors who want to but stock XYZ for investment purposes but do not have enough cash currently and are afraid that the price will increase in the future.

In conclusion, using put and call options as an insurance an investor could conveniently reduce their losses to the amount paid for the premium while maximizing profit. So, investors should be aware of this method in order to safeguard themselves against huge losses in stock markets worldwide.

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