Traditionally, options are used to mitigate risk, although some speculators use them like futures to amplify returns. Bulls typically buy puts to prot
Traditionally, options are used to mitigate risk, although some speculators use them like futures to amplify returns. Bulls typically buy puts to protect against a potential downside, while bears use call options to protect from a sudden upswing in prices. Efficient use of options is contingent on a thorough understanding of key metrics, the so-called Greeks – delta, gamma, theta and rho, that affect the price of an options contract.
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