Advantages of options over shares?

[matan100]

Hey all I just have a quick question about options in particular on speculative shares. Since they don't pay dividends anyway, is there any advantage in holding the actual stock, or would you be better off buying the call on it?
Cheers.

 

[jono1887]

Hey all I just have a quick question about options in particular on speculative shares. Since they don't pay dividends anyway, is there any advantage in holding the actual stock, or would you be better off buying the call on it?
Cheers.

Dont you use options as insurance for holding actual stocks... so it gives you the option to sell at a set price in case they drop?? not too sure though, never used options before...

 

[shulink]

With options, you pay an up-front fee that allows you to sell later. For example, if the stock of a company is $20 a share, and you want to buy 1000 shares for a total of $20,000. However, let's say you don't want to risk $20,000 or you don't have enough money to buy it, then you can consider option. Option allows you to pay an up front fee let's say $1000 that gives you the option to buy later at the price of $20. Let's say the stock price of the company go up to $30, then you can buy them for $20 a share which is a profit of $10 a share for a total of $10000. If the price didn't go up, then your option expires worthless and you lost $1000.

 

[cooper1308]

Since they don't pay dividends anyway, is there any advantage in holding the actual stock
Cheers.

Even if a stock is paying a dividend, it is factored into the option price. e.g A Call will be cheaper and Put more expensive.