Part 1 Identifying Support and Resistance

Why Trade Options?

Options serve multiple purposes in modern finance:

Hedging:
Investors use options to protect their portfolios from adverse price movements. For example, a stockholder may buy a put option to guard against a potential price fall.

Speculation:
Traders can speculate on short-term market movements with limited risk and potentially high returns. Buying calls or puts allows traders to profit from expected price directions without owning the underlying asset.

Income Generation:
Selling options (writing covered calls or cash-secured puts) generates regular income through premiums. Many institutional investors use this strategy to enhance portfolio returns.