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The benefits of Options as compared to Stocks for long term investors
By Wealth Directions  •  June 4, 2016
It is no secret that Options loses value over time. So is it viable to buy it for long term appreciation of a stock? Let compare stocks vs options using a real life example, MSFT. On 31st May 2015, MSFT was trading at $46.86. Let’s assume that we are optimistic on this counter over the next 12 months. One way is to buy 100 shares of MSFT for $4686. The alternative way is to buy a Strike 30 CALL options contract expiring on 21st Jan 2017. And from the diagram below, we could see that the Options is worth $17.10. So, buying this contract would cost $1710. If we fast forward 12 months to 31st May 2016, MSFT has risen to $53. Let’s take a look at how much is our options contract worth now. Referring to the diagram below, Strike 30 CALL expiring ......
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By Wealth Directions
With the mission to help 1 Million Millionaires, Wealth Directions Pte Ltd aims to be the leading provider of Financial Education in Singapore and the region. We do not want to be just another seminar provider, but help create a closely-knitted community of like-minded people, who are interested in continuous Personal Development and learning, who believe in improving themselves in order to contribute back to the society at large.
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