- Cost Efficiencies and Asset Substitution
- Potential to Deliver Higher-Percentage Returns
- Risk Management
I often get asked this question, a lot: ‘What do you do, when the price of Bitcoin trades in a price channel?’ E.g. If the price fluctuates between $7000 to $10,000 over the entire year.
Despite being a long-term holder of the digital asset, I can see the appeal of making some short-term trades. The biggest challenge for mid to long-term investors like us, is the opportunity cost in buying and holding.
This is where Financial Derivatives come in: Important Financial instruments which offer various types of risk protection and allow for innovative investment strategies.
Today I’d focus on Exchange-Traded Options, which first started back in 1970s. The general public views options as High-Risk investments meant only for Expert traders, but in reality, options can be useful to the individual investor.
Some advantages of Options and the value they can add to your portfolio:-