Part 1 Candle Stick Patterns

Why Trade Options?

Options are used for three primary purposes:

(A) Hedging (Risk Protection)

Just like insurance protects your car or house, options can protect your portfolio from losses.

Example:
If you own a stock and are worried it might fall, buying a Put option can limit your downside risk.

(B) Speculation (Profit from Movements)

Options allow traders to profit from:

Rising markets (buy calls)

Falling markets (buy puts)

Sideways markets (sell options or use spreads)

(C) Income Generation

Through option selling (writing), traders earn premium income. For example, selling call or put options can generate regular cash flow.