Let’s face it, options can be a bit scary for investors if the only exposure to the market is with buying and selling stocks. Professional traders use options as a tool to take advantage of market opportunities, to offset risk, lock in gains, build an equity position and more. The truth is, options give investors a wide range of strategies for your portfolio.

Option strategies come in many different risk profiles. On one hand, options offer one of the safest alternative investment strategies that doesn't even require spare cash to trade. And on the other, a full offering of speculative stragies that offer leveraged returns with a variety of risks.

Theta X Capital offers personalized web sessions that teach how to use options to enhance an investment portfolio. If you are a self- directed investor and have zero to intermediate knowledge working with options, sign up for a free one-hour session and explore how options can enhance your investment goals.

For those who are over the AGI requirement for IRA contributions, you have no choice but to let your portfolio sit “market-long” and stagnant year after year, advancing merely at the whim of the market and quarterly dividends. Although for some this passive strategy is well and good, and endorsed by the majority of investment management firms, there’s another way to generate additional gains that can be used to increase your base equity or cash position in your IRA.

If you’ve ever sat frustrated watching the financial news talk about the next hot IPO, but with limited funds in your account to take advantage of the opportunity, you’re not alone. For the majority, the only way to raise spare cash in your IRA for future investing is either by dividend accumulation or by closing an existing position. The downside to this is A) dividend accumulation typically takes years , and B) you might not want to sell stock in a company you’ve invested in to buy shares of a new public company. Using options to leverage your equity is a common practice and one of the safest options strategies available.

Options are a great investment tool for those who know when to use them. One of the fastest ways to wipe out your portfolio is by jumping into an option position because someone said it was a good idea. The truth is, options are predictable, with the proper knowledge under your belt. Like with stocks, similar rules apply. Company fundamentals, timing and market conditions all need to be considered with options as well. However, there are a few dark area that at first can seem confusing and introduce a fair amount of risk.

If you’ve ever heard the terms, delta, theta or vega, for most these present an area of confusion. But they are very important option pricing model components that need to be clearly understood. Unlike stock where you actually own a piece of a company, options are contracts that have a finite expiration which, if not managed, can cause irreparable harm to your account.

There are several misconceptions with options, however the one that will put you in the penaly box the fastest is not managing the trade size at entry. Those not familiar with option pricing see the lower cost in relation to the underlying share price as a discount, and then decide to double or triple down on the trade size. At the time this might sound like a good idea when looking at the potential profits, but what happens if the market goes against you?

Trade size in relation to contract quantity is the best way to control your potential losses if the trade goes bad. There are also other ways to control risk with options. For example: spreads, but these usually cap potential profits, so the first consideration with an option trade is size. Sign up for a free one hour one-on-one session to explore how Theta X Capital can help.