InvestorQ : What are the practical uses of index options and who are the users typically?
Anamika Sodhani made post

What are the practical uses of index options and who are the users typically?

Answer
user profile image
Anamika Sodhani answered.
2 years ago


Index Options are effective enough to appeal to a broad spectrum of users, from conservative investors to more aggressive stock market traders. Individual investors might wish to capitalize on market opinions (bullish, bearish or neutral) by acting on their views of the broad market or one of its many sectors. The more sophisticated market professionals might find the variety of index option contracts excellent tools for enhancing market timing decisions and adjusting asset mixes for asset allocation. To a market professional, managing the risk associated with large equity positions may mean using index options to either reduce their risk or to increase market exposure.