Option stop loss is a concept that my colleague and friend, Jeff, introduced me to when I first started exploring how humans cope with risk in the context of financial risk. He made a really good point in that the key to thinking about risk is thinking about it in a context of human beings. When we are faced with a financial risk we are faced with three choices.
Option one is to take a cash payout and get the money back, but at the same time we will have lost any upside. Option two is to take a loss and take the money right now and go for a low risk-high reward. Option three is to take a loss and keep the money and go for a high risk-low reward.
Option one is riskier. Option two is riskier. Option three is riskier. Option four is riskier. Option five is riskier. Option six is riskier. Option seven is riskier. Option eight is riskier. But Option eight is riskier.
How is this riskier than taking the whole cash? There’s certainly a downside to making a bad call. But we’re talking about a hundred times the upside. This is the biggest risk we’re talking about here.
A loss is actually a good deal if it means we’re not just wasting our money. It would be better to take the whole cash. It’s a lot better to get lost than to lose our money. It would mean our lives would be at risk too. You’re never going to make a big loss.
We all know how bad it can feel to lose money. Well, the good thing about options is that they are riskier. So if you take the wrong one, you get to keep your money. Also, it’s better to take the whole cash than lose your whole life.
Options have been one of the most popular strategies for making money and saving up for retirement. And I’m not talking about the traditional IRAs. I’m referring to retirement funds based on options. Options are a bit different than other savings accounts because they don’t have to pay out a fixed amount of money every month. They can come with a variety of different fees, such as a fee that may be taken out of your paycheck.
Options are, essentially, retirement funds in which the account owner can invest their money however they want. There are even accounts that allow you to buy options (which essentially means you can buy something that will give you a certain level of interest, like an index fund) and then sell them back at a later time. The key word is “buy”. While options may seem complex, in reality there are some really simple ways to use them for money.
When we buy a lot of ideas, our attention will actually come to them. When we purchase a few ideas, we will probably get a couple of dozen of us to think about, and we’ll start to look around the site to see what we can buy and how often we pay in.
If you buy and sell things all day long, it takes a lot to pay for. That’s why buying options is a great way to get to use a huge chunk of money in a short period of time.
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