{"id":964599,"date":"2024-12-09T12:46:52","date_gmt":"2024-12-09T10:46:52","guid":{"rendered":"https:\/\/www.etoro.com\/?page_id=964599"},"modified":"2024-12-09T12:46:54","modified_gmt":"2024-12-09T10:46:54","slug":"buying-stock-vs-options","status":"publish","type":"page","link":"https:\/\/www.etoro.com\/en-us\/academy\/videos\/buying-stock-vs-options\/","title":{"rendered":"Buying Stock Vs. Options"},"content":{"rendered":"\n

Description<\/h2>
In this video, we\u2019ll talk about two outlooks (optimistic and pessimistic) and two timespans (short and long-term) to show how they relate to different assets.<\/div><\/div>

Transcript<\/h2>
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What if I told you there were certain assets you might want to trade when stock prices go down?<\/p>\n\n\n\n

Keep watching and learn more.<\/p>\n\n\n\n

In this video we’ll talk about stocks and options and how each may fit your goals, depending on a couple of different things.<\/p>\n\n\n\n

The first: whether you’re bullish or bearish – are you optimistic or pessimistic? <\/p>\n\n\n\n

The second: time frame – are you a short-term optimist or a long-term optimist?<\/p>\n\n\n\n

Let’s pretend your favourite company is Owlwerkz.<\/p>\n\n\n\n

You think that Owlwerkz is a real up-and-comer and then in 10, 15 years they’re going to build their way up from small insignificant widget maker to big time tech giant.<\/p>\n\n\n\n

You\u2019re long-term bullish – optimistic about a long time span.<\/p>\n\n\n\n

And in that case the stock might make sense for you.<\/p>\n\n\n\n

However, let’s say Owlwerkz is dropping its new Widget 3000 in three weeks and you’re confident it’s gonna take the world by storm, causing a big jump in the stock price.<\/p>\n\n\n\n

You could invest in the stock but one alternative would be buying an option.<\/p>\n\n\n\n

Specifically, a call option.<\/p>\n\n\n\n

Why?<\/p>\n\n\n\n

By purchasing an option that expires in a month you would have access to more potential gain.<\/p>\n\n\n\n

If you’re right the Widget 3000 really takes the world by storm and the stock price rises.<\/p>\n\n\n\n

You could make more profit than if you had just bought the stock.<\/p>\n\n\n\n

The downside?<\/p>\n\n\n\n

If you’re wrong you could lose the entire investment,  though you usually have to put in less than if you were to buy the same amount of stock.<\/p>\n\n\n\n

That’s two great options for bulls, but what about bears?<\/p>\n\n\n\n

Well, if you’re pessimistic in the short term and you think the Widget 3000 is going to be a total failure that burns the stock to the ground, one asset you could look at is a put option.<\/p>\n\n\n\n

Buying a put option reserves your right to sell shares at a certain price, which means, if the stock price drops, you could make some profit.<\/p>\n\n\n\n

And for any long-term bears out there: well, you might want to find another company to invest in, like a competitor making the industry-leading SuperWidget 4000.<\/p>\n\n\n\n

Options are exciting because they let you engage with the market in ways that stocks don’t.<\/p>\n\n\n\n

That said, not every investment is for everyone.<\/p>\n\n\n\n

You got to consider your own goals.<\/p>\n\n\n\n

And that’s why eToro lets you choose – we give you options.<\/p>\n\n\n\n

Explore eToro options today.<\/p>\n<\/div>