Introduction To Options

Options are utilised by many investors because of their flexible nature and the seemingly endless array of opportunities that they can generate. Technically known as "Exchange Traded Options" or "ETO's", options are carefully regulated by the ASX which provides the market through which they transact. Their versatility allows investors to:

  • Hedge (protect or insure) shares from adverse price movements (useful for example around events such as profit reports)
  • Obtain directional exposure (long/up and short/down share price movements)
  • Earn extra income via selling time (eg, for example, "Covered Call strategies")
  • Earn income instead of buying the shares immediately (eg, sell Pull Options)
  • Obtain/Increase Leverage to the underlying shares
  • Decrease Leverage (partial hedging)
  • Construct a myriad of scenarios which best suits a particular view on a stock (whether it be long, neutral or short)

Exchange Traded Options (ETO's) are commonly utilised worldwide by both retail and institutional investors. Sentinel's experienced team of Options Brokers and Advisers can assist you in constructing an option strategy which best matches your overall objectives or view on a particular stock.

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