New Way To Look At Equity Options

Equity Options consist of basically Call Options and Put Options-

Imagine Deutche Bank DB is selling at $60 per share today May 22nd.

Call options gives us the right to buy a stock at a specific price and a specific time.
DB call to buy @ 65 is selling for $1.65 expires on June 18th, 2010.

Put Options gives us the right to sell a stock at a specific price and at a specific time
DB puts to sell @ 55 is selling at $2.55 expires on June 18th, 2010.

Let us go back and look at various usages of options-

1. Buy Insurance on your portfolio.

2. Sell Insurance for the portfolio.

3. Speculate on movement of the stock with very less cash on hand.