speculative and hedging.
Buying stock is speculative - you do that, right? Why do you believe you are any better at buying stocks than anyone else? How do you know you're not the guy who loses 10% every year? You can set up an option position on an underlying stock that can be more risky, the same risk, less risky, or anywhere in between than buying the shares directly in that stock. This is the beauty of options. You can make yourself a customized position. You'll learn this if you take some time to get more experience with them. You will pay a small 'fee' for this which equals the current option spreads (.05-.10 per share) plus the extra commissions (and possibly the time value depending on the strategy). The more complex the strategy, the more this 'fee' will be. For this 'fee' you get the flexibility of choosing how you want to play a stock.
I would be willing to bet (heck I already am in a way) a put writing strategy on QQQs (with a stop loss like I previously posted) would return more over a 10 year period than just buying QQQ shares. There is a factor we are not considering though. Taxes. Short term vs. long term gains. I think you would only win out in a tax sheltered account like Elmer is doing.
And LOL, you should never buy a random spattering of options. You will get zero or less, guaranteed. I'm starting to think that was your original point, and if so, yes, you have to be smart enough to choose the strategy that fits fairly well with a situation. You don't have to be any smarter about the underlying stock though.
You are giving yourself flexibility if you learn how to use options.
HailMary
