Unfettered Greed baby! "Haha infinite potential loss? That would never happen TO ME!"
Edit: more seriously, options come with premiums and can still lose you money even if the stock did in fact go down (i.e. You buy a PUT for $5, the stock is at $4 currently, but the PUT costs you more than $2 because there is a premium to pay based on a bunch of Greek alphabet astrology, so you'd only make money if the stock goes down to $3 or less)
On the whole, buying options is a losing proposition. Options were literally designed as insurance against unfavorable moves. What happens with insurance companies? They usually make a whole fuckload of money. It's those long tail, black swan events that wipe them out.
Is there a reason why funds buy shorts instead of put options? Seems a lot risker
Unfettered Greed baby! "Haha infinite potential loss? That would never happen TO ME!"
Edit: more seriously, options come with premiums and can still lose you money even if the stock did in fact go down (i.e. You buy a PUT for $5, the stock is at $4 currently, but the PUT costs you more than $2 because there is a premium to pay based on a bunch of Greek alphabet astrology, so you'd only make money if the stock goes down to $3 or less)
On the whole, buying options is a losing proposition. Options were literally designed as insurance against unfavorable moves. What happens with insurance companies? They usually make a whole fuckload of money. It's those long tail, black swan events that wipe them out.