Options have advantages and disadvantages. One of the advantages is the possibility of controlling actions without having them. Possibility of obtaining a higher return on investment, with less capital I can obtain higher value assets, taking less risk when buying shares by investing less capital, and the most important possibility of reducing the risk of the company's portfolio.

In summary, the two main advantages are that options help you achieve greater leverage for the company while at the same time minimizing the risks of your assets.

The drawbacks that options have, on the one hand, leverage, this can be a double-edged sword because you can compromise your company a lot. A strategy called Spreads is used to minimize this. There are also risks of volatility, time, displacement, (use of spreads to reduce them). The learning factor is very important since they are complex investments that require some training and knowledge.

The spreads are combinations of the options looking for the good of the options and thus minimize the risks. Spreads are combinations between underlyings like Stocks with ETFs or Stocks and Futures or Futures with ETFs etc.

Spreads have many advantages such as reducing or eliminating risk, generating profits no matter if the trend is bullish or bearish. Possibility of obtaining benefits even failing in our movement expectations. They are very flexible and we can adapt them to the needs of the company. Spreads can be used in two ways:

- Primary instrument to generate returns - Secondary instrument to reduce risk

4.2 Trading strategy

The options adapt to any trading profile:

Directional trader- is one who looks for a trend. It can be uptrend, downtrend or sideways. Non-directional trader- is one who does not have an expectation of the market and has a neutral approach. You can take an expectation of increased volatility or decreased volatility. Bullish strategies are characterized by:

- Positive Delta - Delta is a Greek letter that defines our position to the underlying. A bullish strategy will always have a positive delta. - Exposure to volatility, is known as negative or positive Vega. Vega is another Greek letter that tells you how the strategy is going to move. In this case preferably negative. - Theta that can be negative or positive and this helps us to benefit over time. - The ideal rising strategy would be: Delta+, Vega-, Theta+ - An uptrend would be a bull call.

Downtrend strategies are characterized by: Negative Delta Vega positive Positive theta The ideal bearish strategy would be: Delta -, Vega +, Theta - The trend would be a diagonal put

The lateral trend is characterized by: Neutral delta Vega negative or positive (negative preferred) Negative or positive theta (better positive) The ideal strategy: Delta-, Vega-, Theta+

Non-directional trader seeks a position as neutral as possible to generate income: Always look to have a positive theta. It can be vega negative or positive (or both). The ideal position would be: Delta+, Vega+/-, Theta+.

4.3 Investment Strategies

Bull Spread

It is a strategy to profit from a moderate increase in an asset.

Box Spread

This combines the bull call with a bear put, this type of strategy only works with European options because they are made at the expiration date.

Butterfly Spread

It is an option strategy with a fixed risk and limited profit.

conclusions

The purchase of options can be advantageous or disadvantageous, it is necessary to design the correct strategies to avoid that we have unlimited losses.

Options, as part of derivatives are very versatile and that versatility can cause problems. There are always risks related to the assets that are traded in the market, the important thing is to have the proper education.

Explain: 1. What have I learned in this module?

2. What is the easiest to learn from this?

3. What is the hardest?

4. How can this be used for future carreer in Fincance?

5. How can this be used in workplace (credit unions)?