Options vs. Stock trading: Which is better?

Stock prices may be volatile, but options can even more so. Since they're risky and offer high potential gains for traders who know what to do with them, this is part of what draws people in. Options trading isn't necessarily easy (or low risk), though; some strategies are relatively lower-risk ways to enhance returns as a stock investor.

Investors who use options as a hedge may be less risky because they need less money than equities and are more impervious to the potentially devastating effects of gap openings. Options are the most dependable form of a hedge, making them safer than equities, and this fact makes them even more superior.

Unless you are a seasoned investor with plenty of experience, stock trading is superior to options investing.

With options, you can lose 100% of your investment when you are buying puts and calls. It is almost inevitable that this will happen to you since options trading requires being more active.

This is why many financial experts suggest only putting about a fifth of your portfolio in options.

Now, with stock trading, you have more flexibility and a wide array of investment tools. It is rare to lose 100% of your money by owning shares.

Stock trading is great for investors of all skill levels, with any amount of capital.