If an investor owns a valuable asset such as shares then they are running the risk that the price of the those shares may go down. Now, most investors are happy with that risk and understand that they are making long-term investments at least five years and that the volatility of share ownership is the price they must pay for the long-term gains they expect. But, what if they are specifically nervous and wish to insure their shares.

Option (finance)

How would they do that? Well, there are several approaches but one would be to buy a put option. A put is an options contract that guarantees that they could sell their shares at a fixed price within a certain period of time. In effect, they are insuring their shares against a drop in the share price.

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• What is an options contract?!
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And just like any other insurance contract, the put option has an expiration date and crucially, they have to pay a premium for it. Who gets the premium? How much health insurance I should opt? How much should I insure for? How much sum assured I should take? How pension plan works? I am already covered by my Employer in a Group Mediclaim policy, do I need to buy a separate policy? In case of a claim will I get paid from both policies? I am healthy. Why should I take health insurance? I do not believe in taking health insurance instead of that I prefer in creating my own fund.

I have not paid premium for some time. Can I revive my policy?

I want to discontinue my policy. Do I get anything back from the insurance company?

A primer on using put options to get you through market turbulence.

I want to save tax and plan for my 1-year old child's higher education. Which is the good insurance policy for this? If I already have an e IA, how do I buy a new policy in electronic form? If I get heart attack, cancer, stroke will I get covered in a health Insurance policy? If there are problems with claims what can I do? Is it compulsory for all Insurance Companies to offer electronic policies?

What Is Portfolio Insurance? | Finance - Zacks

Is it compulsory to issue policies in only electronic form? On what basis is claim paid? Should I buy a life insurance policy even if my employer has insured me in a group insurance scheme? Should I take Life Insurance? Should I use insurance as an investment? What are the basic elements of Life Insurance? What are the benefits of group life insurance? What are the benefits of holding Insurance Policies in electronic form? What are the documents required to open an eIA Account? What are the tax benefits on Health insurance policy?

What are the various types of insurances? What coverage available under health insurance plan? What do I do if I need to make any changes to my policy or e IA? What do I get if I insure? What do I get if I survive the term of the policy? Options mean alternatives or flexibility. In financial terms an options contract is another type of financial derivative.

Employee Stock Options

Similar to a futures contract, an options contract can be used for the purposes of both hedging and speculating. However there are also some important differences. Want to keep learning? See other articles from this course. This article is from the online course:. News categories. Other top stories on FutureLearn. In our first blog post about learning essential soft skills, we discuss the importance of …. Discover some top tips on learning English quickly and effectively.

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