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Part 2 of a series of posts on some ways to protect yourself while investing in the stock market as fears of inflation induced correction takes place. Another one of the way i invest differently in a volatile market is by using options. I would like to say from offset that options and derivatives are double edged swords. Please do your own due diligence by studying and learning more about it before even considering any of the advice mentioned below.

Options and derivatives allows for leveraged positions. It increases your hypothetical purchasing power and allows you to purchase more assets with the same amount of cash. Although it does sound like magic, the idea is rather simple. Rather than buying the asset with cash, you purchase contracts that guarantees your purchase in the event that you exercise that contract.

For example, you want to buy a stock that is worth $50. Buying a contract with expiry on a certain date costs maybe $10. By simply buying the contract, you are able to reduce your upfront cost of $40 per share (Do note that there is another sum of money that needs to be paid to purchase the actual stock, buying options only gets you the right to buy it at a certain price). However, do note that this is a crazy oversimplification of what derivatives do. Please do your own research, i am merely providing different perspective on how to utilise such tools in the market.

One great way of utilising options would be buying LEAPS. This is a method that i am rather confident about because of the minimised risk due to the long time horizon. Usually LEAPS options expire 9 months later or more. And this can be a great way to buy into a fundamentally good company while utilising less cash. This is a great way to preserve the war chest and provides investors flexibility to react to whichever direction the market moves towards. In the off chance that the markets move downwards, you can consider selling calls on the LEAPS options or even buying more LEAPS options at a discounted price.

If you are confused about LEAPS but is interested to learn more, i recommend a Youtube channel called " InTheMoney ", from which i have learned about the LEAPS options. I think he did a great job explaining the details and nuances of the LEAPS. DO NOTE THAT THIS POST IS NOT SPONSORED. Just wanted to share where i learned these things.

Some considerations to note for the stocks to buy LEAPs with are stable stocks with low IV that you are bullish on in the long run. Personally $Palantir Technologies Inc.(PLTR)$$Nike(NKE)$$Microsoft(MSFT)$are my favourites LEAPS options to buy.

To conclude, options and derivatives provides great opportunities to profit even in a volatile market. However, as with all great venture, it must be done safely and wisely.