What are options, and where can they fit in your portfolio?

Options are contracts that give an investor the right, but not the obligation, to buy or sell a security at a set price before a certain date. They can add flexibility to a portfolio by helping investors seek income, manage risk, or adjust exposure without fully selling core holdings.

For some investors, options strategies may help generate steady monthly income while still keeping stock market participation. They can also be used to hedge against downside moves or to target specific return outcomes in changing markets.

At the same time, options carry meaningful risks and require careful use. Their value can change quickly with market moves and time decay.

For financial advisors and investors, options may fit best as a targeted tool rather than a core holding. Used thoughtfully, they can complement long-term investments and support more disciplined portfolio management.