What are the Disadvantages?

When options are bought, a person is not able to receive dividends that the company might pay. This is in the case and is the same for all buyers of options, even if they are buying deep in the money DITM or out of the money OTM options. Something else is that the person will not have any right to vote for that specific company. However, one must ask themselves if these are really big enough reasons they should not purchase the options. For some it doesn’t. There are many investors that will be happy to settle for an investment that is going to cost them close to fifty percent less in total funds, which means that there is half the amount of money at risk, and there is in addition the opportunity to take part in the equivalent movement in exchange for an at times worthless dividend. Bear in mind that there are not any dividends that will completely mitigate the fall of a stock when it is in a downwards trend. There is also another disadvantage or setback in the limited life span that options have. Take into consideration that options can be purchased for a lot of different expiration times, and there are even some that will extend to three years in time. In the case of the deep in the money DITM strategy, an individual is even able to choose a LEAP option. LEAPS actually consist of long term options. As a matter a fact, it is suggested to use the longest dates LEAPS one can find for any stock that is being considered to be held in a portfolio. This is one way in which one can provide a good number of years for an investment to mature. There are however, some people that will still believe that an expiration date, despite the fact that it is three years away, is a setback. Those would probably consist of the biggest setbacks that can occur and really, they are not that big, which is why it is a good strategy to follow.