By Avery Rathbun
Options, Futures, and Annuities
What will something be worth in the future?
Prices typically change with time value. You never know if the price of something will ever go up or down in the next year. This is why Options, Futures, and Annuities are important for an investor who is trying to buy securities.
Options
If you buy an option, you have purchased the opportunity to buy something at a specific price over a period of time. The option guarantees you will be able to buy stocks from industries in the next year. If you end up choosing not to buy, you lose cost of your option but nothing else.
Futures
If you buy a futures contract, that is you saying that you will purchase 100 shares of a company’s stock for $50/share next year. Investing in futures can be dangerous because of the product ends up only being worth $10/share in the next year, you’re locked into having to pay that $50/share. Futures are risky investments.
Annuities
Annuities are sold by life insurance companies and provide a regular series of payments that only continue for a set period of time. An investor could either purchase annuities in a single payment or a series of payments. Annuities are most commonly used to help pay for a person’s retirement. Payments can typically increase/decrease depending on how well the investments are doing.
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