Here is the dilemma. The lower stocks go, the more attractive they seem. The Investor's Business Daily recommends that an investor stay out until a bottom is clearly formed, and that is probably good advice. The problem, however, is me. If that happens, I lose my opportunity of a lifetime.
Options can help.
I can buy stock and buy puts. This gives all of the potential upside of owning the stock, plus crash insurance. I could also just buy a small number of calls. This would provide substantially the same upside potential but at only a small percentage of the risk. Additionally, if the stock dips, the investor who owned stock would be out.