That premium is a small concern if the market falls soon after you buy the option. The key to hedging with put options is to buy an option only when you feel quite certain that the risk of a market decline is quite high. The cost of staying continually hedged can be very high. Option trading is much more complicated than it appears. You should consult an investment professional in this area when constructing a hedge or writing call options.
Volatility is a necessary ingredient of stock market investing.
Take some time before making an investment to anticipate your response should the stock you buy fall immediately after purchase or should it fall after an increase in price. Know some of the options available to you so that you can make an informed decision with a minimal amount of emotion. This will make stock investing a much more enjoyable and profitable experience. The information in this Internet site is directed at, and is intended for distribution to, and use by, persons in the U.S. only. It is not intended for distribution to, or use by, any person in any other jurisdiction.