An Optionable Stock is one that has listed options available to trade. Options are contracts between two parties that give the holder the right, but not obligation, to buy or sell a security at a predetermined price within a certain period of time. In order for a stock to be optionable, it must meet certain criteria established by exchanges such as having sufficient liquidity and meeting minimum standards for market capitalization and average daily trading volume. Optionability can also depend on other factors such as whether the company pays dividends or if there are any restrictions placed on its shares due to insider ownership or corporate governance rules.The benefit of owning an optionable stock is that investors have more flexibility in how they manage their portfolios since they can use options strategies like covered calls and straddles which provide them with additional income from premiums received when selling call options against existing long positions in stocks held in their portfolio . This gives them greater control over risk management than just holding plain vanilla stocks alone would offer since these strategies allow investors hedge their downside exposure while still collecting potential upside gains from rising prices without having to actually purchase additional shares outright themselves . Additionally , because many institutional investors prefer investing through derivatives rather than directly purchasing underlying securities , being able to access listed options markets may make some companies more attractive investments overall compared those who cannot offer this type of investment vehicle .Overall , owning an optionable stock provides numerous advantages including increased flexibility with regards risk management along with potentially higher returns based upon premium income generated form selling call/puts against existing holdings plus increased attractiveness among institutional buyers who may otherwise overlook non-optionables altogether making it important factor consider before deciding which equities should be included within your portfolio allocations strategy going forward.
