Why options are for 100 shares? how to hedge for expensive stocks then?

If you really want exposure to Amazon, but on less than 100 shares, just buy fewer shares or buy a call spread / sell a put spread.

 

Thank you so much Lee!
Thanks to you all

 

Purchasing a synthetic (long) and a long put is cost ineffective. Replace the 3 legged position with one (a call option at the same strike / expiration as the long put) and save some commission.

Sell an OTM call strike if you want to mitigate some of the time decay in the long premium. This will morph the position into a vertical spread.

The long strike provides an in-built hedge.

@basem0001, I suggest you paper trade before you put your $$ at risk.

 

Thanks for your input!

Yeah definitely I would try with paper trading first as I am new to options trading.

I think you missed the point about hedging? if I bought a call option only, I will be exposed to risk if the stock plunged?

 

"The long (call) strike provides an in-built hedge."

The above was the answer to your question. The most you can lose is the premium paid purchasing the option.

If you're long the stock, you're on risk all the way down to zero.

It would be worthwhile reading a few option books / online resources to help you understand the basics.