Financial novices develop an understanding of trading by learning about how stocks trade, what causes price fluctuations and reading stock tables, explains Investopedia. It is also important to understand how investors hedge with puts and calls during times of market volatility.
A put is an option contract in which the owner has the option of selling a certain amount of an asset at an agreed price within a set time frame, notes Investopedia. A call option is a similar contract in which the owner has the option of buying that asset.
Investors hedge with puts and calls versus both stocks and employee stock options, according to Investopedia. Hedging versus employee stock options is a better option, but requires greater expertise to pull off, according to Investopedia.