I was suggesting an investor could use call-options and put-options to hedge against up or down price movement from the IPO price.
Options are derivatives which gives the owner the right, but not the obligation, to sell or buy a stock. If an investor holds both, in equal (or sometimes unequal amounts), they can (usually) make money from price movement upwards or downwards.
If I was going to buy the stock on opening day or buy options, I might wait until closer to the offer day, or before opening bell, and look at the long-short spread (how many shares are being bid and offered and at what price). This can give a good indication if the price will rise or fall on opening day.
Options are derivatives which gives the owner the right, but not the obligation, to sell or buy a stock. If an investor holds both, in equal (or sometimes unequal amounts), they can (usually) make money from price movement upwards or downwards.
If I was going to buy the stock on opening day or buy options, I might wait until closer to the offer day, or before opening bell, and look at the long-short spread (how many shares are being bid and offered and at what price). This can give a good indication if the price will rise or fall on opening day.
For further reading: http://en.wikipedia.org/wiki/Derivative_(finance)