Options

Options are best used as a complement to a stock portfolio. In order to pair an equity and options strategy one must have a pretty thorough understanding of the equity and which type of options strategy aligns with your view of the security and what you want to do.

For instance, think FB is a good long term bet? You can sell a put option a little below the current price to possibly own additional shares at a cost basis equal to the option’s strike price minus the premium you received from selling the put.

Think you’d like to trim your MCD holding? Sell a call at the money or perhaps a bit above the current price and if MCD is at or above the strike price your shares will probably be called away and you will receive whatever the strike price was plus the call premium you already received.

I am a member of Pro and Options, and I find they do well together.

Bob

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