Calls and Puts for Income Message Board

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Strategies & Market Trends : Calls and Puts for Income

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To: Jerome who wrote (3126)	10/12/2008 11:15:22 AM
From: Gottfried	Read Replies (1) of 5891

Even Volatility Gets Volatile [free from Barron's] online.barrons.com excerpt Some patient investors increasingly view expensive options as an opportunity to lower the cost of buying quality stocks. Rather than buy all the stock at once, these investors buy half as many shares as they want to own, and sell a corresponding number of puts. Instead of buying 1,000 shares of Apple, five Apple puts are sold, and 500 shares bought. If the stock declines below the put's strike price, the stock must be bought, though the price is reduced by the amount of money received for selling the five puts. This strategy lets investors potentially buy stocks for less.

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