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Strategies & Market Trends : Dividend investing for retirement -- Ignore unavailable to you. Want to Upgrade?

To: chowder who wrote (3747)	2/11/2010 4:17:31 PM
From: upanddown	Read Replies (3) \| Respond to of 34328

Wouldn't the strategy you are employing with KO be better in a situation where you already owned KO and were wanting to add to the position? Dabum, that depends on your short-term outlook for KO. If you see significant capital appreciation coming soon, then sure, just go long. Chris is hedging here. His .43 premium covers the next div and if he doesn't get it in Mar, there is Apr and May before the next div. With options, there is always another month. Let's say you liked KO a month ago at 57. If you went long then, you would be down 5%. If you had instead sold Feb 55 puts, you might have collected around a buck and you would have a very good chance of being assigned next week at a net cost of 54. I'm a dividend player like you and I really do believe options have a place in income investing for both enhancing return and reducing risk. Options can be intimidating. It took me years to be comfortable with them. From your previous stuff, I can see that you are a very analytical guy. You might want to consider getting something like McMillan's "Options as a Strategic Investment". Options give you options. John