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| Options: A Foolish Introduction | |||
| The Basics of Options Trading |
Options
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| Option Strategies: | |||
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Options Updates /Comments
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CONSIDER THESE HYPOTHETICAL EXAMPLES |
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Make no mistake: Gains from prudent option use can be
both varied and spectacular. Own shares of
Wal-Mart (NYSE:
WMT), which has gone nowhere for years? Why not regularly
write
call options against your shares to produce an income stream?
(Mystified by the terminology? Keep reading. We'll clear things up in
subsequent articles.)
Concerned that Research In Motion (Nasdaq: RIMM) may continue falling, given the news that the SEC has expanded its investigation into the company's past stock-option-granting practices? You might consider buying a put option, which could protect your current profits if the stock subsequently tanks. Believe that Microsoft (Nasdaq: MSFT) is mind-numbingly cheap in the face of pending Vista-related upgrades? Instead of buying shares, you could magnify your gains by buying calls. Heck, you could leverage those potential gains even further by combining several option positions at no cost to you -- leaving you 'exposed' to receiving all potential gains. Before you get too excited, remember that you might be on the hook for potential losses, too; there's no free lunch. |
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