Blogs

Options Trading: The Synthetic Short Sale

Shorting stock is a high-risk strategy that most traders avoid. It requires borrowing stock from your brokerage firm, selling it, and hoping the price falls. You have to maintain margin and pay interest on the borrowed stock; and if the stock price rises, margin requirements grow and you could end up losing. You can duplicate the potential profits without all of that risk, by creating a synthetic short sale with options.

By Michael C. Thomsett - February 2, 2012

Options trading: Three Options-based Tax Planning Ideas for Carryover Losses

Many investors and traders find themselves with huge carryover capital losses. Under current rules, you can deduct only $3,000 maximum per year, meaning that the excess could last for many years into the future. However, this situation presents opportunities involving options. Three goods ideas are among these opportunities.

By Michael C. Thomsett - January 26, 2012

Options trading: The Protected Covered Call Ratio

The ratio write consists of writing a combination of covered and uncovered calls. The uncovered portion is at risk, but the strategy is not as high-risk as just writing uncovered calls. The combination of time decay and implied volatility makes a well-timed ratio write a safe strategy, assuming all of the right elements are in place. For those seeking more protection than what is provided by time decay, you can protected the uncovered portion with a higher-strike long call.

By Michael C. Thomsett - January 19, 2012