Trading options is often the poster-child for what is thought to be risky investing. And many of the strategies that use options are, in fact, very speculative and will add to risk. However, the truth is:
Option strategies can be a very useful and effective tool for long-term investors.
So why are options NOT more popular with advisors?
Lack of options knowledge among advisors
Very time-intensive to implement
Difficult to deploy over a large number of accounts that are customized
How does NCM use options?
To increase portfolio income- a dividend stock and covered call strategy provides a very competitive income stream. With today’s low interest rates, this is very attractive to retirees.
To protect portfolio gains
We implement these strategies through individual options, ETF's, or mutual funds.
Want to increase portfolio Income? Sell CALL options!
We are able to choose the DURATION and PRICE of the call options we sell
The option premium that is collected= INCOME to the portfolio
When done on a consistent basis, selling call options not only provides additional cash-flow to the portfolio (INCOME!), but will also enhance TOTAL RETURNS over time
Want to protect gains? Buy PUT options!
Buying put options is a pro-active way to limit losses and protect gains
Can be done to protect individual positions (through single stock options) or entire portfolios (through index options)
May be inexpensive “insurance” to help hedge portfolios
At NCM, ……we customize portfolios and use options to help conservative investors increase the amount of income generated from their portfolios, as well as help them protect gains---without having to incur capital gains by liquidating positions that are generating dividends and may not want to be sold.