The Short Book on Options: A Conservative Strategy for the Buy-and-Hold Investor by Mark D Wolfinger

The Short Book on Options: A Conservative Strategy for the Buy-and-Hold Investor by Mark D Wolfinger

Author:Mark D Wolfinger [Wolfinger, Mark D]
Language: eng
Format: mobi
Publisher: Options for Rookies Books
Published: 2002-06-24T23:00:00+00:00


3) If your goal is to find an option that allows you to make a predetermined, specific percentage return from your investment (Table 8.4)

You can get that return from a high volatility stock by selling a call that is deeper in-the-money when compared with a stock with a lower volatility.

To get that same return from a lower volatility stock, you may have to sell a call that is not in-the-money.

The high volatility stock affords greater protection to the downside (because the option is deeper in-the-money). The lower volatility stock offers a different type of protection: it is less likely to make a big downside move. Choose an option with risk characteristics that make you comfortable (more on this topic in the next chapter).



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