September 26, 2013

Advisors Option: Stock Repair

55 minutes

Options 101: The Stock Repair Strategy

Have a downturn in your account? Options can help make that money back. Stock repair strategies are a popular way for many advisors to regain some or all of the losses in a clients' portfolio. When should you use a stock repair strategy? How does it differ from just holding the stock? You can trade calls on a ratio for additional income, etc.

The Buzz: Clients are ready to listen to advisers on alternative investments: Natixis survey finds mass majority open to adviser recommendations, up dramatically from past two years - http://www.investmentnews.com/article/20130917/FREE/130919907#

Mail Bag: In which we tell it like it is

Question from Gabe Shahir. The majority of my clients have large concentrations of assets in 401K plans. These plans are usually very limited from an asset selection perspective (very broad mutual funds, large cap, small cap, etc). With such a prolonged rally in the stock market many of my clients are looking for ways to protect the gains in their 401Ks. Short of divesting the positions and going into cash, the typical 401K does not offer much in the way of hedging opportunities. How can I use options to protect my clients?

Question from Alex Tophas. I often utilize leveraged short S&P ETFs to hedge my equity accounts. Is this a preferable options to buying puts - pun intended - for most advisors, since they do not need to master a new asset class to protect their clients?

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