Options 101: The Stock Replacement Strategy
Using options in lieu of stock.What is stock replacement? What are the advantages of stock replacement over just owning stock?What are some scenarios where you might want to consider a stock replacement strategy?Jazz up your covered call by using a stock replacement to save money and improve returns.Listener Mail: What do you want to know?
Question from Sal S, Fort Worth, TX - Most of the firms where I house my client account are pretty worthless when it comes to options. Rather than go through the hassle and paperwork of buying a put, what do you think about using an ETF like VXX to generate a volatility hedge for my portfolio?Question from Avantage - Do I need to fully understand the Black-Scholes formula to trade options?Question from Nick Thomas - How long do I have after the close of trading on expiration Friday to decide whether to exercise my clients call options? Also, do you have any good rules of thumb when deciding whether or not to exercise?