Options are one of several tools you can use to (a) optimize profits and (b) minimize and hedge risks in your portfolio. But you need to know specifically which options strategies are going to achieve this desirable two-part goal. Covered calls The covered call is a popular and widely understood strategy. You own 100 shares… [READ MORE]

On the surface, it seems obvious that chasing big dividends is smart trading. But in practice, a double-digit dividend stock may also be a red flag. Because dividend yield is based on the dividend per share and current price per share, if the price plummets, the yield goes up. A high dividend could result from… [READ MORE]

Covered calls work well, assuming the right strike is selected. It is not enough to pick a strike just because the premium is rich; that can be an expensive mistake. What strike proximity works best for covered call writing? The answer depends on several mitigating factors: What is your basis in the underlying? If your… [READ MORE]

You probably have heard that you cannot cover short options, but must roll forward, close, or allow exercise. But there is another choice. One way to cover a short position is to own 100 shares of the underlying stock. Another, more creative way is to sell a shorter-term expiration position and buy a longer-term position… [READ MORE]