Many fear the market will correct in the next year or so. But many are scared to go to cash and miss out on another bump up. How to hedge?
I think a good idea is buy some quality stocks and immediately sell at the money calls that expire in about 10 months. For example you can buy AAPL for $144 and then sell a call Jan18 call option with a $145 strike for $10.80.
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If the stock market crashes you would have bought AAPL at a discount of $10.80 or about $134. That's a pretty nice safety net.
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If the market stays flat or slightly dips and AAPL does the same you keep the $10.80, some dividends and still hold the stock.
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If the market goes up, you collect dividends and premium. You will make close to 10% annualized return. That's much nicer than cash, CD, or bonds. Plus you got nice protection.
If you want more risk and bigger returns just sell options out of the money like $155 Jan18 for $6.60.
Submitted March 29, 2017 at 02:51PM by kdcurry http://ift.tt/2ohU46K
