Portfolio Strategies

Hedging Techniques of the Pros

• How to safely protect your portfolio
• Generate monthly income from stocks you already own
• Earn income on stocks you don't even own
• Get paid to buy a stock
• Methods to hedge your portfolio

There are two types of options: calls and puts. A call gives the holder of the options contract the right, but not the obligation to buy the underlying stock. Conversely, a put gives the holder the right but not the obligation to sell the underlying Stock. The price at which the underlying stock may be bought or sold is the exercise price, also called the strike price. An options contract affords the right to buy or sell for only a limited period of time; each options contract has an expiration date. On the opposite side, a seller, or writer of an options contract incurs an obligation to perform, should an options contract be exercised by the purchaser. The writer of a call incurs an obligation to sell a stock and the writer of a put has an obligation to buy a stock.		OPTIONS RIGHTS AND OBLIGATIONS
		CALL
		Buyer	Seller
		Has the right to buy a stock at a predetermined price on or before a defined date.	Grants right to buyer, so has obligation to sell stock at a predetermined price at buyer's sole option
		Expectation: Rising prices	Expectation: Neutral or falling prices.
		PUT
		Buyer	Seller
		Has the right to sell stock at a predetermined price on or before a defined date.	Grants right to buyer, so has obligation to buy stock at a predetermined price at buyer's discretion.
		Expectation: Falling prices.	Expectation: Neutral or rising prices.

Here are some of the specific benefits you can receive with every option trade:

• You can reap returns of 100 percent to 500 percent per trade.

• You can have half as much money at risk when compared to trading stocks.

• You can gain greater leverage than is possible when buying stocks outright.

• You can participate in all the same movement as the stock or commodity.

• You can have a high probability of profit.

• You don’t always need to pick the correct direction of the stock or commodity to be profitable. (This is a huge one!)