Stock Options Weekly Column
by Mark D. Wolfinger
Column 1
Stock Options: Why Should You Care?
March 20, 2002
This is the first in a series of articles about stock options. Perhaps you have heard something about stock options. I’m sure that some of you are fairly knowledgeable in this area, while others know virtually nothing about them.
we are writing this series to introduce the topic to those investors who are unfamiliar with stock options. As we make progress over the coming weeks, the articles will become more and more meaty. I’m sure that there will be some nuggets of useful information for even the most experienced trader of stock options.
Let me introduce myself . We spent 24 years at the Chicago Board Options Exchange (CBOE). We spent most of our years as a market maker on the trading floor. We also helped new traders learn the business and worked with other traders to help them manage their risk.
From our vantage point as a trader, we watched the CBOE grow from a tiny exchange to one of the most important trading floors in the world. We were able to see public customers, as well as professional traders, using a variety of investment strategies with options. Some strategies were very sophisticated; some were not. Some were very profitable; alas, some were not.
Today, many professional traders, mutual funds, hedge funds, and private investors use stock options. There are still vast numbers of investors who are not familiar with these investment tools. These investors do not (yet) know that options can be used conservatively to make their stock holdings safer. The main purpose of this series of columns is to introduce those investors to the wonderful opportunities available from the use of options.
Options are very versatile investment instruments and can be used both in speculative and conservative strategies. This series will include articles describing a variety of strategies using stock options. Our personal belief is that the conservative uses are so powerful and allow the investor’s stock portfolio to grow comfortably over time, there is no need for him/her to speculate with options. However, since this series is intended to educate, many different strategies will be discussed in future articles.
To answer the question raised in the title of this article, you should care because a useful tool is available to you. This tool can take some worry out of your stock market investments. This tool can be used to help you to earn additional money from those investments. This tool is available to you and is easy to learn to use. The goal of this series is to teach you how to make the most of the opportunities available in the world of stock options.
See you again next week.
To learn about our book, click here .
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