Have you ever wondered whether you should learn more about trading options? I was discussing this with a friend recently who gave me this perspective. I thought it was a really interesting way to think about it.

"One nice thing that you can do with options is that you can rent your assets (cash or stock) to capture a premium. The option's strike price can easily be tied to the buy and sell targets you set when you did your fundamental analysis. For example, you can capture a premium while you wait for the price to drop to your lower-priced target, the option's strike price. This is essentially like renting your cash out until the option's expiration date and capturing a premium while you wait to buy that particular stock at a lower price. The transaction is called a cash-secured PUT. In some ways it is like a limit order, but with a nice bonus of having cash show up in your account while you wait for the price to come to you. Likewise, you can capture a premium if the stock climbs to your sell price -- it is similar to thinking about it like renting out your stock until the expiration date to capture a premium (rent) while you wait to sell it at your target price. These transactions are called covered calls."

If you are interested in learning more, InvestEd Inc., a non profit organization dedicated to investor education, is sponsoring a free webinar this coming Sunday Evening that you are invited to attend. Paul Madison, whom I'm told by a number of people is a fabulous instructor, will be the presenter.

InvestEd Inc. Free Webinar

Covered Options: A Tool for the Fundamental Investor

Sunday, September 25, 2011

9 PM-10:30 PM ET / 6 PM-7:30 PM PT

Instructor: Paul Madison

This webinar will demonstrate how covered calls and cash-secured puts can augment a fundamental investor's toolbox. More information is available on the webinar registration page. Register today! Space is limited.

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Laurie Frederiksen
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