Motley Fool Staff November 22, Are you looking to generate income from your investments? Open you eyes to investing in U. Do options scare you? They scare a lot of folks. Enter your email below for FREE access to this article and all the content on the site.

Covered Call | Options Trading at optionsXpress Australia

Also receive Take Stock, The Motley Fool's unique daily email on what's really happening with the share market. You may unsubscribe any time.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about other products and services we think might interest you. Please read our Financial Services Guide FSG for more information. With a little knowledge and care, options can be very useful tools — even for conservative investors. Here in Australia, the options market is quite small and quite illiquid.

The exact opposite is true in the U. The options market is massive, and growing quickly.

optionsXpress Australia | Covered Calls, Protective Puts & Collars

Courtesy of cheap online brokers like OptionsXpress and Interactive Brokers, Australian investors can quickly, easily and cheaply trade U. Most investors will deal with standardised, exchange-traded options on stocks or indexes, which come in two basic flavors: The options you buy or sell are good for a set time period, after which they simply expire if unused.

Those are the basics. But if you think about it for a minute, you can see a whole range of possibilities. At the simplest level, options are a low-cost way to take a position if you think a big move is coming.

Buying puts on Bank of America NYSE: BAC or other banks lets you take that position with no more at risk than the cost of the options.

Buying calls lets you get some of that upside without a huge up-front cash commitment. An options strategy for the rest of us, right now We all know that a stock that pays a good solid dividend through good times and bad is a great thing to have. PEP are the cornerstones of many portfolios. This is a simple strategy that any investor can use. This can be a stock that you already own, or you can buy one.

But think of it this way: This article was originally written by John Rosevear and published on Fool. It has been updated.

Covered Call | Options Trading at optionsXpress Australia

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