Stockbrokers and financial advisers make their living off your assets.
Stockbrokers are continuously looking at the accounts they 'manage' for ways to create commission, they of course, would like to make you money as well but that is not #1.
Enter stock options, this is the stockbrokers commission gift that keeps on giving.
Options are a contract that allow you buy or sell a particular stock in the future at a particular price. You can speculate with options (without owning the underlying stock) or you can take the other side of the trade by 'writing options' (when you own the underlying stock).
Statistics show that speculating with options is a fools game with very few participants making money.
Buying the stock and selling the call option strategy is supposed to create income with little risk and it does that but it does even more - for your financial guy!
What it also does and your stockbroker won't tell you is create a nice stream of income for the stockbroker, he makes commission when you buy the stock, sell the call and sell the stock (or write another option).
As always, be careful of your financial guys intentions. Ask yourself, should I invest in stock options? If he asks you to start 'investing' with options, watch out!
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