How to Use Options Strategies Designed to Generate Income

Transcription

1 How to Use Options Strategies Designed to Generate Income TD Ameritrade, Inc., member FINRA/SIPC. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank TD Ameritrade IP Company, Inc. All rights reserved. Used with permission

2 Important Information Options are not suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses. Prior to trading options, you should carefully read the previously provided copy of Characteristics and Risks of Standardized Options. Options trading privileges subject to TD Ameritrade review and approval. Market volatility, volume and system availability may delay account access and trade executions. Spreads, Straddles, and other multiple-leg option strategies can entail substantial transaction costs, including multiple commissions, which may impact any potential return. Advanced option strategies often involve greater and more complex risk than single-leg options trades. Investors should also consider contacting a tax adviser regarding the tax treatment applicable to spreads and other multiple-leg options transactions. Naked option strategies involve the highest amount of risk and are only appropriate for traders with the highest risk tolerance. The cash secured put strategy risks purchasing the corresponding stock at the strike price when the market price of the stock will likely be lower. Supporting documentation for any claims, comparison, statistics, or other technical data will be supplied upon request. In order to demonstrate the functionality of the platform, we need to use actual symbols. However, TD Ameritrade does not make recommendations or determine the suitability of any security, strategy or course of action for you through your use of our trading tools. Any investment decision you make in your self-directed account is solely your responsibility. 7/9/2015 2

3 Important Information A covered call strategy can limit the upside potential of the underlying stock position, as the stock would likely be called away in the event of substantial stock price increase. Additionally, any downside protection provided to the related stock position is limited to the premium received. (Short options can be assigned at any time up to expiration regardless of the in-the-money amount.) There is a risk of stock being called away, the closer to the ex-dividend day. If this happens prior to the ex dividend date, eligibility for the dividend is lost. Income generated is at risk should the position moves against the investor, if the investor later buys the call back at a higher price. The investor can also lose the stock position if assigned. Access to real-time market data is conditioned on acceptance of the exchange agreements. Professional access differs and subscription fees may apply. Past performance of any security or strategy does not guarantee future results or success. Backtesting is the evaluation of a particular trading strategy using historical data. Results presented are hypothetical, they did not actually occur and they may not take into consideration all transaction fees or taxes you would incur in an actual transaction. Margin trading increases risk of loss and includes the possibility of a forced sale if account equity drops below required levels. Margin is not available in all account types. Margin trading privileges subject to TD Ameritrade review and approval. Carefully review the Margin Handbook and Margin Disclosure Document for more details. Please see our website or contact TD Ameritrade at for copies. 7/9/2015 3

4 Speaker MARCH 25, 2015 Tom White Director and Chief Strategist, RED Option Advisors Traded as Market Maker at CBOE for 15 years Regularly appears on CBOE TV, BNN, and First Business giving insights and commentary on financial markets and strategies Over 20 years of experience in the options industry RED Option Advisors, Inc. and TD Ameritrade, Inc. are separate but affiliated firms. Advisory services are provided exclusively by RED Option Advisors, Inc. and brokerage services are provided exclusively by TD Ameritrade, Inc.

5 How to Use Options Strategies Designed to Generate Income Covered Calls and Cash-Secured Puts Chief Strategist: Tom White 7/9/2015 5

6 RED Option: Path to Learning Providing a Dynamic Package Supporting Organic Growth Education Strategy Experience Service Key Activities: Initiation, Management, and Closing of Risk- Defined Options Trades Detailed Research and Guidance Probability Analysis Portfolio Management Skills Risk-Management Techniques Risk-Defined Trading Strategies Conservative Options Advisory Client Controlled Subscription Service Useful for all Investors Support from Veteran Traders and Consultants Strategy Guidance for Trade Initiation and Management Invaluable Options Trading Experience Simplification of Trading and Processes Fully Engaged Client Support Technical Know-How Trading Experience Strategy Consulting Client Loyalty Thursday, July 09,

7 @redoption **Free Trial Available** 2 Strategies for 2 Months free. Contact us for details: support@redoption.com Call: Thank you! TD Ameritrade, Inc., member FINRA/SIPC, is a subsidiary of TD Ameritrade Holding Corporation. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto- Dominion Bank TD Ameritrade IP Company, Inc. All rights reserved. Used with permission.

8 Important Information Options are not suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses. Prior to trading options, you should carefully read the previously provided copy of Characteristics and Risks of Standardized Options. Options trading privileges subject to TD Ameritrade review and approval. Market volatility, volume and system availability may delay account access and trade executions. Spreads, Straddles, and other multiple-leg option strategies can entail substantial transaction costs, including multiple commissions, which may impact any potential return. Advanced option strategies often involve greater and more complex risk than single-leg options trades. Investors should also consider contacting a tax adviser regarding the tax treatment applicable to spreads and other multiple-leg options transactions. Naked option strategies involve the highest amount of risk and are only appropriate for traders with the highest risk tolerance. The cash secured put strategy risks purchasing the corresponding stock at the strike price when the market price of the stock will likely be lower. Supporting documentation for any claims, comparison, statistics, or other technical data will be supplied upon request. In order to demonstrate the functionality of the platform, we need to use actual symbols. However, TD Ameritrade does not make recommendations or determine the suitability of any security, strategy or course of action for you through your use of our trading tools. Any investment decision you make in your self-directed account is solely your responsibility. 7/9/2015 8

9 Important Information A covered call strategy can limit the upside potential of the underlying stock position, as the stock would likely be called away in the event of substantial stock price increase. Additionally, any downside protection provided to the related stock position is limited to the premium received. (Short options can be assigned at any time up to expiration regardless of the in-the-money amount.) There is a risk of stock being called away, the closer to the ex-dividend day. If this happens prior to the ex dividend date, eligibility for the dividend is lost. Income generated is at risk should the position moves against the investor, if the investor later buys the call back at a higher price. The investor can also lose the stock position if assigned. Access to real-time market data is conditioned on acceptance of the exchange agreements. Professional access differs and subscription fees may apply. Past performance of any security or strategy does not guarantee future results or success. Backtesting is the evaluation of a particular trading strategy using historical data. Results presented are hypothetical, they did not actually occur and they may not take into consideration all transaction fees or taxes you would incur in an actual transaction. Margin trading increases risk of loss and includes the possibility of a forced sale if account equity drops below required levels. Margin is not available in all account types. Margin trading privileges subject to TD Ameritrade review and approval. Carefully review the Margin Handbook and Margin Disclosure Document for more details. Please see our website or contact TD Ameritrade at for copies. 7/9/2015 9

10 How to Use Options Strategies Designed to Generate Income Up next: Trading Calls and Puts with Precision TD Ameritrade, Inc., member FINRA/SIPC. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank TD Ameritrade IP Company, Inc. All rights reserved. Used with permission