Stock Options To Boost Returns

A Real-Life Example of Juicing Portfolio Returns for Low Risk

I know, I know - this week we were going to hit on the 2nd part of Controversial Finance Topics. But the Feb 21st option expiration date is due and this recent example is just too good to ignore.

This stack has covered options fairly extensively with primers on how to buy & sell both calls and puts (6 parter on Option Basics), how I use options in my portfolio, and even a prior example of the different option performance in my portfolio.

You don’t need to be this guy to get options

I think you can safely incorporate options in your portfolio and get some extra returns, lower the risk, and even decrease the amount of time you need to spend looking at and trading within your portfolio.

But it isn’t through option trading or some complex strategy of setting up multiple options at different strikes and maturities (which all happen to sound like dirty jokes we used to make in high school - Iron Condor, Batwing, Butterfly - 2 are multi-leg option set-ups and one is when you stretch you scrotum out flat).

No.

As laid out in other posts, there are a few basic things to do that make your options act just like limit orders - you set them and wait for the stock to trigger your buying or selling of the stock at the price you want.

But, the big benefit of using options instead of limit orders is you make money while you wait.

So for example, you want to buy a stock at $10. You can set a buy limit order for $10 and then wait. Or you use an option and get paid money (say $0.50 per share) while you wait. You can do the same for shares you want to sell at a particular price.

Same risk to your portfolio.

Almost same resulting purchase/sale.

But one way you make money while you wait.

It is a beautiful thing.

Here is the first post that lays out the whole strategy for you.

And this month, this strategy worked tremendously for a name in my portfolio which made it a great example to share to show the power of this strategy.

For the last ~30 days, using options instead of limit orders gave a ~7% return on this one name, or over a 100% annualized return on this particular piece of the portfolio.

Not bad.

So what is the name and the trades that lead to this nice result?