Anyone who has been following this Sunday column with any frequency over the last few months will realize that I’m not a trader. Not that I have anything against people who want to sit and flip stocks and ETFs all day—but I’d rather invest in good, quality companies trading for cheap valuations and collect my dividends. Moreover, if I’m not doing that, I’m indexing, which is why I take options and the strategies surrounding them with a grain of salt.
With names like “Condors”, “Iron Butterflies” and “Christmas Trees”, it’s a confusing and complicated world that most of us (including myself) should have no place playing in. If you think you can execute a “Tarzan Loves Jane”—which involves selling two of the 30-day strike puts and two of the 30-day strike calls on a stock while also buying 3 of the 6-month puts and 3 of the 6-month calls—knock yourself out.
But, with the Fed starting raise rates, options could be an income-seekers best friend. No “Combo-Mambos” required.