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Jay Pestrichelli Discusses Common Myths Around Options Plus How to Hedge Large Low-Cost Basis Stock Positions

By Jillian Baker

You can click on the player below to listen to the entire episode.

In this week’s edition Jay discusses what some of the common myths around options are including:

  • No one ever makes money on options
  • Options are only for short term traders
  • Options are only used to speculate
  • And more

Plus, Jay discusses what for many advisors is an issue when trying to help clients. The dreaded low cost-basis concentrated position. Many people might have worked at a company and acquired quite a bit of shares. They may understand the risk having so much invested in one company. Yet because of their reticence to sell causing large capital gains, their single stock risk remains high.

Jay goes into how options are flexible in allowing us to hedge or even potentially generate income from large concentrated positions. Plus how monetizing hedges naturally allows clients to use hedging profits to diversify into other more broad based index exposure.

Later in the episode the topic around using option spreads to capture dividends and finally are coconuts more dangerous than sharks? You’ll have to listen to the episode to find out what that was all about.