REITS AND REAL ESTATE INVESTMENT TRUSTS
These trusts are set up as corporate entities, have readily transferrable shares and are traded just like stocks on the major exchanges (although some privately held trusts exist and are not discussed here). This makes for ease of liquidity, unlike direct property ownership. In addition, Many ETFs can be found in the real estate space. Real estate investment trusts come in many varieties. They can be broadly diversified across many real estate types or they can specialize within specific subgroups. Specialty trusts can include Retail Centers, Offices, Commercial Mortgage, Apartments, Industrial Buildings and Facilities, Hotels and Health Care Facilities. By law, these entities are required to distribute 90% of their income to shareholders. Many pay generous dividends, mostly on a quarterly basis. For that reason, they are often prized among income investors, who own them to compliment their bond and other fixed-income holdings. Can we use real estate as part of a safe-option-trading program? The answer is a resounding YES! Many real estate investment trusts have listed options. Hence, covered calls can be written against them and they can be acquired via cash-secured puts. Since they tend to pay generous dividends, the addition of periodic option premium can make these investments particularly high-yielding. There are hundreds of REITs and associated ETFs available. Some are thinly traded and many do not have listed options. Several of the more popular issues that also have listed options are: Realty Income Corporation (O), Public Storage (PSA), Health Care REIT, Inc. (HCN) and Federal Realty Investment Trust (FRT). These are just a few to get your research started. Keep in mind that the options on these issues can be thinly traded, so when establishing an option position be sure to use limit orders rather than market orders.
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