Mutual Fund Alternatives
Let us turn to a consideration of mutual fund alternatives in light of the benefits of the conservative options selling techniques championed throughout this website. Mutual funds have become a very popular investment product over the last few decades. In fact, they form the mainstay of many people's retirement plans, especially given the burgeoning use of 401k and IRA plans. The big mutual fund houses promote these products with great zeal and provide quite a bit of useful information for their clients to consider. These products may indeed be a good part of many investors retirement and wealth building plans. The benefits are numerous including diversification, low cost, and convenience. Sample portfoios are offered by most large fund companies and even "fund of funds" are available. However, a huge drawback is that traditional open-ended mutual funds do not have listed options. Therefore, many of the benefits one can achieve through cash-secured put selling, covered call writing, and using options collars to protect gains are not directly available to mutual fund investors. Perhaps it is a good time to rethink your long-term portfolio. A basket of high-quality, dividend-paying stocks, a sprinkling of optionable REITs and selected ETFs, all acquired via put selling and against which you write covered calls, may make a lot more sense than simply holding a stock and bond fund or two. If any of your holdings rise substantially in price, consider insuring your paper profits by purchasing protective puts. Be active in the management of your wealth as you weigh the advantages and disadvantages of mutual funds.
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