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About the Author
Dr
Wai Chen
Investment Analyst, Fiducian Account Based Pension
Wai-Yee Chen was a Research Analyst from 1996 and has been advising clients on their investment strategies and managing clients' portfolios since 1998. Wai-Yee provides advice on a large spectrum of investment products, namely direct equities, fixed interest securities, derivatives (including options trading and strategies) managed funds and personal risk management products, in addition to financial planning and investment advice for self-managed superannuation funds. Wai-Yee is a Certified Practising Accountant (CPA), holds a Masters in Applied Finance from Macquarie University, a Diploma in Financial Planning (DFP8) with the Financial Planning Association and is a Level 2 (highest) ASX Derivative Accredited Adviser. Wai-Yee regularly presents to clients, does market commentary for Sky Business News and Channel Seven and writes for industry publications.
Articles Published
Showing results 1 to 1 of 1
The strategic use of options in a portfolio
Many everyday investors do not use options as part of their investment strategy; it is viewed as either too risky or too complex. There are numerous advantages in using options strategically in a portfolio. Read moreMany everyday investors do not use options as part of their investment strategy; it is viewed as either too risky or too complex. There are numerous advantages in using options strategically in a portfolio. Mainly, they can be used to generate an income stream without having to assume higher risk than a typical share-only portfolio. The inherent obligations, risks and limitations of these option strategies are managed up-front, prior to the option contracts being entered into. The strategy discussed in this paper, the Options-Enhanced Portfolio Strategy, could be more widely used by everyday investors - it is a very powerful tool in generating income to enhance the return of share portfolio. Exchange traded options (options) were first listed by the Australian Stock Exchange (ASX) 30 years ago. There are now over 100 listed shares and three indices with options issued over them. Despite this, the use of options is still shunned by everyday investors as being highly risky. More often than not they are viewed as a tool for the professionals rather than what an everyday investor would use. Even when used, they are often used by traders as a tool to "punt" or trade for a small outlay. Options are certainly not often thought of as a tool to generate an income stream from a portfolio of shares.
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