Retail Investor Toolbox: Mini-Options for Apple Inc. (AAPL), Google Inc (GOOG), & Amazon.com, Inc. (AMZN)

Page 2 of 2

Amazon.com, Inc. (NASDAQ:AMZN)

Amazon.com, Inc. (NASDAQ:AMZN) is a dominant retail monster, the go-to site for online shopping. They are aggressively pursuing other big mediums in cloud computing, music, and publishing, as well such as online content in videos, movies, and TV shows.  Even with the pursuit of market share over profits, Amazon is a long term buy as they continue to be a dominant internet company.
The other 2 stocks that will have mini-options available are the SPDR Gold Trust ETF (NYSEARCA:GLD) and the SPDR S&P 500 ETF (NYSEARCA:SPY).

Mini-Options strategies for the retail investor

If used safely and efficiently, options can provide a profitable enhancement to a retail investor’s portfolio. Here are some basic options strategies for retail investors:

Earn some cash, do some covered mini-calls: A common options strategy for retail investors is to sell out of the money calls to earn some income against the shares that you own.  The investor selling the calls would collect a premium for the calls.  If the stock trades below the call strike price at expiration, the investor would keep the premium.  Otherwise, if the stock closes above the call strike price at expiration, the stock shares would be called away, and the investor still keeps the premium collected.   For example, if a retail investor owns 30 shares of Google Inc (NASDAQ:GOOG), he or she can sell 3 out of the money mini-calls against those 30 shares.

Get Shares on Sale, Sell Mini-Puts: I like to sell out of the money puts as a way of legging into a stock position at a “sale” price.  If the put that I sold is assigned at expiration, I will own those shares at a lower price than just buying the shares outright.  If the stock trades above the put strike price, then I will keep the premium collected.  For example, if Amazon.com, Inc. (NASDAQ:AMZN) is trading at $260, I could sell the 250 mini-put strike at my desired time frame.  If assigned, I would receive 10 shares of Amazon.com, Inc. (NASDAQ:AMZN) at $250.

Other common option strategies are the Married Put (combines stock shares & buying puts), and the Collar strategy (combines stock, buying puts, and selling calls).

Conclusion

Mini-options are products with promising upside for retail investors.  Mini-options will give retail investors and retail option traders a chance to be more active and participate in Apple Inc. (NASDAQ:AAPL), Google Inc (NASDAQ:GOOG) and Amazon.com, Inc. (NASDAQ:AMZN) with the smaller risk size and margin commitment.

The article Retail Investor Toolbox: Mini-Options for Apple, Google, & Amazon originally appeared on Fool.com and is written by Sergio Balatan.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Page 2 of 2