Review by CPA Australia
By Derek Parker
After the global financial meltdown, derivatives have a bad name, but Chen, a CPA and financial planner, believes they should be seen as a crucial aspect of an investment portfolio. Her emphasis in on the practical, although she admits that the effective use of options involves a good understanding of the underpinning mathematics and theory.
Chen uses four hypothetical investors with different strategies to show how options can be used in conjunction with equity investments to enhance both safety and returns. Much of the risk associated with options trading, she believes, comes from trying to use them as a get-rich-quick vehicle, but for average investors a better strategy is to utilise them for long-term portfolio building and management.
Link to the September 2010 issue on IntheBlack is below