Consider Options

Options are typically seen as complex and risky.  They may be complex, but they need not be risky.  In fact, options are a great tool for making the risk/return menu more complete.  In that regard, I think they deserve a close look now.  The reason is that given the immense run-up in the market since the financial crisis many investors (including me) have large unrealized capital gains.  To the extent that those investors feel that at current levels stocks prices are rich (as I do), it is worth considering selling further upside appreciation for current cash.  Options are a perfect tool for doing that.  Therefore, if you are unfamiliar with options, or how they can be used, now is a good time to do some homework.

 

VIX Options



About the Author

Prof. Bradford Cornell, Cornell Capital Group
Bradford Cornell is an emeritus Professor of Financial Economics at the Anderson School of Management at UCLA. Prof. Cornell has taught courses on Applied Corporate Finance, Investment Banking, and Corporate Valuation. He is currently developing a new course on Climate Change, Energy and Finance. Professor Cornell has published more than 125 articles and four books on a wide variety of topics in applied finance. Professor Cornell is also a managing director at BRG where he heads the practice on Climate Change, Energy and Finance. In addition, he is a senior advisor to the Cornell Capital Group and to Rayliant Global Advisors. In both capacities, he provides advice on fundamental investment valuation.