Now to business; the art of making money. Frequently I speak of a stock that has "attractive options," or kiddingly, "voluptuous options". Since you can't see them you may believe that I am leading you on a financial Snipe hunt. Perhaps you expect me to show you how to trill your voice properly for the mating call. Such is not the case. To understand options better, call 1-800-952-8665, and order for free "The Options Tool." It's a dry but short video about options made for you. It's not as much fun as renting "Die Hard," but then, I never found any financial benefit from viewing gratuitous violence, either. I'll leave options teaching to the video, but explain the results of a "real life" options situation. The prices reflect those of the day this particular example was taken a few months back, and are the "real" net values to the investor. Say I was your broker (now say it again) and you bought Structural Dynamics (NASDAQ: SDRC) at $13.87 per share (it was my darling because of their fundamentals and they have attractive options). If you sold the July@$15 call options, you would receive .94 per share. Like I said, we are going to SELL the option and RECEIVE money; like buying a car and selling the spare tire. If the stock goes up and stays over $15 by July 21, you will have to sell your stock at $15, and thus receive $14.73 per share. If the price remains close to where it is, and there is no change in the fundamentals, you hold the stock. That's no big deal to a long term player who intended to hold it at least that long anyway. Here it is as a balance sheet:

Spending, per share
13.87 (stock "buy")
you sold) Total $13.87 (spent by you)

Receive, per share
.94 (premium from option)
14.73 (stock "sell")
Total $15.67 (received by you)

If this stock goes above $15, you will net about 13% on your investment in roughly five weeks. If it doesn't, you have received the equivalent of 6.8% of the value of your investment. Either way, it crushes CD rates. So you ask, Is the hand really quicker than the eye?

This is not sleight of hand, anamolies like this occur daily, and options are not the exclusive domain of the foolhardy. Consider that for every gambler, there is a vig. It's all a matter of which side of the equation you are on: as the gambler who bets, or the house who takes in his money. Most people dismiss this as financial alchemy. So, let me draw an analogy: When manned flight was first developed, it was widely believed its only use would be to speed up mail delivery. But, it has since been adapted for passenger travel, space exploration, crop dusting, and yes, mail delivery. Options are not new, and for anyone to pass it off as voodoo economics means he may be leaving a lot of money on the table.

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