Covered Calls and Cash Secured Puts (Part 6)

In my last post, I discussed some reasons why more investors don’t use CC/CSPs. While my citations are decisively in favor of options, is it possible that options are too risky and should be avoided?

Ultimately my answer is no because options are less risky than stock.

However, because I’m a hard sell I am going to discuss one point that takes issue with most of the references in my last post:  conflict of interest.

The author of the first article admits one reason he writes the option trading blog is to make money:

> It would be hypocritical if I say I am doing all this blogging
> just to tell the world “hey here is another sucker who is
> trying to invest his cash”. I must admit, that I am doing all
> this to create another stream of income.

Of course he wants to be pro-option trading since his option trading blog caters to option traders and their page views provide his stream of income.

The author of the second article writes books on stock and option trading.  Of course he wants to be pro-option trading because this positivity translates to interest among his readers.  Some of this interest and willingness to learn or develop trading strategy will likely translate into buying his books.

With regard to the third article, do you see any potential conflict of interest?

> Well, here at OptionsZone, we have our own set of MythBusters.
> Our team of experts is comprised of CEOs from the top options
> trading firms. Industry luminaries such as Tom Sosnoff of
> thinkorswim, George Ruhana of OptionsHouse,
> Wade Cooperman of tradeMONSTER, Don Montanaro
> of TradeKing and Stephen Ehrlich of Lightspeed,

The OptionsZone website caters to option traders and the same conflict of interest I described regarding the first article, above, applies here.  In addition, the “team of experts” are all brokerage CEOs.  They want everyone to be so excited and passionate about option trading that everyone goes out and trades options!  The more options traded, the more likely their brokerage firms are to make more money.

I will continue this discussion with my next post.