Chimera: Protecting a High Yield Stock From Market Risk Using Options

A number of investors are looking for income through high yield with relative market risk safety. That is often a difficult combination to achieve. Companies that qualify as real estate investment trusts (REITs) are good income producers, but they are not immune from market and / or interest rate risk. The use of options to assist us as a tool in the decision to invest is akin to the use of a hammer and nails in constructing a structure. Often for us, the ability to apply option trading techniques is the difference between a viable and non-viable trade or investment. It is almost always a key component of our strategy to control risk in any trade, because controlling risk is the cornerstone of successful investing. Chimera Investment Corporation is one REIT which pays a quarterly dividend that annually yields 16%. Its business is described on its website as follows: Chimera... Read more

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