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Stock Options as a back up for employer paid Mutual Fund?


My employer offers company paid 401(K) plans throgh various Mutual Funds. Can stock options, that i buy on my own, be used to augment your investment in the shares of a fund. The employer is at least paying for the fund -by adding some risk to the 401(k) or any mutual fund would'nt that make it profitable?

Speculation is not the goal or tax-sheltered retirement plans.

It's possible, but it's probably not a good idea. Most people who speculate in options lose money; options 'rot' over time, and most expire worthless. You would be better served by investing in funds or stocks which diversify your holdings (rather than concentrate them); have a look at exchange-traded funds.

The only practical way I can think of is to find an index that general tracks your mutual fund (look for its primary benchmark) and look for a put option that goes off of this benchmark. Buy options for close to the amount you want to protect. In order for this to be worth the commission, you may need to have substantial assets to justify the option purchase.

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