[quote user=Darr]I`m really not comfortable with options and risk.
Options can be used to reduce risk !
Any investment or life decision has risk. Even sitting in your chair and reading this post has risk: the house might collapse, the chair you sit on might give, there may be an earthquake or the screen might shatter. The only question is: how likely is this risk, and what do I do about it !
Here is what I know: January 2013 or Jan 2014 is later than today, September 2012. I also know that people need stuff: food, oil, gas, pipelines, PCs, shoes, database software, housing, commercial office space, mortgages ... I can make money with that knowledge. What I do not know is what real estate or Facebook or Google or Encana trades for in January 2013 or Jan 2014. However I do know that some companies are well managed and will be around forever. I can make money in a flat or even slightly declining market with covered calls, on quality stocks or ETFs such as: ORCL, IBM, MSFT, ECA, POT, SLV etc.
So, for example, buy 1000 shares of Encana today for $21.50 each or $21,500 and sell 10 calls for Jan 2013 at $2.50 each or $2500. Net investment: $19,000. You will not lose if Encana stays above $19. You will make $1000 on $19,000 invested in 4 months or 4% if it stays above $20. Can you lose money: yes. Is this likely: no. Or sell the Jan 2014 $17 call for $5.60 to be even more conservative: You now have net cash invested of about $16,000. Make $1,000 or 6% in 16 months if Encana stays above $17.
I make more money reliably in apartment buildings and that why 85%+ of my networth is in it. But I use this (and the related naked put or call or put spread on quality stocks) too on my spare cash as this is more liquid.
Disclaimer: this is an opinion. This is not advice. You can lose all your money in most investments. I am not licensed to give (financial or real estate) advice.