SAN FRANCISCO, Feb. 5 /PRNewswire-FirstCall/ -- Contrary to popular
perception, many options traders are affluent, experienced investors who
are just as likely to use options to generate income during their retired
and semi-retired years as they are to speculate. This was revealed in a
recent survey of nearly 800 active options traders conducted by Charles
Schwab in the fall of 2006.
According to those clients surveyed:
-- Nearly 70 percent indicated that they think options are "a great way
to generate income"
-- More than half noted that options trading is part of their overall
retirement strategy
-- Nearly 90 percent of respondents consider themselves "self-directed"
-- 94 percent are male, their average age is 57, and they have been
trading options for about 11 years
"Historically, individuals nearing retirement would begin shifting
their investments away from equities and into more conservative asset
classes such as fixed income -- this is no longer the case," said Randy
Frederick, director of derivatives at Charles Schwab. "Today, investors,
particularly baby boomers, are more likely to embrace using options as an
alternative for protecting their portfolios and generating income."
Frederick noted that the paradigm shift is due in large part to
advances in options trading automation and a concerted effort by exchanges,
industry organizations and firms like Schwab to educate investors about the
benefits of options.
The most popular income-generating strategy by far is selling covered
calls (65 percent), followed by buy-writes (34 percent), spreads (26
percent) and selling naked puts (24 percent).
However, speculative strategies are still commonly used among options
traders as well with 73 percent buying calls and 57 percent buying puts.
Protective puts -- a hedging strategy -- are used by 26 percent of
respondents.
While the survey revealed that more than 60 percent of options traders
consider themselves "risk takers" -- including 54 percent of those who are
in retirement or semi-retired -- Frederick points out that this does not
mean these investors are taking risks 100 percent of the time when trading
options. "It is important to note that the same individual who is using
options to generate income and is conscientious of his or her retirement
funds may only occasionally implement a more speculative or potentially
risky strategy -- so, in a sense, there is a blurring of the lines between
risk takers and conservative investors," said Frederick.
Looking out over the next several years, 90 percent of investors
responded that they would either continue trading options at the same rate
or even more frequently. This is in line with the growth Schwab has already
experienced in its options business. In 2006, Schwab's daily average
options revenue trades increased 36 percent compared with 2005.
Schwab options survey results are available at
http://www.aboutschwab.com/media/ppt/2006_options_trader_research.ppt .
For more information about Schwab's options trading products and
services, please visit http://www.schwabat.com\options.
About Charles Schwab
The Charles Schwab Corporation (Nasdaq: SCHW) is a leading provider of
financial services, with more than 300 offices and 6.7 million client
brokerage accounts, 542,000 corporate retirement plan participants, 147,000
banking accounts, and $1.2 trillion in client assets. Through its operating
subsidiaries, the company provides a full range of securities brokerage,
banking, money management and financial advisory services to individual
investors and independent investment advisors. Its broker-dealer
subsidiary, Charles Schwab & Co., Inc. (member SIPC, http://www.sipc.org),
and affiliates offer a complete range of investment services and products
including an extensive selection of mutual funds; financial planning and
investment advice; retirement plan and equity compensation plan services;
referrals to independent fee-based investment advisors; and custodial,
operational and trading support for independent, fee-based investment
advisors through its Schwab Institutional division. The Charles Schwab
Bank, N.A. (member FDIC) provides banking and mortgage services and
products. CyberTrader(R), Inc. (member SIPC, http://www.sipc.org) is an
electronic trading technology and brokerage firm providing services to
highly active, online traders. More information is available at
http://www.schwab.com. (0207-4783)
Options carry a high level of risk and are not suitable for all
investors. Certain requirements must be met to trade options through
Schwab. With long options, investors may lose 100% of funds invested. With
covered call writing, downside protection is limited to premiums received.
Protective put writing increases cost bases on underlying securities held.
Spread trading must be done in a margin account. Multiple leg options
strategies will involve multiple commissions. Please read the Options
Disclosure Document titled "Characteristics and Risks of Standardized
Options" before considering any option transaction. Call your local Schwab
office or write Charles Schwab & Co., Inc. 101 Montgomery Street, San
Francisco, CA 94104 for a current copy.
SOURCE Charles Schwab
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Related links:
http://www.schwab.com
CONTACT:
Lindsay Tiles of Charles Schwab,
+1-415-667-3997, or Lindsay.Tiles@schwab.com; or Mike Boccio of
Intermarket Communications, +1-212-754-5461, or
mboccio@intermarket.com
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