The realm of stock option trading is usually left in the hands of speculators and traders. Value investors don’t purport to be able to time stock price movements, and since options expire, there is an important timing element to most option trading. However, there are a couple of types of options strategies that can actually add value for value investors. Over on Jonathan Goldberg’s site (which we’ve discussed here), he has an article explaining the details and the caveats of these options strategies for value investors.
While you’re there, you might also want to check out his discussion of a Seth Klarman speech he recently attended. Klarman is one of our favourite value investors, as while his book (which we summarized here) is easy to understand, it nevertheless discusses very clearly some important value investing concepts.
