Option Fund

Mutual fund that trades options to increase the value of fund shares. The fund may either be conservative or aggressive. A conservative fund, commonly called an “option income fund”, may buy stocks and increase shareholders’ income through the premium earned by writing options on the stocks within the portfolio. An aggressive fund, commonly called an “option growth fund”, may buy options in securities that the fund manager thinks will fall or rise sharply in the near term. If the manager is correct, large profits can be made on the exercise of the options.

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