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Related Information

Options

Options Provide Opportunities to Buy & Sell Investments at Specific Prices

Options are contracts that give the options holder the right (but not the obligation) to buy or sell shares of an underlying security at a pre-established price for a set period of time. Investors often use options to hedge an existing investment. By purchasing options, an investor has the potential opportunity to earn profits while limiting the risk of loss.

Please note: Although options can be used to hedge an existing investment, options can also expose you to potentially significant risks. An investor who purchases options may lose the entire amount committed to the options in a relatively short period of time.

Benefits of options
Buying and selling options
Trading options through Wachovia Securities

Benefits of Options

While there are many risks associated with buying and selling options, some investors with more complex portfolios may be able to benefit from the implementation of options strategies that fit within their overall investment profile. In the right situation, options can help you:

  • Protect your stock holdings from a decline in market price
  • Increase income against current stock holdings
  • Prepare to buy stocks at a lower price
  • Position yourself for big shifts in the market
  • Benefit from the rise or fall of a stock's price without having to incur the cost of actually buying or selling the stock

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Buying & Selling Options

When you buy options, you're buying the right to buy or sell the underlying investment at a specific price. However, it doesn't mean you must buy or sell the investment. It just gives you the right to do so.

When you sell options, you're selling the right to buy or sell the underlying investment to another investor. That investor can choose whether or not to buy the underlying investment, but you've given up that right to make that particular decision.

Options are a very complex investment strategy with many moving parts. Options are not suitable for all investors. A Wachovia Securities Financial Advisor will be your best source of information about how options actually work and risks associated with buying and selling options.

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Trading Options Through Wachovia Securities

You and a Wachovia Securities Financial Advisor can work together to determine whether options are appropriate for your particular situation. If options are appropriate, your Financial Advisor will help you develop strategies for buying and selling options that fit your investment goals, time frame and risk tolerance. Before you implement such a strategy, be sure to ask your Financial Advisor for a copy of the options disclosure document entitled "Characteristics and Risks of Standardized Options," which discusses specific information about the risks of buying and selling options.

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