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When considering options strategies, it’s tempting to focus solely on payout or yield for credit-based approaches. However, investors must remember that there is a direct relationship between risk and reward: the higher the risk, the greater the potential reward. In some rare cases, though, this relationship becomes skewed in favor of the risk taker or speculator.
One great example that popped up is Texas Instruments (TXN). While TXN stock hasn’t gotten off on the right foot, losing more than 21% of equity value since the beginning of this year, in the long run, the security has been quite stable. With a 60-month beta of 0.99, TXN tends to absorb kinesis. In other words, it’s not going to react too much in either direction.
