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NOVEMBER 5, 2007
Edited by Amy Dunkin A Playbook for Traders TradeKing CEO Donato Montanaro says he learned more about trading options from analyst Brian Overby's trading-room chatter than from the dry tomes on the subject. That's why Overby, the firm's director of education, came up with The Options Playbook. Modeled on a football coach's handout, the spiral-bound book diagrams 30 plays from the simple "covered call" to the exotic "long condor spread with puts." Each play gets a two-page spread, with explanations of the strategies and tips from Overby, who also writes the Options Guy blog (). Published by TradeKing, the book is free to new clients for a limited time and is available to others at tradeking.com for $24.95 and at Amazon.com (AMZN ) for $34.95. By Jeffrey M. Laderman This REIT Avoids the Housing Mess The subprime mess has put a black mark on any investment with "mortgage-backed" in its name. But former Fidelity Investments bond manager Kevin Grant says some of the best bargains are in mortgage-backed securities with no connection to the subprime market. By sticking to high-quality issues backed by Fannie Mae (FNM ) and other government-sponsored entities, Grant is finding yields around 6%, with the potential for price increases as the market calms down. Investors can get in on the action through Grant's Cypress Sharpridge Investments, a real estate investment trust going public this month that concentrates on mortgage-backed securities. Read more in "Bargains in Mortgage Land" at the Investing Insights blog on BusinessWeek.com. By Aaron Pressman   Expecting a Lump-Sum Pension? Read This Close to half of companies with defined-benefit pension plans let retiring employees take a lump-sum distribution instead of a monthly check. When given that choice, nearly everyone takes the cash. But a federal law that goes into effect in 2008 may limit many companies' ability to offer those one-time payments. Starting next year, companies won't be able to make lump-sum distributions if their pension plans are more than 40% underfunded. (Congress is considering a bill to postpone the change until at least 2009.) For companies using a calendar year, the change will begin on Apr. 1. Those that are 20% to 40% underfunded will be permitted to offer lump sums on only up to half of the benefits employees have accrued. Is your plan likely to land on the no- or partial-distribution list? The pension data available on Form 5500--filed with the Labor Dept. and available from HR departments--are generally outdated by the time they're released. The disclosures in companies' 10-Ks are also of limited use, since they rely on a different formula to calculate pension funding than the new law requires. Still, "it can give you a rough estimate," says Marjorie Martin, a vice-president at Aon Consulting Worldwide. Your employer may not even know right now whether it will be able to offer the distributions. Companies still have a few months to cough up the cash to get their pension plans into better shape. Even relatively healthy plans that are as much as 90% funded may find they're restricted unless they can get an actuary to certify their results by Apr. 1. If the delay in certification continues past Oct. 1, a plan would be temporarily deemed below the 60% threshold, and lump sums would be off-limits until certification is granted. By Anne Tergesen
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