When we wrote Options! Options! Options! we were vocal about the decision the CBOE made for creating weekly options that had a 30-day life. Like any good business the CBOE continues to try to improve and create new products.

On March 18th, 2013 we are going to see the start of mini-options. Now these will be different from the standard options because they will be based on 10 shares per contract instead of 100. This is going to start on a small group of stocks:

• AAPL
• AMZN
• GOOG
• SPY
• GLD

Typically, we don't like the addition of new option products because it is just something else to clutter up the option chain. Luckily, the CBOE felt our pain and gave these new options a new ticker symbol. Now all mini-options will have a '7' on the end of the symbol, for example. AAPL7, AMZN7, GOOG7, SPY7, and GLD7.

We doubt these new mini-options will be big for speculative trading. Yes they will be cheaper but the idea of only controlling 10 shares is not that enticing. As it sits now a standard option on Apple will run you $1000 - $2000. Now that is not cheap but it is also not unattainable for most portfolios.

The plus we see to mini-options is the ability to write covered calls on smaller portfolios. Most retail traders won't be able to hold multiples of 100 on a $500 stock. It is more believable that a smaller trader would have 10 maybe 20 shares of Apple. Being able to write options on these shares will be a big advantage. When starting out in mini-options make sure to pay attention to the volume these options get. We can't see there being a big market for these options right off the bat. Low volume options create large bid-ask spreads making it difficult to get favorable prices.

A covered call allows you to hold the shares in your portfolio, and then sell call options on those shares. This gives you a little downside protection, caps your upside, but allows you to collect a premium for selling the options. The downside of a covered call is the cap of your profit. If the underlying does move over your strike your shares will get assigned and be sold off. You will keep the money from selling the options and from selling your shares.

Covered calls are a good strategy for new option traders. They are a low risk way of learning how options trade and move.