A popular use of options known as "the 90/10 strategy" involves placing 10% of your investment funds in long (purchased) calls and the other 90% in a money market instrument (in our examples we use T-bills) held until the option's expiration. This strategy provides both leverage (from the options) and limited risk (from the T-bills), allowing the investor to benefit from a favorable stock price move while limiting the downside risk to the call premium minus any interest earned on the T-bills. Assume XYZ is trading at $60 per share. To purchase 100 shares of XYZ would require an investment of $6,000, all of which would.
