“Let’s start with a concession: Maybe options aren’t totally devoid of merit,” writes Jonathan Clements in today’s Wall Street Journal.

“I don’t like exchange-traded stock options. They are complicated. They are often used for mindless speculation. And the odds are unattractive. For every winner, there is a loser. In fact, after trading costs, investors collectively end up out of pocket.”

“Still, I did manage to find two options strategies that almost pass muster. Options come in two flavors: puts and calls. By buying a put, you acquire the right to sell stock at a fixed price. Similarly, by purchasing a call, you acquire the right to buy stock at a set price.”

“But these rights don’t come cheap. You have to pay a premium to the sellers of these options. Indeed, many folks sell puts and calls as a way of generating extra investment income. But that strategy can backfire if the stock involved has a big move.”

“Sellers of call options may miss out on big gains by the underlying shares, while sellers of puts can be forced to pay a lofty price for a now-battered stock.”

“Sound confusing? To get a better handle on what is involved, consider these two strategies that may appeal to certain investors.”

“Easing out: Suppose you have 1,000 shares of Microsoft that you bought for a pittance. You know you ought to diversify, but you are reluctant to sell because of the resulting tax bill.”

“Options could ease the pain of selling. The idea is to write call options against your Microsoft position. Let’s say you sold July calls, with a $75 strike price, somewhat above the current $68.47 share price. By writing the calls, you agree to sell your Microsoft shares for $75 any time between now and the options’ expiration date. In return, you will receive $4,200 in option premiums, which will help to offset the tax bill, should your stock get called away.”

” ‘The problem is the downside,’ says Eric Seff, a financial planner in Mamaroneck, N.Y. What if your Microsoft shares plunge? Mr. Seff says the option premiums you collected probably wouldn’t compensate for your losses.”

“To guard against a big decline in Microsoft’s shares, you could combine the sale of call options with the purchase of Microsoft puts.”

“That would give you downside protection. But the premium you pay for the puts will likely wipe out the income you earned by selling the calls.”