Want to generate consistent monthly income without risking a lot? You might want to consider buying and selling options.
Many people find options to be overwhelming, but we have a course that makes trading options easy. The course covers everything from basic explanation of what options are to watching live how to screen for options and how to place the trades.
In this article I’ll cover some methods you can use to make monthly income with options.
First a little explanation, when you buy a put option you are placing a bet that the stock will go down. If the stock goes up you would lose. So this is one of the risks of options.
However, this is not the income strategy I am talking about. What I am talking about is selling options.
When you sell a put option you are betting that the stock goes up, stays the same or it goes down slightly. When you sell a put you are paid a premium, which the broker deposits into your account right away.
By selling puts you can easily generate 10% to 30% of your initial investment.
As an example, company XYZ is trading for $20 per share and paying a dividend of 3% to stockholders. You could purchase the stock and earn 3%, or you could sell puts to collect upwards of 30%. This 30% would be paid to you right away versus having to wait for company XYZ to pay out their dividend.
Now before you go out and sell puts you should only do so on company’s you might actually want to own because of the stock does go down you would be forced to buy at the strike price. When selecting the strike price to sell the put at you want to sell at a price that you think the stock won’t go to. We could go on and on about how to do this, but two methods are technical and fundamental analysis. We cover these in the options trading courses.
So after you sell at your desired strike you would receive the premium right away. If the stock doesn’t rise, but instead falls you would be forced to buy the stock at your agreed upon strike price. Another point to keep in mind about options is that 1 options contract represents 100 shares of stock, so keep that in mind when selecting companies.
Now this may all sound like a lot of work, but in our course we show you an easy method to do this; combine this with the broker’s software and it will be a breeze.
Again, this is just one strategy you can use to make income. In the course we go into more advanced techniques.