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Are Buy-Write Funds a Good Hedge Against Volatility?
There are many different ways to minimize volatility in a portfolio, including diversification into multiple asset classes, but buy-write funds have become a popular alternative for stock investors looking to reduce volatility and generate income. Most investors are concerned with two things when it comes to building a retirement portfolio, risk and return, and it’s […]
How & Why to Sell Options During a Recession
Recessions often lead to a drop in stock prices, as slowing revenue lowers valuations. While some investors choose to ride it out or shift their portfolio into cash or bonds, choosing to sell options during a recession can help you stay in the market, hedge against downside risk, and generate income. In particular, covered calls […]
The Risk of Covered Calls: What You Need to Know Before Trading Options
Covered calls are one of the most popular options strategies for generating extra income. But while they’re less risky than other option strategies, they aren’t risk-free. It is critical to understand the risk of covered calls and the steps you can take to mitigate it before using them as part of your investment strategy. Let’s […]
How to Write Covered Calls With Better Yields
With traditional investing, you buy stocks, hoping the price goes up, so that when you eventually sell you can make a profit. While this type of investing can make you money, it doesn’t always have a payout, and even when it does, you don’t always have a livable income from that payout. There are other […]
How to Find Covered Call Opportunities
Covered calls have become one of the most widely used option strategies for generating income. While simpler than most option strategies, finding the right covered call opportunities can be challenging—especially when you’re trying to build a holistic portfolio with minimal risk. In this article, we will look at how to choose the right stocks and […]
How to Screen for Options with optionDash
Covered calls are a popular way to generate income from an equity portfolio. But, of course, the challenge is finding stocks that offer the right balance of safety, yield, and upside potential. Fortunately, covered call screeners can simplify the process by automatically generating a list of ideas from a given set of criteria. Let’s look […]
Tips for Managing Covered Call Positions
A covered call position is a great way to generate extra income from a stock portfolio. While the strategy is fairly straightforward, there are many nuances that can make managing a covered call position challenging—especially when the stock pays dividends or if the price is approaching the strike price near expiration. In this article, we […]
Can I Trade Options in an IRA?
Many individual investors wish to utilize options trading to generate income but are unsure of whether or not they can trade options in an IRA. Most individual retirement accounts (IRAs) are indeed capable of trading options, provided they request the right settings. This includes Traditional, Rollover, Roth, Simple, and SEP IRAs. Where most investors can’t trade […]
Covered Call Pros and Cons
In this article, we examine covered call pros and cons. Before diving into the complexities of what a covered call trade is and how it can be used to generate portfolio income lets first define what an option contract is and what it means to each party involved. There are two main types of options, […]
How to Select a Broker for Covered Calls
Covered calls are a great low-risk strategy to generate a predictable income from an existing portfolio. By selling call options against stocks that you own, you can generate an income above and beyond equity dividends and recoup some losses if the stock declines in value. The only “cost” is opportunity cost if the stock rises […]
Should You Trade Covered Calls Around Earnings?
Covered calls are a great strategy for investors looking to generate an income from a stock portfolio—such as retirement investors living on a fixed income. By selling the right to buy a stock that you own, you can collect option premiums and you are only required to sell if the stock hits the (higher) strike […]
The Importance of Asset Allocation
Most people are familiar with asset allocation even if they don’t recognize the term. For example, the SEC’s Beginners’ Guide to Asset Allocation uses the example of a street vendor selling both sunglasses and umbrellas. The street vendor would never sell both items at the same time but having both in stock helps even out their revenue regardless of […]
Calls or Puts: Which Is Better for Income?
Stock options come in two different flavors, but they can be combined into countless different strategies. Option income strategies are designed to take advantage of time decay to generate a consistent income. Investors may decide to use calls or puts, or a combination of options to achieve these goals. Option income strategies are designed to […]
What Is a Poor Man’s Covered Call?
Covered calls are a popular way to generate an income from stock options, but they require a potentially large upfront investment in the underlying stock. While such an investment isn’t a problem for large account holders, it can be prohibitively expensive for those just getting started using options to generate income. Fortunately, there are some […]
How the Wheel Option Strategy Works
There are many different options strategies designed to generate an income. While covered calls are the most popular, traders may also use iron condors, butterfly spreads, diagonal spreads or calendar spreads to generate income that may be less risky or more lucrative than simply buying dividend-paying stocks or conventional bonds. The wheel option strategy is […]