Search Results
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 Do Cash-Secured Puts Work?
Options may be notorious for their speculative use, but many investors use them to generate income or achieve other goals. For example, cash-secured puts provide you with an alternative way to delay stock purchases and buy stock below its current price. You earn a cash premium that you can keep whether or not the option […]
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 […]
Buying Protection with a Married Put
The stock market is known for rising during both times of euphoria and fear. For instance, the stock market hit record highs during the COVID-19 pandemic despite extremely high levels of unemployment, a sharp contraction in gross domestic product and lofty equity valuations. Investors that continue to hold stocks during these times may worry about […]
Starting a Position with a Covered Straddle
There are many different option strategies that investors can use to generate an income. While covered calls generate an income from an existing long stock position, a covered straddle can be helpful for investors that want to initiate a long stock position and generate extra income. The trade-off is that it is a bit riskier […]
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, […]
Can Option Trading Really Give You Safer Retirement Income?
Option trading may sound like a risky endeavor, but like most investments, it’s only as risky as you make it. After all, stock investing can be incredibly risky if you’re investing in penny stocks, but few financial advisors would argue against a diversified blue-chip stock portfolio. The key to building income for retirement is using […]
Generate an Income from Credit Spreads
Income investing is popular among investors in or approaching retirement, but there are few good choices during periods of record-low interest rates. Exchange-traded options provide an easy way to generate extra income in a portfolio with limited risk. While covered calls are the most popular income strategy for options, credit spreads have become a popular […]
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 […]
Top 5 Covered Call ETFs (2022)
Exchange-traded funds (ETFs) have become a popular way for investors to access countless strategies, including covered calls. From smart beta to actively managed funds, there are many different ways for investors to generate an income above and beyond dividends. However, there are also several drawbacks to consider before using ETFs. Let’s look at the top […]
How to Calculate Covered Call Outcomes
Covered calls are one of the most popular option strategies used by both short-term traders and long-term investors. In fact, The Snider Investment Method uses covered calls at its core to generate consistent cash flow. The strategy is more conservative than most option strategies and is relatively simple to execute—the key is understanding how to calculate covered […]