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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 […]
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 Protect Gains with Options
Most investors are happy with unrealized gains, but there’s always a risk of loss until they sell. Fortunately, there are a couple of options strategies that you can use to protect gains by locking in profits without immediately selling your stock. The key is finding the strategy that provides the right level of protection, upside […]
Generating Income with Cash Secured Puts
Options are often seen as speculative instruments for traders, but many investors use them to generate income. In fact, the most sophisticated option traders use them to reduce risk, limit downside and boost the income on a stock portfolio. While covered calls are the most popular income strategy, there are several others that investors should […]
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 […]
How Dividends Impact Option Pricing
Dividend stocks are a popular way to generate income, but they also impact several other investment strategies. For example, dividends impact option pricing. Let's say that an investor that’s selling call options to generate an income should be aware of how option prices behave when a company announces and pays a dividend to avoid any […]
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 […]
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 […]
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 […]
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 […]