Category Archives: Options

Risk management in an option selling strategy

The most important part of any kind of trading plan is proper risk management. This is the area where most traders fail and end up wiping out their accounts. In this post I’ll outline the components of a good risk management strategy and use the option selling strategy I’ve discussed before (here and here) as an example. Actually, risk management applies to any kind of trading whether its selling options on stocks or just buying or selling the stocks themselves. It really is a money management strategy. We’ll just use option selling as one example. There are three major components … Continue reading

Posted in Options | Tagged , , | 7 Comments

Increase your odds of making money from selling options

Today I want to look at a few simple ways to increase your odds of making money from selling options. Option selling, i.e. selling cash secured puts, is my primary strategy to generate income from my trading portfolio. I talked about the details of my strategy in this post. The strategy is simple enough but obviously the success of the strategy isĀ dependentĀ on which stocks you choose and the strike prices for the options. It is also critically dependent on having a proper risk management strategy but I’ll leave that topic for another post. A common way of choosing stocks and … Continue reading

Posted in Options | Tagged , , , | 9 Comments

Advanced income strategy – the leveraged covered call

Today I wanted to present an alternative way to generate income using options. In a previous post I discussed selling options as a great way, and my preferred way, to generate income. In my Investing for A Living retirement model this is the predominant strategy I use for the ‘trading’ portion of my portfolio, usually the 20-30% cash part of the total portfolio. While selling options is a great way to generate income there are times when it is too risky or the option premiums are too low to justify the risk. When volatility is very low, as it is … Continue reading

Posted in Options | Tagged , , , , , | 17 Comments

The investing for a living retirement model

Well, its finally time to put it out there. Since I started blogging I’ve been trying to build a base of background posts to get me to this point. Today, I want to share with you the retirement model that I am using to fund my retirement. I think I have posted enough background information that explains the reasons for this model. And to be frank, the writing process since I started blogging has helped tremendously to refine my thinking and the model. The model is an attempt to have your cake and eat it too. I think a retiree … Continue reading

Posted in Dividends, Options, Portfolio, Retirement | Tagged , , , , | 19 Comments

INTC & MSFT options look attractive

Its been a while since I’ve talked about option selling as an income strategy. Actually, my first and only post on the topic was back in mid November of 2010. With the US stock market on a nice uptrend since that time and with volatility being low it hasn’t been a great time in general to sell options. The options yields, premiums as a % of stock price, just haven’t been that great. But all that seems to have changed this week. Lets see what opportunities selling options during these times gives the income investor. While there are opportunities to … Continue reading

Posted in Options, Stocks | Tagged , , | 6 Comments