You don't pick stocks, you pick indexes for bulk of your option writes. I make 5-9% every month consistent income. Had a 8% loss in August, but since than I have been doing 10-15% a month to date and the gravy train hasn't stalled yet. I can't say a newcomer can duplicate that, but I know lots of people who make lot more. It all boils down to how good you are with what you do in life. NDX, RUT are my favorites. NDX has delivered solid gains since August 16, 2007.
Why do you not stuff that in MUNIS, BONDS, MONEY MARKET account by default and make slightly lower rates without risk? Or buy stocks and write calls against them. Option trading isn't for every soul out there. People have lost fortunes and got burned. But this line of work attracts a lots of interest everyday. A good option investor makes 5-9% a month. If that is what you can achieve well and good. But without considerable knowledge ane experience I would not count on it.
Yeh the original post is a troll. Agreed. But I answered him back anyways. If you have made millions why would you come here and start asking about options? Makes you wonder whats the motive behind it.
Generally, what strategy do you use? Do you recommend doing credit spreads on SP500 futures? What to do if the underlying market price moves against you? Please answer these questions, I am keen to learn and open to new ideas Thanks
Options writing with the random entry points is good for the income but not for the capital growth. Eventually it will deplete your principal because the income comes out of it. In the bullish market you can achieve much better results with the long calls.
Someone care to explain what Calendar Spread is? How is it more superior than writing credit spreads / naked calls?
1) Simply absurd. There is no implicit edge in buying or selling options. Any initial position (long or short) is immediately a loss in the retail world due to commissions and the spread. Any edge (or perceived edge) is due to one's reasoning behind initiating the position. Only time can then statistically prove the actual edge. 4) Time is on your side. Volatility and curvature is not. 5) Again, completely absurd. Gamma is inversely linear to theta. 6) Sure, short volatility and, probably in your case, short cheap gamma. An easy way to lose a lot of sleep and feel a lot of pain...
Here's my two cents, in a simplified answer... Put the bulk of the money in A rated preferred stocks (S&P and Moody's) which yield approximately 6.50% presently. You can trade them and easily bump the yield up another 6.50% (when one is up, sell it and buy something that is down, thereby maintaining the income stream and increasing your yield). Use the balance of the cash for option trading to get you past 15% and higher (?). Follow the cycle. Once every year or so there's a moderate to major correction (see this summer). Pfd's are already up 10-15% from the 8/16 bottom. Bump the allocation in pfd's up when this occurs. Decrease it when paper rallies. You'll have a steady income. some trading income and the options will be gravy. Second worst case scenario is that you hold 6.50% paper for while and garner some trading profits. Worst case scenario is that we're glowing during nuclear winter