Here is my strategy, perhaps you can shed light on where the potential pitfalls are. I have been trading for about 7 years, and buying options for roughly three years now. After reading a little about selling options I realized I can get the same returns or perhaps a little lower returns but with much lower risk. I am not a technical trader, I'm a stock picker. I follow individual stocks and industries. Because I only follow 10-12 stocks there were many times where I found there wasn't really anything for me to do. Selling options helps me get past that as I can now bet that the stocks will have no significant movement. My basic rules are: Never have one position take up more then 15% of the portfolio I am always spread into at least 4 different industries (Tech, Auto, Retail, Financial, Conglomerate etc..) I generally have bull positions but at least 20% of my positions need to have a bearish slant. If I find myself at a 100% loss on any given position I sell no matter what. Your thoughts and advice are appreciated.