"income" sounds more safe and steady than burning premium and lures in the optimal new options trader with big money searching for yield.
Hilmy83 simply said and I quote : "You can earn income selling covered puts on consumer dividend stocks". Where is the "more money" part?
I apologize. Indeed you can earn income in variety of ways, including not trading stocks. You can also earn income holding stocks and not selling any options.
Not being an options guy beyond the basics all I can do is share a brief story of my Uncle. After making bank with stocks during the dot.com bubble, he turned to options, for what was intended to be passive income. Passive in the sense he wouldn't be buying/selling something new every day or week. His options trading was with UBS. Use that an indication of account size. His strats were with blue chips and well knowns only, no spec flyers. His trades were simple... covered calls, collars, straddles, strangles, etc. Along came 2007. He lost 80% of his world. Was forced to downsize to middle-class. No more hi-rise penthouse-like living. He died in 2013. Not including life insurance, my Aunt got the downsized house, and 2mil cash in the banks. My cousins became beneficiaries of the brokerage account, approximately 750K. Yes, you can still lose. Just be wise enough to separate the fuck you money from trading. I miss my uncle very much.
Absolutely you are thinking about this the right way. There is no such thing as trading for income. When you sell options you bet that the options will be worth less than you sold them for (hoping for them to be worthless). It’s speculation and not income (like interest from a bond or a dividend from a stock which is a contractual payment or your share of a likely recurring profit).
Well the thing with options is whatever direction the market goes, you have more...options. You can make money, and in some cases, almost “guaranteed “ money with options, even though it may a conservative amount for each trade. For the most part, with day trading, most people make money when the market is bullish, obviously. Options have more layers to them, which allows for more security, more of a strategic game-plan. Its funny i keep wanting to type- with options you have more options, lol Thats why i believe the overall sentiment is you can make a living wage with options trading.
Absolutely. Options offer dozens, if not hundreds, of ways to exploit ANY market condition. However, only the most sophisticated traders can play them successfully, as they are not that easy to master, especially their volatility component, a key element in their pricing model. Those interested can read Lawrence G. McMillan books for instance, it's an excellent start.