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Right now is the ideal time to be selling options on high-quality companies. When volatility is high as an option seller you receive a greater premium (money) to sell puts or calls.
Option selling is less risky than holding stocks outright. When you sell an option, you generate income that lowers the total cost of your position (your so-called "cost basis"). That gives you a downside cushion.
In addition, down markets can make things better for option trades. When volatility surges, we earn more income when we sell (to open) an option position.
You should consider selling stock options with a two-month to three-month time frame. That's the "sweet spot" where we can earn the most income in the shortest amount of time. It's one of our many secrets to option selling.
The key rule when selling stock options especially puts - Only sell options on stocks that you actually want to own. That helps make option-selling strategy less risky than owning the stocks themselves.
The next post we will discuss covered-call options, how to place the trade on securities you already own. You receive a premium for every contract you sell plus receiving the normal quarterly dividends it pays.
You may visit my blog at DFI Wealth Strategies or my website at DFI Wealth Management
Daniel F. Iuculano, AAMS CMFC
Accredited Asset Management Specialist
Chartered Mutual Fund Counselor
