How to Make a Monthly Income Selling Options
You Don't Even Need to Invest in Order to Profit from the Stock Market:
If you aren't familiar with stock options then don't worry, I have provided you with a great book listed below. If you are already familiar with stock options, then lets learn how to make a monthly income selling options.
NOTE: This is about SELLING options, NOT buying options - those are 2 completely different things! Also, make sure you are selling covered call options (being covered puts you at MUCH lower risk!)
The best way is to sell monthly covered call options, and make sure you sell the call option a strike or two out of the money (if these terms aren't familiar with you then you will benefit from reading the book below). The reason you want to sell call options a strike or two out of the money is because you don't want to have your option executed; you want it to expire worthless so you get to keep your stock and sell another option next month.
Why sell a call option each month instead of selling one call option that expires a few months from now? Many reasons. Firstly, stock options lose value rapidly as they get closer to expiration. This means if you sell an option that expires in one month then you will get more money per day than if you sold the same option that expires in a few months. Remember, we are SELLING options, not buying them. When you sell an option, you collect a premium and if the stock option that you sold expires worthless then you profit.
Another reason is because a 1-month option gives you the opportunity to adjust the strike price you sell each month. If you sell a 6 month option only 2 strikes out of the money then it is very likely that you will get executed on because now the buyer you sold to gets 6 months to reach that price instead of just 1 month (huge difference). However, if you sell options each month then you have the freedom of choosing a new strike price each month instead of being stuck with the same one for 6 months. Make sense? These are just the basics.
If you want a full detailed account of how options work and how to benefit from both buying AND selling options, then I highly suggest you read the following book about stock options: