Options

Options investing is a field that most people do not know about. I am currently involved in selling naked puts and covered calls, but I hope to cover advanced options strategies eventually.  Options trading and investing has to do with taking a position that a particular stock may go up, down or stay the same which makes the contracts very versatile.

Re-engineering My Exit Strategy when Selling Naked Puts

I only started selling naked puts a few months ago, so my it is natural that my strategy is going to change.  At first I thought I would only sell naked puts against dividend champions, but I quickly learned that the premiums were not enough to make it worthwhile so I adapted.  Recently, I have been bothered with my closing strategy. My Current Buy to Close Naked Put Strategy When I first started (and up until this post) the current strategy is to take a 50% gain on the premium collected. The easiest way to understand the strategy is with an example. Stock [...]

By |2016-11-25T00:27:44-04:00November 25th, 2016|Options|2 Comments

Selling My First Covered Call Option

I have written about covered calls before, as it is a strategy I have used for years, but this is my first covered call sell in the current iteration of my Undervalued Dividend Growth Portfolio.  The trade and post comes from being assigned 100 shares from the sale of a put contract last week. What is a Covered Call? Investopedia defines a call option as. A call option is a contract that gives the buyer of the option the legal right (but not the obligation) to buy 100 shares of the underlying stock at the strike price any time before the expiration [...]

By |2016-11-07T16:23:53-04:00November 9th, 2016|Options|4 Comments

Selling Naked Puts – What to do with In the Money Put Options?

I have been selling naked puts for a few months now with the goal of creating immediately investable income. The main risk of selling naked puts is that the stock you took a position won't go beneath "$X" does go beneath "$X" and you are now holding shares of a company that you might not have otherwise bought.  For the first time in the 4 months since making my first trade, I am in the position of having to decide what to do with one a trade that is likely to finish in the money, so why not share my thought process! [...]

By |2016-11-04T14:39:02-04:00November 3rd, 2016|Options|2 Comments

Generating Income Selling Short Puts

While I was taking my hiatus from writing on this site I started to get very into selling short puts to create a tangible, income stream that can be used to supercharge my undervalued dividend growth investment strategy.  I will provide posts about what I have done (and will do), but first I think it would be useful to articulate the strategy. What is a Put vs Call Option? An options contract is An options contract is a contract that allows the holder to buy or sell an underlying security at a given price, known as the strike price. The two most common [...]

By |2016-10-04T21:31:24-04:00October 4th, 2016|Options|6 Comments