Online Options Trading for Earning Extra Income
Typical Situations Let’s look at three typical situations where online options trading can be used to generate desired extra income. See if any of these resonate with you.
Phoebe, in her mid twenties, is a bright lady who enjoys life. She has always known the value of a dollar and has saved about $20,000, which she keeps in a bank account “for a rainy day”. Lately, she has noticed that her bank only pays her 1% on her savings - a mere $200/year - and she is wondering if she can make extra income. She has recently become aware of online options trading... Craig is in his late forties and has worked for a large corporation for many years. He has systematically built up a six-figure sum in his company’s retirement plan. For years things were going well. He had steadily built a long-term nest-egg by investing in stock and bond mutual funds. Over the last few years, however, Craig’s retirement fund has lost 40% of its value due to “adverse market conditions“. Even more concerning, there have been threats of downsizing at his workplace. Craig and his wife decided to protect their savings and moved most of it to cash about 6 months ago. However, Craig realizes that he is earning only about 1.5% interest on his retirement stash, hardly enough to keep up with inflation. He vows that he must do better to keep up with inflation and would like to earn extra income. Mary is a widow in her sixties, in good health, who loves to travel. Because her husband was thrifty and industrious, she was fortunate to be left with a pension and a savings kitty. Her day-to-day living expenses are covered by pension income. Her savings kitty is about $250,000, currently parked in a money market account and several CDs. She also owns about 1000 shares of a regional utility company, which she and her husband had accumulated slowly over the last twenty years. Mary would like to generate a stream of extra income from her savings kitty to help finance her next trip to France…
Phoebe opened up an online brokerage account and now earns much more than 1% every month by selling cash-secured, deep out-of-the-money puts on the Nasdaq tracking index. Craig converted his retirement nest-egg to a balanced portfolio of exchange traded funds. He now sells out-of-the-money calls on these positions to generate handsome monthly income to compound tax-free in his IRA. Mary now sells out-of-the-money calls against her utility company, essentially doubling her dividend. She also collects hundreds of dollars monthly by using the cash in her savings to secure the sale of deep-out-of-the money puts on the Dow Jones Industrial tracking index. Intriguing?…
Good! Let's move forward:
What is Options Trading?
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