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Trading Options for Income

November 3rd, 2014

Chuck is often asked whether there are certain money management rules that he lives by—or more importantly—rules that play a role in his income trading strategies. When it comes to Option Purchases, he definitely follows the following sound advice:

What makes trading options for income so attractive is the fact that you can purchase options and participate in their price movements without committing a large sum of money upfront, or serving as an official holder of a company’s stock. Another attractive characteristic is that you can give your stock options considerable more “room” to ride market fluctuations than you can with stocks.

Trading Strategy: Know When to Act

However, once an option starts to decline by 20%, we suggest you make a mental note to yourself and begin identifying a smart exit trading strategy. And be sure to execute exit strategy before option hits below 30%. Because experiencing a loss on this scale, can take you a long time to make up.

Trade Options for Income

As part of your exit strategy, decide whether to sell (or put) your options before their expiration date. Or, decide if you see a benefit in rolling options over, which could help you compound your returns while playing with the house’s money (so to speak).

To learn more trading strategies, check out Chuck’s webinars.


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