Let's add some options to our trading strategy and see if they can bring in some more money. Our 10 minute trading strategy is all about collecting dividend checks, as many as we can. Although dividends may be small, alot of them will add up over the coarse of the whole year. The world of options is relatively new (started in the early 1970's) but there are so many combinations I don't think anyone knows them all completely. We are going to stick to the basic option strategy that compliments the dividend stock. A covered call is the simplest and one of the safest option strategies out there. So safe is the covered call, you can do them in your IRA if you wanted to.
As you are buying stocks to collect some dividend check you already own them. Now in order to collect some more profits you sell a "call" option for the closest strike price that you just paid for the stock. This way you get to collect the dividend and a cash premium to some one that wants to buy the stock from you someday in the future. Let me briefly explain. Let's say you buy F (ford) for the current price of $15.66... the dividend was $.40 you collect that... thank you very! Instead of selling the stock for a small profit, you sell the option for someone else to buy the stock from you for a premium of $.20 for this Fridays (4 days away) for some more profit. you just added to your bottom line with very little effort. This example was very short and simplified. Options when combined with the right dividend stocks can increase your profits
Just out of high school I decided to be self employed, after running a successful manufacturing business I had a problem of making more money than I knew what to do with. I started investing, after 23 years of investing I now want to share my strategy with a select few that want an extra edge in their own investing.