11 Amazing Things You Can Do with Option Spread Trading
By: Billy Williams
A few years ago, investors in the U.S. flocked to gold and silver. At the same time, Federal Reserve printed money around the clock, destroying the value of the dollar in the process. Anxiety increased among investors — especially those approaching retirement age. The Fed monetized our debt by printing more money to service the existing debt.
The U.S. is not the only one taking this "nightmare pill". The debt crisis in Europe and the rest of the world is compounding the problem. Ireland, Spain, Greece, Italy, and other major industrialized European powers are an economic basket case. Many have borrowed money back and forth from each other in order to pay the debt owed to other partners in the European Union.
This economic mismanagement across the globe has left the stock market on shakier ground than ever, with the possibility of another crash.
Gold and silver are good investments to have in any market condition. However, most retirement couples or individuals are not going to be able to live off of precious metals.
Precious metals are good hedges against inflation or a falling dollar. However, they don’t serve the long-term financial interests of their owners.
Problems surrounding the stock market are compounding and investment professionals do not have a stellar track record. Therefore, individual investors are seeking answers on how to achieve greater returns on their own while controlling exposure to risk. To reach their financial goals, these individual investors have to get involved more in navigating through this economic chaos.
No one, and I do mean no one, will ever care more about your money or your future than you do. The good news is that there are few strategies as successful or as versatile over the long haul as option spread trading.
The even better news is that you could take advantage of option spread trading fairly easily. If you are willing to put in some time to master the basics of trading option spread, you will gain a skill that could make you money over time.
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Option spread trading is not a quick way to a windfall. You must be patient with the process and let the strategies do their work. In return, properly executed option spread trading strategies could potentially produce sizable returns over time and maybe even create a second income stream for you and your family.
Option spread trading requires study, discipline, a healthy respect for risk, patience to allow the strategies to work, a strong focus on minimizing risk, self-reliance, and a strong desire for consistent profits and higher returns.
If that strikes a chord with you, here are the top 11 things you can do with option spread trading:
Create your own "dividend" by selling the call options on a position and collecting the premium.
Sell call options on your stocks over and over again unless they are called away.
Protect from loss if the stock declines, because of a "buffer" in the form of the premium already collected.
Gain a distinct edge by being an option seller and letting time decay work for you.
Put an option spread position into play and then buy it back if the option you sold becomes cheaper (your return is lower but your market exposure and risk is less).
Potentially make 2% to 15% each month safely (sometimes more).
Achieve returns that are steady and consistent.
Reach your financial goals much faster.
Retire much earlier.
Build a sizable part-time income from a few hundred dollars up to several thousand dollars a month.
Achieve a greater benefit from the law of compounding, because your rates of return turn over at a higher rate.
I must emphasize again that there are no free lunches in life and especially not on Wall Street. Risk exists with any kind of trading — including trading option spreads. But if you are aware of the risks and willing to work at managing things effectively to execute profitable trades, you can be successful.
About the Author: Billy Williams is a 20-year veteran trader specializing in online stock trading and options trading. He has been published in Futures Magazine, Traders.com Advantage, Stock & Commodities Magazine and StockInvestor.com.