Dear Reader
Inflation rates in 2022 have caused 80% of consumers to change their spending habits.
And our latest confidence reading fell to four-month lows with people 55+ rating confidence in the future lower than the younger generation – causing great concern.
Everyone is being impacted to some degree.
Sure, there are people who worry they won’t be able to dine out as often, but there are others who are in or nearing retirement who have great cause for concern.
Food, fuel and shelter costs are on the rise, and the longer inflation levels remain elevated, the greater the concerns become.
The reality is that we lose our purchasing power as high inflation persists – our dollars won’t buy us as much as they used to, and this means savings dwindle, credit card balances rise, which eventually forces people to come out of retirement or delay going into retirement.
The impact is already being felt globally – retirees are going back to work.
Great Britain expects over 700,000 retirees will be headed back to work in the coming months due to persistent inflation levels.
With the Russian war and China’s zero-covid policy upsetting the supply chains, we really don’t have a reason to believe inflation is going to fall dramatically any time soon.
For this reason, I want to tell you about a strategy that can boost your income on a monthly basis.
So, let me help you avoid getting a second job or coming out of retirement, if possible, by learning the strategy of selling options – an income strategy that can be done in the comfort of your home.
Put Option Basics
Two of the simplest ways to begin utilizing options is by buying call options or selling put options – today’s focus will be on selling put options.
Let me first tell you what a put option is, but then I’ll show you how to profit by selling them.
A put option is an equity option contract that gives the buyer a right to sell shares of stock he might own, and a put seller, on the other hand, has an obligation to buy shares of a stock at some point in the future.
Additionally, each put option will have a strike price (the price you might buy or sell share of the stock), an expiration date (when the contract expires) and a premium (the price tag to buy or sell the contract).
Now, the great thing about selling put options is you don’t need to own the stock right now, but you can choose to purchase shares later (at the option’s expiration date) if you want, or else, in many cases, you can exit the trade and remove yourself from the obligation.
Next let’s talk about why traders sell puts.
How To Profit from Selling Puts
Let me illustrate what selling a put can look like.
In the image below I’ve provided the basic information for selling an Amazon put option, and Amazon was trading in the market near $95.50 at the time.
Reading from left to right: on December 1, I am selling one $90 put contract with an expiration date of January 6, 2023. The credit I am receiving for this contract is $243, which will be my income on a contract that expires in just over a month.
Now, I mentioned that Amazon was trading at $95.50, which is above the $90 put option contract – which is the desired outcome for a successful trade. This means I have over 70% probability I will get to keep my $243 for the month without any hassle.
Afterwards I can move on to selling another put contract for another month – repeating the process month after month.
There are enough stocks with put contracts that I’m able to sell puts and bring in credits on a monthly basis if I’d like to – the choice is mine.
Because there are so many factors involved with our current economic situation, finding ways to generate additional income to offset the sky-high levels of inflation is important.
I speak of this and other strategies each week, so be sure to join me in the discussions.
Until next time,
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