Does making the transition to include options in your trading seem daunting due to the complexity involved? Here are two strategies that are easy to implement and have less risk than buying 100 shares of stock. An added benefit of these strategies is the potential to reduce cost basis. Both strategies involve selling options.
A reference guide to a Covered Call was displayed. The guide included how to initiate a covered call, how it works, what you give up, what you gain and the maximum loss. Tom and Tony noted the importance of managing at 50% of max profit and rolling losing trades to extend duration.
Next, a reference guide to a Cash-Secured Put was displayed. The guide included how to initiate a cash-secured put, how it works, what you give up, what you gain and the maximum loss. A table comparing the max loss of a long stock position, covered call and a cash-secured put was displayed. The table showed that by using short options, you can lower the levels of risk in a trade by reducing your cost basis by a large amount over the course of a year.
For more on these two strategies see:
Watch this segment of “Options Jive” with Tom Sosnoff and Tony Battista for the valuable takeaways and other information about utilizing two related strategies, the Covered Call, and the Cash-Secured Put.
This video and its content are provided solely by tastylive, Inc. (“tastylive”) and are for informational and educational purposes only. tastylive was previously known as tastytrade, Inc. (“tastytrade”). This video and its content were created prior to the legal name change of tastylive. As a result, this video may reference tastytrade, its prior legal name.