I've been spending some time studying option trading for the Dividend Town portfolio. As part of the Dividend Town strategy, I will be using covered calls to generate additional income, and utilize cash-secured puts for additional premium on securities that I want to own. With the exception of a disastrous $SPY put in November, I've done fairly well writing out of the money covered calls.
I don't want to get too cute or creative with options. However, I will utilize them when I see an opportunity or to hedge one of my existing positions.
- Covered calls - Will write out of the money short term options for a premium.
- Cash secured puts - Sell an out of the money put for a premium.