italian_job
01-31-2008, 01:25 PM
hello all,
This is gonna be a pretty technical post. It is not for the newbies or for people that have not generated any sort of income. It is for people that are already advanced in the online marketing business and want to add more income generating weapons to their asset arsenals (automated sales weapons...by the way...).
As some of you may know, I am involved into different online businesses, where the common denominator is that they all generate cash flow (sometimes fully "untouched/automated", sometimes they require my attention).
You probably know that I do affiliate marketing. But I do even more dropshipping consumable products that can allow you to have a stable income from returning customers and referrals.
I am also involved into residential real estate. And I have signed a remote-work agreement with my employer a few years ago.
Over the past year though I have not invested my profits into property because I felt prices were too high, so I start looking at stock investing.
I didnt know much, so I started reading. And I didnt like what I discovered, because I felt that stock investing could have never given me any sort of leverage or any sort of control to generate passive income.
To me, once again, let me repeat, cash flow is the name of the game.
So...I kept reading (and I really recommned you to do your home work before jumping into any entrepreneurial venture).
And I discovered one way of earning stable income from stock that I never considered before.
This is what I do:
I trade options. Option trading is an often misunderstood concept. It is true that you can lose your shirt easily if you dont know what you are doing. Most of the people start trading options in the most SPECULATIVE way possible, which is they BUY a CALL option (basically they bet that a certain share price will go UP by a certain date).
But that's not what I do.
As you might have guessed, I am a VERY conservative investor and entrepreneur. I like stability and cash flow.
So, what I do is I sell COVERED CALLS to generate income.
This is probably the most CONSERVATIVE option trading strategy. And I like it. Of course you must chose the underlying stock wisely, because you want to sell a call option of a stable stock (=low volatility). So tech stocks are not good for selling covered call options.
I usually sell slightly "in the money" covered call option, with an expiration date of around 5-7 weeks, for not less than $1/option.
"Covered" means you sell options of a stock that YOU own. So this strategy DOES require an investment (since for every call option you sell, you must own 100 shares of the underlying asset).
Basically, when you sell (=write) a covered call you cash in a premium and you keep it. That's the income that you can generate every month. Then, if at expiration date the buyer of your covered call exercises the option, you stock is called away. If the option is not exercised, you keep the stock (as well as the premium you received when you sold the option).
This strategy works also extremely well if you own stocks that you intend to SELL anyway. Remember though that when you sell 1 option, you are selling the right linked to 100 shares. ONE HUNDRED shares. Don't forget that!
I didnt learn all this by myself. I did all my necessary readings and now I am reaping the rewards. It really is an advanced automated income generating technique.
There are a tons of different techniques to use when you trade options, but I feel that the one that fits my personality (very conservative), is at the moment the one I described above.
Also, I like learning how to trade because in my business I always thought that I had to keep my asset forever, but now I can also consider building an asset that generates monthly net cash flow and then selling for a multiple of the monthly cash flow generated.
This is a website that has lots of free stuff for you to learn:
http://www.optionsuniversity.com/
I hope this post will help you to do some "lateral thinking"
Safe investing to you all !!
Danny
PS (disclaimer): this post does not constitute financial advice. Always seek for professional financial advice before making any sort of investment decision.
This is gonna be a pretty technical post. It is not for the newbies or for people that have not generated any sort of income. It is for people that are already advanced in the online marketing business and want to add more income generating weapons to their asset arsenals (automated sales weapons...by the way...).
As some of you may know, I am involved into different online businesses, where the common denominator is that they all generate cash flow (sometimes fully "untouched/automated", sometimes they require my attention).
You probably know that I do affiliate marketing. But I do even more dropshipping consumable products that can allow you to have a stable income from returning customers and referrals.
I am also involved into residential real estate. And I have signed a remote-work agreement with my employer a few years ago.
Over the past year though I have not invested my profits into property because I felt prices were too high, so I start looking at stock investing.
I didnt know much, so I started reading. And I didnt like what I discovered, because I felt that stock investing could have never given me any sort of leverage or any sort of control to generate passive income.
To me, once again, let me repeat, cash flow is the name of the game.
So...I kept reading (and I really recommned you to do your home work before jumping into any entrepreneurial venture).
And I discovered one way of earning stable income from stock that I never considered before.
This is what I do:
I trade options. Option trading is an often misunderstood concept. It is true that you can lose your shirt easily if you dont know what you are doing. Most of the people start trading options in the most SPECULATIVE way possible, which is they BUY a CALL option (basically they bet that a certain share price will go UP by a certain date).
But that's not what I do.
As you might have guessed, I am a VERY conservative investor and entrepreneur. I like stability and cash flow.
So, what I do is I sell COVERED CALLS to generate income.
This is probably the most CONSERVATIVE option trading strategy. And I like it. Of course you must chose the underlying stock wisely, because you want to sell a call option of a stable stock (=low volatility). So tech stocks are not good for selling covered call options.
I usually sell slightly "in the money" covered call option, with an expiration date of around 5-7 weeks, for not less than $1/option.
"Covered" means you sell options of a stock that YOU own. So this strategy DOES require an investment (since for every call option you sell, you must own 100 shares of the underlying asset).
Basically, when you sell (=write) a covered call you cash in a premium and you keep it. That's the income that you can generate every month. Then, if at expiration date the buyer of your covered call exercises the option, you stock is called away. If the option is not exercised, you keep the stock (as well as the premium you received when you sold the option).
This strategy works also extremely well if you own stocks that you intend to SELL anyway. Remember though that when you sell 1 option, you are selling the right linked to 100 shares. ONE HUNDRED shares. Don't forget that!
I didnt learn all this by myself. I did all my necessary readings and now I am reaping the rewards. It really is an advanced automated income generating technique.
There are a tons of different techniques to use when you trade options, but I feel that the one that fits my personality (very conservative), is at the moment the one I described above.
Also, I like learning how to trade because in my business I always thought that I had to keep my asset forever, but now I can also consider building an asset that generates monthly net cash flow and then selling for a multiple of the monthly cash flow generated.
This is a website that has lots of free stuff for you to learn:
http://www.optionsuniversity.com/
I hope this post will help you to do some "lateral thinking"
Safe investing to you all !!
Danny
PS (disclaimer): this post does not constitute financial advice. Always seek for professional financial advice before making any sort of investment decision.