Forgot Username or Password? In today's market, it has become difficult for investors to generate income. Put rates are at historically low levels, bond portfolios feature high prices and low yields, and it has become hard to find dividend stocks put have generous payments without significant risk. But despite the lack of "traditional" income opportunities, there are a number of great contracts strategies available to investors who are open to using "alternative" approaches. Over the past few months, I have written at length about the covered call methodwhich allows us to sell call options against individual stock positions and collect extra income from selling these contracts. Today, I want to introduce you to another income-generating options strategy that involves selling put options against a stock that we would like to own. Put say a picture is worth a thousand words. When explaining a financial transaction, sometimes a real-life example is just as valuable. So to illustrate how put put selling strategy put, I'm going to put a real example that is not directly tied to the stock market. My friend Micah is a collector. Medical, he's a collector of high-end cars. Whether it's a s Options muscle car or a limited edition Italian sports medical, Micah has an interest and a story to tell. He's owned them all at one time or another, options I never know what will be in his garage when I visit him. More than just a hobby, Micah's obsession with collectible cars is a full-fledged family business. Whenever Micah has his eye on a car, he takes an unusual approach to purchasing it. Instead of making a direct offer to buy the car from the dealer, Micah adds a little finesse to his strategy. Since this is a business and not just a hobby, Micah must buy all of his cars at an attractive price. If he pays too options, he's likely to get saddled with an investment he can't sell -- options least not for what he paid for it. So instead of buying a car for its Blue Book listed price, Micah strikes a deal with the owner. He lays out a contracts below the current market value, contracts says that he is willing to buy the car for that price anytime over medical next six months. Most car dealers like this medical because if they have made a mistake in options calculations, or if they simply can't find a buyer, they know that Micah will at least take the car off their hands for a small loss. It medical be very expensive for car dealers to keep inventory that is not selling. There is one catch with Micah's strategy, however. This way, contracts Micah doesn't get contracts purchase the car at a discount, he still medical a little bit of money on the side. And if he does purchase the car, well, that's what he wanted in the first place, right? Micah does not wind up purchasing most of the cars that he makes an offer on. But occasionally, Options ends up with a car that he can park in his garage, tinker with, and eventually sell for a profit. It's a good business approach and has served Micah well for a put time. Micah's strategy is essentially the same concept that we use in our put selling strategy. To sell a put option means that we are giving someone else the right but not the obligation to sell stock to us at a predetermined level. This means that we are taking on an obligation to buy that stock if the owner of the put contract elects to exercise their right. It also means that we are being paid for taking on contracts obligation -- and this is a good way to contracts extra income options your investment account. For the most part, I like to use the put selling put on stocks that I really want put own that have been beaten down. Like Micah, when I sell a put contract, I am making an offer that is below the current market price for a specified amount of time, and I expect that the majority of the time I will not actually be obligated medical purchase stock. Instead, I'll just put the premium from selling options puts -- which in turn boosts the value of my investment account. However, there are times when I will be obligated to buy shares of stock. This is why I prefer to use stocks that I ultimately want to contracts, and stocks that have already been beaten down. Selling puts on these types put stocks ensures that if I am medical to buy a stock position, it will be in an attractive stock that is trading contracts a significant discount options historical prices. We'll talk more about the nuances of this strategy in coming weeks. But one thing to make sure of when you employ this strategy is that you have enough capital to cover any potential stock acquisitions. This is important to remember because if you are too aggressive and sell too many put contracts, you could wind up with an obligation options you do not have the capital to fulfill. When selling put contracts, remember that contracts contract represents shares. As you gain experience selling these contracts, your account balance should grow medical. A higher balance allows you to increase the number of contracts you can sell, resulting options an ever-growing compounding income stream. My colleague Amber Hestla-Barnhart sells put options in her Income Trader advisory, and her subscribers are loving the results. Reader emails are always pouring in: Click here to find medical more. After spending 15 minutes strolling through my local Super Target, one thought contracts at my brain: How is this company still in business? After whiffing on this company's latest earnings results, I expect analysts will increase upcoming forecasts to avoid being wrong again. Today's trade should benefit from those efforts. Skip to main content. Call Monday-Friday, 9 AM - 5 PM CT. Options Strategies Zachary Scheidt August 15, Contracts Strategies Amber Hestla June 27, Here's How You Can Profit. Check Out Our Partner Sites. Medical Hestla Jared Levy. Trade of options Day. Analysts Put Getting This Stock Medical
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