 Entry is Key...Exit is Everything! TM
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with Covered Call / Naked Puts / Naked Calls / Spreads These are the results from trades suggested on our "Collecting Rent Plays" list. Note: they are suggested entry and exit points! disclaimer Profits Up!! --------------------------------------------------------------------------------------------------------------------
COVERED CALLS – The goal here is to collect some "rent" on stocks you already own. We do not want the underlying stock called away from us, so we will adjust our actions accordingly if it looks like that will happen.
NAKED PUTS – The goal here is to collect premium or shall we say plucking some money from the options money tree! Of course, you could get caught, so our strategy is to sell Naked Puts a little further out of the money to lower the risk of assignment. Note: if you are new to selling naked options, then you should NEVER sell Naked Puts on any stock you are not 100% sure you want to own at any price below the strike you are selling!
NAKED CALLS – The goal here is to collect premium or shall we say plucking some money from the options money tree! Of course, you could get caught, so our strategy is to sell Naked Calls a little further out of the money only when we feel the odds of success are better than 80% so we can effectively lower the risk of assignment. Note: if you are new to selling naked options, then you should NEVER sell Naked Calls on any stocks, especially with future compelling news like earnings; because if the stocks make a massive move higher; then you are obligated to buy the stock at the price you sold naked and deliver it to the buyer of the calls. In other words, since you sold naked, you now have to deliver the difference in CASH!—this strategy carries the unlimited risk because the upside of a stocks price is unlimited whereas a naked put has capped losses because the stock can only fall to zero.
SPREADS – The goal when trading spreads is to capture a pre-defined amount of premium with capped loss should the trade go against you. Most spreads are traded one strike above or below the one you are selling. Most strikes are priced either $0.50, $1 or $5 apart. The risk of loss is ONLY the difference between the strikes minus the premium you were paid. You can do several types of spreads plays such as: Vertical, Straddle, Strangle, Butterfly, Iron Condor, Calendar, Diagonal etc. I primarily focus on Vertical Bull Put or Bear Call spreads.
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