Stock Options Credit Spreads – Low Risk Rate Monthly Earnings Techniques
Professional Investors Despite the reputation of being a speculative instrument for active traders, stock options are still used as a conservative way to earn large amounts of monthly income – Usually in the neighborhood of up to 8-10% per month. If we can generate such returns on a monthly basis, regardless of the way in which the market is, and it has a clear and controllable risk, we are obviously talking about a very good community
Many professionals are used to obtain a monthly income stream of vehicles, regardless of the way the market moves to the option spread, while buying and selling a pair of call options or selling When we collect more options we sell than we pay for one we buy, and the spread we collect is our net premium, which represents our share of the price we pay for the same month we are buying.
- Why is it that they can be so appealing to seek reliable monthly income ;
- They are a conservative investment method. Trade risk is defined and controlled.
- Option credit spreads require much less capital than their counterparts in underlying securities. Therefore, a monthly premium can represent the return on investment (ROI)
- The provisional gross profit per credit spread is prepaid to the investor. Profits are fully realized when the option expires
- Unique, time is the investor on one side of the credit spread.
- If you have established a spread that is far enough away from the current value of the base or index so that the price of the underlying security will not reach your spread, the premium will become zero at maturity, regardless of what price fluctuates. Before expiration.