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3 Options Trades for $1,000 in Monthly Income

Selling naked puts for a standard monthly return

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Bed Bath & Beyond (BBBY)

bed-bath-beyond-bbby-stock-optionsRetail is a dicey place to be in this economy, so if I sell naked puts against retail, it had better be a solid stock.

Bed Bath & Beyond (BBBY) is in really good shape. For one, BBBY stock has $900 million in cash and no debt. It is growing at a nice 12% clip, and free cash flow is routinely in the $800 million range annually.

Like DirecTV, BBBY stock has not been an explosive performer, but has the kind of volatility that makes it a good trading and options vehicle. The Jan 80 Puts recently went for $2.75 (though have since fallen to around $2.65). I sold two of the put contracts for $550 in income, bringing the total thus far to $830.

Note: BBBY does report earnings Wednesday, so the potential for volatility in the stock is extremely high.

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