This week I’m looking at a strategy for generating $1,000 in monthly income using options called naked puts, which reverse the trade known as covered calls.
In a covered call, you sell the right to give another investor the chance to purchase one hundreds shares of stock directly from you. Naked puts are the reverse, so you sell the right for an investor to sell (or put) one hundred shares of the stock to you. This trade will execute if the stock is at or below a price you have chosen, or anytime before the contract’s expiration date.
Naked puts can generate good income for you, even on a monthly basis. Just remember the trade can go against you, so you better use them only on stocks you would like to hold anyway. These three come to mind at the present time.