Covered calls are incredible cash cows. It is difficult to avoid double-digit returns if you focus on short-term contracts slightly out of the money. Writing several of these per year and waiting out expiration (or closing at a profit and replacing) is clearly one of the best conservative strategies. For anyone willing to accept the… [READ MORE]

Covered call writers may be interested in expanding their strategy by also selling a put. This creates a short straddle consisting of a call and a put. Calling it a “covered” straddle is inaccurate, since only the call is covered. The put remains uncovered. Rationale for this strategy is that an uncovered short straddle (one… [READ MORE]

The backspread is not always a bear strategy. Many traders think of the put ratio backspread in this way because it involves puts. But in fact, it is not a bear strategy, but a volatility strategy. That means it is designed to turn profitable due to fast point movement in the underlying. The put ratio… [READ MORE]

The great dilemma for options traders is well known: Options close to expiration cost less but expire soon. Options with more time to develop profitably cost more. Every trader struggles to balance these offsetting problems of options. How do you balance these conflicting attributes? Trading options very close to expiration and containing little or no… [READ MORE]