Options Writing Strategies

The book, Options Writing Strategies for Extraordinary Returns is written by David Funk. The book is superbly written and is about call and put option writing techniques which can be used by investors so that they can make profits from the market irrespective of the direction the market is moving in. The book has options writing strategies for selling options short, tips to use charts and tables and then helps investors to buy stocks by building a three legged model. Apart from these techniques there are some additional amazing features in this book for options writing strategies. The book also lists the option tools that are available online and also the step which the investors can take to take advantage of the volatility in the markets.

All the features in the book are very useful for all investors as it helps them to know of all the options writing strategies using which they are able to invest in a much better way and earn more profits of the market. The content of the book is written in a concise and clear way which makes it easy for everyone to read. The way it has been taught to make the strategies in the book is excellent and thus, provides benefits to all investors who read the book. The book helps the investors to deal with the stubborn situations of the market. The investment strategies in the books are extremely sophisticated and as they are written in a simple and clear way, it can be understood by all very easily. The strategies reduce the risk that the investor faces in the market and thus, help them to increase their earnings from the market. Irrespective of the way the market swings, all investors can easily use the strategies and invest amicably and earn profits.

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Selling naked put

Lee Lowell wrote a great book on option trading “Get Rich with Options: Four Winning Strategies Straight from the Exchange Floor“. He is one of America’s leading options professionals. Lee spent six years in the options market as a market maker on the floor of the New York Mercantile Exchange (NYMEX) in New York City. He has his own office-based trading firm where he trades commodity, stock & index options on a daily basis.


One of the strategy I like from the book is selling naked puts. Naked put is an option put where the option writer does not have a position in the underlying stock. This strategy is used when you want to buy stock, but you think the price is too high. By writing a put, you will get a premium. If the stock price rise, you will keep the premium, but if the stock drop, you can buy the stock at strike price.

You can see that the potential profit is limited to the option premium, and the potential loss is unlimited if the stock falls all the way to zero. So this strategy is very dangerous if you didn’t know what you are doing.
The key of this strategy is very simple. A smart put-option seller will only sell put option contracts at a strike prices at which you would like to buy the stock. The secret is to pick a stock that you would like to own at a cheaper price than it is now. Here’s what I do, I look for stocks that just rise because of good earning result. Since the price has rise, I want to buy it at lower price, so I just write a put option at lower strike price and wait until it expires.

Income generating option strategies

Income generating option strategies is an option strategies that makes money when you enter the position. The income is generated when you sell option, either selling put option or buying put option. Here are some strategies to consider:

• Selling naked puts. You will get income by selling put. This is a perfect strategy if you want to buy stocks at lower price. Selling naked puts is a bullish strategy.
• Covered Call. Covered Call is an options strategy where an investor holds a long position in an asset or stock and writes call options on the same asset. This strategy is used when investor has neutral to bullish overview of underlying stock. Although they believe it has bullish overview in long term, investor also believe it will only have limited price change during the contract life or short term. So to gain additional income they sell call option.
• Iron condor options. Iron Condor has minimal risk and higher probability of success. With Iron Condor, you don't need to guess the direction of stock. This strategy is used when we have a neutral outlook on stock. You will make money if the price don't move much. It's a good idea to implement this strategy on security (stock) with low volatility, because their price tend not to move much. The bull put spread is implemented by selling an in-the-money (ITM) put option (has higher price) and buying an out-of-the-money (OTM) put option (has lower price) on the same underlying stock with the same expiration date. While the bear call spread strategy is implemented by selling an in-the-money (ITM) call option (has higher price) and buying an out-of-the-money (OTM) call option (has lower price) on the same underlying stock with the same expiration date. Both bull put spread and bear call spread has limited profit and risk.