Options

This section covers selling options for income on a portfolio you already hold, using two strategies: covered calls and cash-secured puts. It assumes you are comfortable owning individual stocks and have a brokerage account approved for these trades. If you are still deciding whether to hold individual stocks at all, start with Investing first; everything here sits on top of that foundation.

Start here

• Foundations: What options are, why a long-term holder would sell them, the vocabulary, and the temperament the strategies ask of you.

The two strategies

Covered calls and cash-secured puts are two independent income decisions, each judged on its own merits. Some traders chain them into a loop called the Wheel; this handbook keeps them separate.

• Covered calls: Selling calls against shares you already hold and would be content to sell at the strike.
• Cash-secured puts: Selling puts on cash you have set aside to buy a stock you would be glad to own at a lower price.

Running a portfolio

• Income and position management: How to set realistic income expectations, manage open positions, avoid common mistakes, and handle the tax treatment.

Members can ask questions in the community forum.