A couple of months ago I wrote an article for SharePad extolling the virtues of selling Covered Calls on FTSE 100 stocks. The technique involves selling Call options on shares you already own to bring in additional income. When you combine the technique with a portfolio of dividend-yielding shares, you can create a veritable income machine.

However, there is also a complimentary strategy that allows you to generate an income stream before you even buy the shares in the first place! It’s called selling Cash-Secured Puts and that’s the subject of today’s article.

Picking up shares on the cheap

I know it’s the Yorkshireman in me, but I’m only content when I buy something if I get a bargain. My wife despairs that I’ll only ever buy clothes from discount stores, and I’ve never bought a new car in my life. Far better to get the one-year-old model that’s already shed 30% of its value. That just seems obvious to me.

So, imagine my enthusiasm for an investment strategy that allows you buy your favourite stocks at a discount…and pays you for privilege! It’s like getting paid to go to the sales.

I’m a big fan of selling stock options and I’m going to show you an options strategy that will do exactly that. It will immediately put money into your broker account whilst you wait to buy the shares for a price that’s lower than they are currently trading at. And as well as paying you up front, the technique reduces the risk of simply buying the shares outright.

The technique involves selling Cash-Secured Puts. If you followed my previous article about selling Covered Calls, you will have no problem with this concept.

You see, a Put options works in pretty much the opposite way to a Call option.

Check out the rest of this article on the SharePad site.