Option is a contract in the future to buy or sell a stock at agreed price (strike price). Options are used to hedge (insurance). (detailed explanation for beginners)
Buying PUT option – betting that stock will go down.
Buying CALL option – betting (with leverage) that stock will go up.
The new concept that I have been introduced by Michael is Selling PUT options
Selling #Options is one of the best ways for investors with larger portfolios to generate #CashFlow. It’s like getting paid for having limit orders in the market. Time works in your favor. I’m selling cash-secured puts and covered calls on a monthly basis to generate income. 💰 https://t.co/p87yNwJbdL— Michael Hebenstreit (@m_hebenstreit) December 3, 2022
Choosing the right stock. I sell put options only on those stocks that I want to own.
Setting the strike price and expiration date. I usually set the strike price with 10% discount and 1-2 months expiration date.