Is is time to rethink your income investing strategies?
I get quite a few emails from options sellers; here’s one of the most common: “The premiums on this stock look great. What do you think of the company?”
That’s what I call “premium chasing,” and it’s one of the biggest mistakes you can make as an income trader.
There’s an inherent tension when selling options for long-term income… The volatility that drives premiums up is the exact same volatility that can negatively impact your portfolio value.
What’s a trader to do?
Start by choosing the perfect income stock.
Choosing the perfect income stock starts with choosing the perfect company. Then you simply need to find the right options to sell. In other words, THIS is question traders should ask: “The company looks great… What do you think of the premiums?”
Let’s take a closer look at income stocks…
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