Trade Deep in the Money Calls to Generate Monthly Income

Trading deep in the money calls offers investors a way to take advantage of the subtle movements in a stocks price by capitalizing on the volatility of the option. Purchasing a call option on a security gives you the right, but not the obligation to purchase shares of the underlying security on or before the expiration date for the contracts strike price. While purchasing the stock is a choice you can choose to make, the concept of deep in the money calls trading is to purchase the options contracts and then sell them for a profit prior to the expiration date.

Here are the steps required to trade deep in the money calls that will allow you to generate monthly income.

Stocks

Identify Stock - Use a stock screening tool to identify a list of stocks to monitor. When a stock on your list gets beaten down by macro conditions, it is important to take advantage by purchasing calls. Select Call Contracts - When a high quality stock gets beaten down, you should have identified call contracts that have an expiration date three to six months in the future. Also look for call contracts on the underlying security that are well below the current share price. Deep in the money calls are useful because you are well below the strike price. Monitor Contracts - Once you have purchased your deep in the money calls, be patient and wait for an opportunity to sell them at a profit. Be sure to have an exit strategy in case the stock continues to trend downward to limit your loss. Sell Contracts - Once your stock and corresponding deep in the money calls have risen above a certain percentage that you have defined - put in a sell to close order to make your profit.The steps noted above are very high level. Trading call options are very dynamic and can allow you the financial freedom that can change your life.

Trade Deep in the Money Calls to Generate Monthly Income

Trade Deep in the Money Calls to Generate Monthly Income

Proper planning and education is the key to making money using a deep in the money calls option trading strategy. Remember that every trade will not be profitable and you must teach yourself when to get out of a particular options contract. Likewise, it is also important to set goals and understand when you should take profits on your winners.

Too many times investors get greedy and don't know when to take profits. Often times they miss out on a profit because of this and must settle for little to no gains. In order to implement a successful deep in the money calls trading strategy, you must know when to sell for a profit and sell for a loss. Anything else will surely hurt your chances to make any money from your investments.

While investors can make an educated guess on when to sell for a profit and sell for a loss at the correct times, using technical charts and software can help you take your educated guess and make a confident decision.

For additional information on Options Trading advice, check out - Option Income System for more details.

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