Thursday, July 24, 2008

Trying to guess the stock market direction? Likely to lose in long term!!

What if you can bid to buy your favourite stock and earn passive income while waiting for the cheap price. Look no further. The trading strategy is called "naked put selling" and it is an incredible way to earn passive income.

The stock market trend should be bullish and the targeted stock will not fall in price over next 1 month. Then Target at OTM PUT option and sell the put option. In return, you earn a premium income. If the option expired, you got to keep the premium. If you got exercised to buy the stock, congratulation in owning a cheap stock. Remember you can always to "sell covered call" to earn the premium income the other way round while waiting for someone to buy your stock at a more expensive price.

You are a winner!!

For risk management, always remember to have available funds to buy the stock in case your stock option is being exercised.

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