I have traded options (long). I am thinking about implementing a strategy to do so that would enable me to both keep my stocks and earn profit from the premiums. So far I haven’t found something like that.
With selling options for premium, you do earn money 95% of the time. The 5% when you lose money, however, you lose more than your winners combined.

I am thinking about using selling naked puts like a limit order where I get paid to enter it. Would I do it? Maybe not yet. Why?
I am undercapitalised to do that now. For example if I wanted to buy JNJ, I need to sell 1 put contract at say $60. That means that if the stock falls below $60, I would have to come up with $6000 to buy the stock. That would affect my asset allocation.

Allen – Thanks for the nice comments and I will check out your site as well!

Dividend Growth Investor – I do agree with your comments about selling covered calls and cutting your winners. At the time of the trade I understood the limitations I was setting for the stock and was ok with it. Unfortunately, it made a huge run up almost immediately after I made the purchase so the timing on the options transaction hurt me as well. I had never thought about selling naked puts. Have you done this? Do you trade options at all? I am interested in your feedback if you have.

I will also take your advice and update my blogger profile. Thanks for the tip!

Congratualations on your profit. The scenario above is exactly why I am hesitant about selling covered calls – i feel that I am cutting my winners. Have you thought about selling naked puts in order to enter into stocks when they reach a certain low point?
With this strategy, you are basically getting paid for placing a limit order.

I also wanted to thank you for visiting my blog and commenting. One think that you might want to change is your blogger profile since your website is not on it. Thus if anyone liked your comments on my blog, they would not end up on your blog

Best Regards,

Dividend Growth Investor

Allen Taylor