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Introduction

Options uniquely enable us to enhance our returns by way of combining buy/sell legs so that we can generate income on a regular basis. Income strategies are characterized typically by being short-term strategies, whereby option premium is sold on a monthly basis. Many investors generate significant percentage returns in this way, even if the underlying stock hasn't moved. Imagine collecting income when your chosen stock hasn't even moved at all.

As with all aspects of trading, it's crucial to be level-headed and not to get greedy. A 3–4% return every month is very significant when compounded to an annual rate. Would you take a 30% return on your money every year? Of course you would . . . or at least you should! I know you aspire for more, and that's ok, but remember that fund managers would kill for such returns, though remember that they are fettered by all kinds of regulatory and compliance criteria that the private investor never has to worry about.


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