3 Options Trades You'll Get Paid to Make

• «
• »

Naked Put Writing

Another way to use options to generate income is a naked put-write, which simply means you sell puts on stocks that you don't currently own but might like to. With this strategy you get income up front for selling, or writing, the put.

You shouldn't be intimidated by naked puts. If you can buy an option, then you can sell an option. The caveat, however, is that you might end up owning the stock, which is why it's imperative that you only establish put-writes on fundamentally solid stocks that you would be happy owning -- even at reduced prices. Investors like writing puts because it helps them to buy stocks at a discount or to get paid while they wait.

Learn more about how to make money going 'naked.'

Next: Naked Puts -- Merck (MRK)