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.

Currency Trading

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