Safe And Best Way To Earn Money Online

Best And Safe Way To Earn Money Online
Best Way To Make Money Online
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Let's evaluate the best options strategies for income to help you improve your returns.

Options often get a bad rap as risky investments. Actually, they are risk-mitigate tools if used correctly and can help you weather the storm during any market conditions. Here are some of the best options strategies for income.

We all love income investing strategies that can generate consistent monthly income, right. Why? We have monthly bills to pay, from utility bills, cable to phone bills and, more. Creating multiple streams of income is thus very vital.

A stock options trading is a safe income investment that can guarantee you a steady income. At this point, you’ve taken the necessary steps to start investing.

You are probably wondering, how? Well. Here we will explore some of the best options strategies for income.

A majority of people are familiar with income investments such as dividend investing, bonds and rental property. While these are safe income investments strategies, some require a more significant initial outlay like rental properties.

When I check Personal Capital, I’m able to see my various investments and cash flow for free. Use this tool to evaluate your income and investment diversification.

If you want to invest your money effectively, you’ll need to know how an options trading strategy fits within your investing goals. Millionaire Mob wrote a dividend investing book to help people get started investing.

The book is titled Dividend Investing Your Way to Financial Freedom and features a number of resources to help you invest for financial freedom, including:

Improve your portfolio returns
Understand the pros and cons of a dividend investing approach
Develop and craft your own dividend investing strategy
Build wealth through a long-term compound interest plan

If you want a sample of the book, you can download it here.

Many people cannot afford rental properties (like investing in hotels) or other high capital cost investments. Options can be a great way for people to build income and wealth for little upfront capital.

In this article, we will explore how stock options can be the best way to create monthly income. You need to build a solid foundation to understand options trading to help you attain your goals before you start trading.

What are options strategies?

Options are like tools that can help an investor buy stocks at the target buying price or sell stocks at the target selling price. There are two major types of options which include put and call options.

The call option gives the holder of the option the right but not the obligation to buy at the strike price. The put option, on the other hand, gives the option holder the right but not an obligation to sell at the strike price. Options can give you the flexibility to navigate your portfolio and increase the income in your portfolio.

With both a call option and a put option, you can sell and buy the contracts. If you are a seller, you want the options to expire worthless to increase your income. Most of the below strategies for boosting your portfolio income includes both selling and buying options contracts at the same time.

You can find options virtually with every broker. Compare some of the best options brokers before proceeding with one that suits you best.

How to find the best stocks for options strategies

I think fundamental analysis and the evaluation of financial ratios are the best way to narrow down the right stocks for an options income strategy. If you choose the right stocks, you will find that these options strategies are the best ways to make money with options. Over the long haul, speculation will not win out. Having a proven, calculated options strategy is the best way to make consistent money from options.

How do you find the best stocks for your options strategy?

I’ve given you several lists on criteria for finding undervalued stocks that should help you use a stock screener like FINVIZ Pro or GuruFocus to widdle down your stocks to ones that have strong fundamentals. The best stocks for an options strategy include:

Have higher implied volatility relative to historical averages
The stock has identifiable resistance and support levels
The stock has made a recent significant move in one direction or the other (not always required)
A company that has outstanding fundamentals including profit, strong balance sheet and management team
In addition, you want to deploy an options strategy with a liquid volume of options trading

The above criteria will help you find the best stocks to deploy an options income strategy.

It doesn’t always have to be stock! In fact, some of the most effective income strategies with options are by using indices. Indices are usually very liquid options markets and you likely have significant exposure to the various indices with your retirement accounts. You can use these options strategies for income to boost your index investment income.

List of the Best Options Strategies for Income with Examples

Options trading may be a risky investment (if not used correctly). However, with the right option income strategies, you can make monthly income through options. There is however a small likelihood of making steady money when buying options, and thus we will mainly look at the selling options strategies.

To sell options like an expert, consider using TradingView as a tool to help you understand where a stock has resistance or support. Read more about the tool in our TradingView review.

Here are 6 of the best options strategies for income:

Covered Call Writing

A covered call writing strategy is one of the best option income strategies. A covered call is also a buy-write strategy. I know you are curious to know what it entails. Covered call writing is an options strategy that involves holding a long position in an asset and writing/selling call options on that asset to generate profits.

It mainly arises when an investor has a short-term neutral view on the asset. Thus, the investor holds the asset in a long position and holds a simultaneous short position via the option. The investor aim is to earn income from the option premium. Read more about the best stocks for covered call writing.

Collar

A collar is yet another best options strategy to make money. It is equivalent to an out-of-the-money covered call position, but with an addition of a protective put. In this case, the put acts as an insurance policy. So it limits losses to a minimal, but an adjustable amount. Losses are limited which also means limited profits. But most investors are okay with it since it guarantees some steady income.

A collar options trading strategy is designed by holding shares of the underlying stock while at the same time you are buying protective puts. Also, you are selling call options against that holding. Having the same expiration month, both the calls and the puts are out-of-the-money options. They must also be equal in some contracts.

It is an ideal strategy to use if you are a trader that is writing covered calls basically to earn premiums, but you wish to protect yourself from a sudden drop in the underlying security price.

An example is to buy 100 shares of IBM and Sell one IBM Jan 110 call and simultaneously buy one IBM Jan 95 put.

See Related: Alternatives to Yahoo! Finance

Cash-Secured Naked Put Writing

Another best options strategy for monthly income is the cash-secured naked put writing strategy. It is a strategy that entails writing an out-of-the-money or at-the-money put option and at the same time setting aside sufficient cash to buy the stock.

In simple terms, you sell a put option on a stock you want to own by selecting a strike price that represents the price that you are willing to pay for that particular stock. So, your aim is to get allocated or to acquire the stock below the current/today market price.

Therefore, whether the put is assigned or not, all outcomes are seemingly satisfactory. You get a cash premium in exchange for the obligation to buy stock by paying the strike price. If you don’t purchase the stock, you still keep the premium as a consolation prize.

If you have sufficient money in your brokerage account that you can use to buy the shares, and then you are considered to be ‘cash secured.’ But, that is on condition that the put owner exercises the put.

An example is when you sell one AMZN Jul 100 put and you maintain $10,000 in the account. If you want more examples, read our post about how to sell weekly puts for income.

Iron Condor

An iron condor is another best options strategy for income. An iron condor is a position that comprises of one put credit spread one call credit spread. Its gains and losses are also limited. With an iron condor option strategy, the investor is exposed to a limited risk. It is a non-directional strategy that has a high probability of making limited but consistent profits. It occurs when the underlying asset seemingly has low volatility.

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An iron condor can be equivalent to combining a bull spread and a call spread.

An example is to buy 2 SPX May 880 calls and sell 2 SPX May 860 calls and buy 2 SPX May 740 puts and then sell 2 SPX May 760 puts.

Credit Spread

A credit spread is one of the best income strategies using options. With credit spread strategy, you purchase of one call option and then sell another. An alternative, it involves the purchase of one put option, and sell off another. In this scenario, both options have the same expiration. The reason why it is termed as a credit spread is that the investor collects cash for the options trading.

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Therefore, the higher priced option is sold and cheap, a further out-of-the-money option is bought. It is a strategy with market bias and limited profits as well as losses. A call spread is usually bearish, and the put spread is bullish. An example is to buy 5 JNJ Jul 60 calls and sell 5 JNJ Jul 55 calls.

Alternatively, buy 5 SPY Apr 78 puts and sell 5 SPY Apr 80 puts.

Diagonal Spread or Double Diagonal Spread

Diagonal spread can also be a perfect options trading strategy for safe income. It involves spreads where an option has a different strike price as well as expiration dates. The diagonal spread usually involves purchasing and selling of an equal number of options of the same class, and same underlying security with different expiration months and strike prices.

The diagonal spread options strategy is equivalent to calendar spread where short term options are sold, and the long term options are bought. It is mainly to take advantage of the sharp time decline in options that are close to expiration.

With the diagonal spread, the investor has a near term outlook that is slightly more bullish or bearish. It means that the option that is purchased expire later than the option sold. Also, the option purchased is further out-of-the-money than the option sold.

An example is to buy 7 XOM Nov 80 calls and sell 7 XOM Oct 75 calls. Alternatively, you can buy 7 XOM Nov 60 puts and sell 7 XOM Oct 65 puts. When you possess both positions at the same time, it’s a double diagonal spread which is thus one of the best options strategies for income.

Conclusion on Options Strategies for Income

The best options strategy for income is the cash flow investing strategy which involves the selling of options. Nobody knows whether the stock price will rise or fall. What matters most is the ability to manage the risk you are exposed to.

So by selling options, you can collect the premiums from the buyer of the options up front. Selling options are thus one of the safest options trading strategies. Buying calls or puts is a good strategy but has a higher risk and has a low likelihood of consistently making money. I like combining my options strategy with fundamental analysis.

I use these financial ratios to screen for the right dividend stocks.

This helps ensure me that I’m deploying an options strategy with stocks that I like for the long-term.

What do you think are the best options strategies for income? Let me know in the comments below. I’d love to hear from you.

Other Related Investing Money Resources:

Our resources on how to invest money to ensure success
Our free dividend calculator to see what it will take to live off dividends
A guide on how to read financial statements and conduct financial statement analysis

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When you work online, create a website, and set up an eCommerce store, your credibility is everything. As you establish your business reputation online, it is of utmost importance that you keep your reputation on the positive side.

Unlike in the real world where people can come into your real building, shake your hand and look you in the eye, people establishing a business online need to develop trust another way. This is usually referred to as “social proof.” Social proof is the condition of creating a psychological sense of importance or credibility for a brand based on the ideas and opinions of others.

One real example of this phenomenon is a business owner who puts up a Facebook page and obtains hundreds of followers who share and comment positively on their page or brand. Over time, this creates hype for a name positively and thereby “proves” the social validity of a brand.

There are other ways to gain credibility such as writing a book on a particular topic that shows your credibility or hosting a webinar or blog that promotes your brand.

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With this in mind, we take a look at 13 unethical and potentially illegal ways to make money online in this post. So you will know what opportunities to avoid.

1. Spamming and keyword stuffing

You probably already understand why keyword stuffing will drop your rankings. But it also helps to remember why it is so unethical. Keyword stuffing is the process of overusing specific words with the purpose of directing people to a certain website or sales page. There is nothing wrong with sending people to legitimate pages when keywords are used naturally. But keyword stuffing is an overabundant use of words that are low in quality and are only meant to influence where people go online. It is considered a “Black Hat” technique.

2. Affiliate Marketing with Bogus Products

Affiliate marketing is a legitimate way to make money. But directing people to bogus products or products that are less than good quality is an unethical practice that should be avoided. It is important to check out any products that you promote on your website or blog so that you know you are representing good products. You have some legal liability regarding this if you recommend a product.

3. Selling Pirated eBooks or Media

Original eBooks are written by you are fine, and you can make a great deal of money this way, as well as use the books to promote your business or products. You can also outsource this work to other writers if you do not have the time to write the books yourself. However, you absolutely must retain “resell” rights from the author when you do this. To take any work that someone else created without their selling the exclusive rights to you is illegal and is considered an infringement of copyright.

4. Creating Autoblogs

Autoblogs are blogs with bots. In other words, they are set up using 100% automation software and designed to put out blog articles on a specific schedule that can be controlled by you ahead of time. While this may seem like an interesting way to put our fresh content, this is often done using tools such as WordPress’s Autoblog feature which pulls articles from other sources. This is dangerous for some reasons. First, people will be able to tell that it is not your content. Google may drop you in the rankings due to duplicate content. But worse, you could be accused of copyright infringement which is a federal crime that carries a penalty of $250,000 for one offense! If it is clear that you are not saying the posts are yours, you might get by with showing others’ content, but this practice could be perceived as claiming the content as your own. Do not risk this!

5. Setting up fake social media accounts

You probably already know that it’s unethical to set up fake accounts. But operating a business page that is not tied to a real business is also illegal. That’s because it creates the illusion of being representative of a real company and possibly causing people to spend money on something that is not legitimate. This is unethical and illegal. Transparency is necessary if you are going to create a good reputation online that will allow you to make a regular income and develop trust with your audience.

6. Writing Useless Posts or eBooks

Writing quality content is the only way to create your brand and make money in a legal and ethical way. When you write useless eBooks that are full of keyword stuffing, broken links, or references, not only will you lose your ranking with Google over time, but you may also receive terrible reviews on Amazon or Audible for the low-quality content. Anything you write or put out to the masses should be the highest quality possible. The content you write in any form reflects on you and your brand and website. So make sure it is good content and not meaningless text.

7. Counterfeit trading

Counterfeit products are still rampant on the internet today and buying and selling counterfeit products can be very lucrative. It is also very illegal. Legitimate companies create goods that they want to sell and promote online. Then illegal companies or individuals in China and other locations create an imitation product to compete with this legitimate product. This creates a clear disadvantage for the original product owner, and they can sue for damages if you try this unscrupulous tactic. If you are an online seller, avoid this practice always. Always check out the authenticity of the product before selling or promoting it.

8. Holding contest with money prizes without a permit

Holding contests online is a great way to get attention for your brand or products. Giving away free products is perfectly fine. But if you hold a contest involving money for a prize, you are entering into what is considered “sweepstakes” territory. There are particular regulations in various states regarding such contests, and you must make sure you follow these to the letter or face criminal charges. If in doubt, leave it out!

9. Lying to readers about content or offers

As a business or online blog owner, you probably already know the importance of telling the truth. This is just one of the most basic business ethics that all business owners know. This is not to say, however, that all business owners follow this. It is critical, however, if you want to create and maintain a viable business for the foreseeable future. As a rule of thumb, you might get away with something once or twice. But if you continue to deceive people, you will be destroyed online through social media and your credibility will be lost. This is just not worth the risk to take. Be honest with people about your brand, your products, and your services. Don’t overinflate an offer and tell them what the product does that will help them. Answer any questions honestly. People are looking for businesses they can trust online. They will be loyal to business owners who meet up to this standard. Ones who don’t may lose their good name. And once you lose that, it’s very hard to gain it back.

10. Posting digital content that is not your own

Just as we talked about eBooks and other content that belongs to someone else, the same rules apply to any digital content of any form that you did not create. You cannot post, sell, send as a file, or offer any downloads of digital content that is owned by others. This is an infringement of federal copyright law as well as the Digital Millenium Copyright Act. To post anyone else’s content, you must secure a written notice from them granting you permission to post their content. Read the contract carefully, and this usually does not give you exclusive rights. Further, the only type of content you can post without worry is content that falls under the Creative Commons license, which is an open source, shareable license with some limitations. Only the author of the work can determine what type of license the work carries.

11. Selling personal data

A person’s data is important to their well-being and security both online and offline. Selling or even obtaining such data such as credit card information, social security numbers, and addresses without their permission is a crime and is an infringement of an individual’s Fourth Amendment rights. Just because we are in an era of free information and open source technology does not give anyone permission to hack someone’s accounts, purchase others’ private information, or sell this information for any reason. The only way to legally obtain information including emails, addresses, phone numbers, and credit card information is to have the person ‘sign up’ and give you this information with full knowledge when they purchase your product or sign up for your offers. The FTC takes this a step further and states that you may not keep or archive financial information on any server or device either unless the person opts in to save their data when ordering with a secure server that encrypts and protects it.

12. Gambling

Gambling is only allowed in certain states, and there are specific laws for creating a casino or online gambling site. You must know the laws in your state as well as the federal laws to engage in this activity or offer it to your readers.

13. Selling tobaccos to minors