Retirees are finding a new way to earn extra income in today’s booming stock market by trading covered-call options on their large stock holdings. Options trading activity has been on the rise, with many retirees opting to use their concentrated positions in stocks like Tesla and Apple to generate additional income.
With the stock market reaching new highs, retirees are faced with the dilemma of either selling their stocks and paying taxes or holding onto them and risking concentration risk. This is where options trading comes into play, as retirees can sell covered-call options on their existing stock holdings to earn premiums from buyers.
One popular strategy among retirees is to sell covered-call options, where they set a buying price above their cost and collect a premium from the buyer. If the stock reaches the target price, the deal goes through, and if not, the seller keeps the premium. This strategy allows retirees to generate income in a more volatile market environment.
However, trading options requires specialized knowledge and expertise, which is why many retirees turn to third-party options experts to manage their trades. These experts monitor options chains and manage covered calls to ensure a steady profit with little downside.
While options trading can be profitable, investors need to be cautious of fees that can eat into their gains. Typically, third-party options managers charge around 0.50% in fees, which can impact overall profitability. Despite the risks involved, options trading can be a lucrative way for retirees to generate additional income from their stock holdings.
In conclusion, retirees are turning to options trading as a way to earn extra income from their concentrated stock positions in today’s market. With the right expertise and strategy, trading covered-call options can provide retirees with a steady source of income in an increasingly volatile market environment.
