Boost Your Investing Income With These 4 Trades

Use these four trades to start earning bonus income on top of what you already earn from your dividend stocks. Even slightly increasing your income will help you take charge of your future and guarantee yourself a prosperous retirement.

For anyone interested in learning options, the SPDR S&P 500 ETF (NYSE:SPY) is a good underlying equity to start with. This ETF has some of the most liquid options in the market at the moment, meaning that you can safely trade its options without having to worry about large bid-ask spreads or putting in limit order after limit order in your search for the optimal deal. Nevertheless, most traders enter the SPY options market using the most basic options strategies (buying calls and puts, which are usually sold at a premium) only to find themselves in the red at the end of the day/week/month.

Today, we are going to look at four strategies for trading options on the SPY. I am going to give you four huge strategies – one for each type of market trend. Together, these four strategies can form the main components of your toolbox for trading or investing in the SPY.

Let’s get started:

#1 Downward Movement with a Price Target

Many emerging pieces of information, including Soros’s bearish outlook on the market, the reduced probability for a rate hike, and capital inflows to bear market hedges (e.g., gold, silver, the Yen, and bitcoin) have got investors speculating that the market might take a tumble. The last market correction can give us an idea of where the market will end up should such an event occur. Take a look at the chart below of the last market correction:

DMON SPY CHART

Most corrections have a logical bottom. At some point, investors come in and start buying up the stocks that have fallen, assuming that the stocks are now undervalued. This forms a bottom and often sends the market into a rebound.

The benefit of this phenomenon is that it allows us to set a price target should we assume a coming market correction. When we have a price target, we can engage in what is called a bear debit spread. In the following example, I’m going to be a bit more optimistic and assume that our price target is the incredibly strong resistance level that we see in the chart above – the green line at around $205:

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Disclosure: Tim Plaehn, income expert with Investors Alley, met with the CEO of one of America’s fastest growing specialty banks, and what he told me ...

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