One strategy that can help you pull out money from the stock market on a consistent basis is called writing covered call. This can be a pretty powerful strategy.
So, what is covered call writing? When an investor sells a call on their stock what they are doing is selling another investor the right to buy the stock from them at a given price at some point in the future. For example if you own stock XYZ and it is trading at $53 you may decide to sell the front month $55 call for $4.
You would get $4 in option premium once you enter the trade but you would also be obligated to sell your stock at $55 if you get called out. Well obviously no one is going to make you sell a $53 stock at $55, so it is pretty likely that the trade is going to be profitable.
However if the stock goes up above $55 then it is a different story. If a stock breaks $55 then chances are you will get called out of your investment and forced to sell your stock.
Selling covered calls does come with an additional risk. If the stock goes up to $80 then you actually would have been better off by not selling the call because now you will have to sell your stock at $55. Huge moves like that can actually happen in the market, so the risk of missing a profit is real.
But then again covered call selling can be a great way to make some consistent money. If the stock stays flat, goes down, or even comes up a little the call will expire worthless and you would walk away with the profits.
The consistency you can recieve by selling calls month after month can be worth the risk. While it can be risky it can also be a great strategy, this is especially true when you combine it with fundamentally strong high dividend paying stocks.
