Lions.. do you know that you can also sell options? I do cover this in my book A (NOT) So Random Walk On Wall Street, but let me do a brief synopsis here.
Lets say you are bullish on stock XYZ, well you could buy a call or sell a put. If you buy a call, you BUY TO OPEN and hope that the stock price goes up. If you sell a put, you SELL TO OPEN, and hope that the stock price remains higher than the put you sold..
If you choose to sell a put, you would choose a strike price say 15% lower than where XYZ is currently trading which expires out say 3 or 4 months. If you sell a put, you get paid a premium immediately. As long as the underlying stock price does not go lower than the strike price on the put you sold, you get to keep the entire premium by the expiration date. You can also reverse the put option you sold at anytime choosing, BUY TO CLOSE.
Buying options carries with it time decay, with selling options, as in the case above, time decay works in your favor.
I hope you enjoyed this tip!
GM
Selling 'naked' calls and puts is very risky. If you are wrong you stand to lose a lot of money, especially if you sell calls (upside unlimited risk). It is much less risky to sell a call/put spread. That way the most you lose is the spread value minus the credit you received when selling the spread. Say SPY is 390 and you believe it is going up further, then you would perhaps sell a 370/365 bull put spread. Depending on the volatility, you may receive $1.50 credit with a $5 spread, so your max risk is $3.50. Going out more than 2-3 months in expiration puts you at greater risk that the trade may turn against you, especially since these positions benefit from time decay, and the closer to expiration you get, the more time decay the options have. The only issue with selling bull put spreads when the market is making new all time highs almost every day is that the volatility (VIX) is relatively low. Selling a spread when the VIX spikes (like 3 weeks ago with the WallStreetBets volatility is preferable.
I would ignore this advice. Selling short put, calls, or stocks comes with UNLIMITED possible losses and is only recommended for experienced traders who understand and can bankroll horrific loss that might happen. Even if the drop is temporary or on the same day your account will be immediately liquidated by your brokerage and you may have to pay the difference if your losses were higher than your balance.