Monday, June 29, 2009

Some Prerequisites

Before you get started there are a few basic tools that you will need to do the job. If you don't already have these tool you can start to set them up while waiting for my posts to start rolling in.

• Computer with internet access and a spreadsheet program like Excel
• An online brokerage account with Tier 3 trading privileges
• A subscription to Morningstar, or access to other online stock screening tools

I know the Morningstar subscription costs money, but it is the best service that I have found to do the Option Income system, because of its proprietary ranking system and focus on high quality value stocks. However, if you need to keep your costs down while you are starting out and learning the ropes there are several free online websites that screen stocks for fundamental analysis, such as MSN's stock screener, which is located at:

Next up... A multi-part post on: "How to identify and track opportunities across a range of stocks?"


  1. How did the WAM trade do? I have a virtual trading account and ran the WAM scenario on of the more stable stocks I own CL (Colgate). Colgate was at $71.76 and I sold 2 virtual puts at .90 cents for a net of $165.04 after the virtual commission. Only 1.1%. CL closed today at 73.52.

  2. I had a hard time getting in at my target return of 2-3%, so being conservative I opted to buy the $20 strike price puts at .15 cents for a 3/4% return. What I did like was my probability of success going in which was 90%! True to the statistics the stock closed at $21.99 on expiration day. So another win! Albeit at a lower return then my average of 2%. To use a baseball analogy I like to stay in the game and wait for the fat pitch before I swing.

    Congrats! Nice job on selling the 'CL' put! Was that your first time selling a put (option income strategy)?

    I'll look into CL further. It is tough to get decent returns on quality stocks when their price is that high ($70's). I try to find high quality stocks in the $20 to $40 range (not always easy) and even in the $50 when the stock is strong. But you did very well and like myself better to go safe. Take a small return with a strong stock when learning the ropes!

    I'll look into some other possibilities to consider so we have some other options (choices) besides 'O'. I'm close to my next post - the kids summer activities have been keeping me busy.

  3. Just looked at 'CL'... did you virtual trade the July or Aug options?