There are MANY options. Some are very short term - 1 week and some are VERY long term - a year or more, called LEAPS. There are options on stocks, futures and stock indices. But all options EXPIRE; it's the expiration time period that varies!
One of the critical characteristics of options is that its time value rapidly gets smaller as it gets closer to expiration. And it decreases greatly in value during the month before it expires.
You can either SELL or BUY options. When you are buying an option you are predicting the market to move in a particular direction so you can make a huge profit. Buying an option is driven by our greed emotion and you lose more times than you win. When you are selling options you get a fixed premium if the market doesn't move past your strike price at expiration. Which option to choose to sell depends on your risk aversion?
With the Iron Condor strategy that I recommend you are SELLING both PUT and CALL options for a premium. So the less the time period is, the greater the probability that you will be able to earn the premium. BUT unfortunately, the shorter the time period is, the lower the premium. The option time period you utilize is a function of how risk averse you are vs. the premium you can generate.
Once you decide which time period to use, the question becomes - what option. If one uses an option on stocks, he is bottled in by 2 concerns: one - if he sells an option during the earnings period, the price of the stock can swing wildly and cause him to lose money and two, if an analyst comes out with either a strong negative or positive opinion, the stock can again swing wildly and again cause you to lose money!
If you utilize an Index option like the Dow Jones or the S&P, you will not have to be concerned about earnings or analyst projections for a company.
My preference is the options on the Russell 2000 (RUT) because they exhibit more volatility than those on the Dow and S&P or OEX Indices. The greater the volatility is, the more premium you receive.
With my Iron Condor method because all options rapidly lose their value in the last month, I sell the Iron Condor when there no more than 30 calendar days before the options expire. With this strategy, I earn an average of 10%/month.
With 10%/month gain you will slowly, but surely get wealthy or have a consistent supplemental income. With 10%/month profit and starting with just $3,500, in only 60 months you will be a millionaire. You can check this out by using the Compound Interest Calculator.
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