Many people spend lots of time researching for vehicles to trade. I like my students spending most of their time practicing and perfecting the various income strategies. Here is a simple 3 step process I sometimes use to find good candidates for monthly income trades like calendar spreads, credit spreads, butterflies, condors and covered writes.
#1 List 10 stocks you would be willing to buy 100 shares of for little Guido’s college fund. Typically these are good solid stocks you would buy in your retirement account.
#2 Filter this list by excluding stocks under $55. This gives you stocks with a bit more time premium.
#3 Filter the list again by only including the stocks with implied volatility levels between 17-27. This filters out many potential psycho stocks! This information is easily available from your brokerage platform.
Here is a sampling of stocks or ETF’s that have implied volatility between 17-27 and that are over $55:
KO GLD SPY PM ACL IBM XOM UPS AZO CVX MMM DIS IWM V GS NOC WLP FDX GOOG CAT
This is not an exhaustive method, merely a simple one. I may expand on other methods in weeks ahead. The merits of this method is that it doesn’t require computer training or a Harvard education!
Keep Practicing the craft!
Dan Sheridan firstname.lastname@example.org