Most investors would like to have at least some portion of their money invested in gold. After all, over the last 10 years the long term trend has been steadily up, and with all the uncertainty in Europe, China and elsewhere, owning some gold makes sense.

But investors who invest for income, and rely on that income, face a dilemma: Even BHP — the Melbourne-based natural resources giant with some gold interests — yields just 3. The answer is a proven, conservative strategy of buying the SPDR Gold Shares ETF NYSEARCA: GLD is an unleveraged ETF which owns gold bullion, is managed by State Street for a modest 0.

Buyers of options face an inexorable enemy — time. GLD closed recently at This low figure is due to the fact that gold prices correlate most closely to the U.

But statistically GLD is quite volatile with a standard deviation of depending on the time period, somewhat higher than the stock market average of If we buy GLD at What kind of return does this give us if GLD remains flat, goes up, or goes down? But what happens if GLD instead goes down?

Aggressive Covered Call Options Strategy To Generate Current Income – An Overview

If GLD stays at or above that level, the option will of course expire worthless, and in Jan we can generate more income by selling another option. At that point we can buy back the option and lock in that gain, then sell our GLD shares at a loss.

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Selling covered calls is an excellent proven strategy to increase or create dividend income. It works very well when you own high quality underlying securities and sell options above your breakeven price level. While the same strategy can be implemented with almost any stock, it works especially well with gold because the emotional attachment many speculators have for the metal results in consistently expensive option prices.

Most times the option expires, you keep the stock, and you can do it again.

However, you do give up the potential for a home run. In my experience, just as Billy Bean in Moneyball found that getting on base was the single most important statistic - not hitting home runs - selling covered calls and generating strong income levels is the equivalent of hitting.

I am long GLD with corresponding covered call option positions. Generating Income From Owning Gold Nov.

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