This is an options strategy whereby an investor holds a stock and sells options against the stock to generate income. This is also known as a “buy-write”.

• Benefit: This strategy can give you extra income on positions in your portfolio or add insurance to downside loss.
• Downside: A covered call will limit you upside profit if your stock should pass the strike price of the option. A covered call can also limit your movement in and out a stock.

For more information see here.

Selling Puts for income involves selling a Put against a security to collect the premium.

• Benefit: It can be used as an income stream if markets are moving up or a way to enter a stock you like at a lower price.
• Downside: You have to secure you Put position with cash in the event the stock drops below your strike price. In this case you are obligated to buy the security at the strike price even though the stock is lower.  The open Put maximum loss is exactly your strike price times the amount of shares you are obligated to purchase (example 2 put contracts equals 200 shares of the underlying stock.  With a strike price of $20 your maximum risk equals 200 x 20 = $4,000 )

For more on puts see the CBOE explanation here.

Buying long calls or long puts gives you an option to buy or sell a security at the strike price.  This strategy can be used as an inexpensive way to make bets on the direction of a security.  Straight calls/puts can also be used to hedge risk on other strategies.

Benefits: Inexpensive way to make a predication play on a security.  Also can be used as inexpensive insurance in positions you own.  Limited risk, unlimited gain.

Downside: Often these strategies are an all or nothing game.  If you are betting on a downside or upside move and you are wrong, your option will expire worthless.  In addition, time is your enemy.  The longer the time frame the more expensive the purchase is and the more you will need to risk.

Learn about options here.

Buying stocks for dividend income can be a great strategy that does not take the time to manage such as option strategies.  When looking for dividend strategies, it is good to diversify across sectors and find stocks that have a long history of paying dividends.  Typical high paying dividend sectors include Telecommunications, Energy, and Real Estate.

As explained by Optionseducation.org

A long condor consists of being long one call and short another call with a higher strike, and long one put and short another put with a lower strike. Typically, the call strikes are above and the put strikes below the current level of underlying stock, and the distance between the call strikes equals the distance between the put strikes. All the options must be of the same expiration.

• Benefits: Can collect premiums based on the spread between you long and short positions.  This strategy has a limited upside as well as a limited downside risk.
• Downside: This strategy can be difficult to build, expensive in broker fees, and has limited upside.

As explained by Optionseducation.org

A bear call spread is a limited-risk-limited-reward strategy, consisting of one short call option and one long call option. This strategy generally profits if the stock price holds steady or declines.

The most it can generate is the net premium received at the outset. If the forecast is wrong and the stock rallies instead, the losses grow only until long call caps the amount.

• The description above is for a bear call spread, you can create spreads in any way, long, short, calendar, bear, bull, etc.  They have similar structures but can vary in the risk/reward charts.  The best way to understand spreads is to visit the site above and learn their examples.
• Benefits: Can collect premiums based on the spread between you long and short positions.  Strategies can be built to almost any type of risk/reward chart depending on your tolerance.  Spreads can be used to collect income, build insurance, hedge against up/down turns, and be built for down/up/ or flat markets.
• Downside: This strategy can be difficult to build, expensive in broker fees, and sometimes complicated to understand your risk/reward.  Spreads take a good deal of time to build properly.