Get More Income Using This Creative Strategy

Many retirees are stretching for yield and buying high-yield bonds and bond funds and dividend-paying stocks. The risk/reward ratio in the high-yield bond market isn't too good right now and investors may not be getting compensated for the risks they are taking. Dividend-paying stocks can also be a good income alternative depending on yourindividual risk tolerance.

Consistent cash flow can be obtained by selling covered calls against dividend paying equities. Remember, options aren't suitable for all investors. The main drawback to selling covered calls is that you are limiting the upside potential of your stock, by giving someone else the right to call it from you at the strike price on or before the expiration date. However,if cash flow is your primary objective, covered call writing might be a strategy worth considering.

Source: Market Watch

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