Here’s a short guide and checklist for the 6 strategies, designed with real-life retirement goals in mind—income generation, capital preservation, and low stress.
1. Covered Calls
When to Use:
- You own 100+ shares of a stock you’re willing to hold
- You want monthly income without selling the stock
- You think the stock will stay flat or rise slightly
Why it works for Retirees:
- Generates steady income
- Adds a “paycheck” to long-term holdings
- Low risk if you’re holding quality stocks
Quick Tip: Use on dividend-paying stocks for double income potential.
2. Cash-Secured Puts
When to Use:
- You want to buy a stock at a lower price
- You’re okay owning the stock if assigned
- You want income while waiting for the stock to dip
Why it works for Retirees:
- Provides income while staying conservative
- Allows you to “name your price” for stocks
- Completely backed by cash = lower stress
Quick Tip: Choose strike prices below the current market for extra safety.
3. Diagonal Call Spreads
When to Use:
- You want a mix of income and upside potential
- You’re okay managing a position monthly
- You want to lower capital requirements
Why it works for Retirees:
- Less money at risk than owning stock
- Generates income while holding a long-term bullish outlook
- Flexible and customizable
Quick Tip: Think of it as a “rent-and-hold” strategy.
4. Credit Spreads (Vertical Spreads)
When to Use:
- You have a directional view (bullish or bearish)
- You want limited risk and a fixed income target
- You want defined outcomes
Why it works for Retirees:
- Built-in risk management
- Easy to understand income potential and max loss
- Can be used in IRAs
Quick Tip: Use far out-of-the-money strikes for higher probability.
5. Iron Condors
When to Use:
- You expect a stock or index to stay in a range
- You want to generate income from low-volatility markets
- You prefer small, steady profits
Why it works for Retirees:
- Doesn’t require picking direction
- Defined risk, defined reward
- Can be adjusted or closed early
Quick Tip: Ideal for ETFs like SPY or QQQ in sideways markets.
6. Protective Puts (or Collars)
When to Use:
- You want to protect a stock position from downside
- You’re nervous about market volatility
- You want to sleep better
Why it works for Retirees:
- Acts like insurance on your investments
- You stay invested without fear of a big drop
- Collars add income too (by selling a call)
Quick Tip: Use after large gains or during earnings season for added safety.
