Passive income on options. What Is Passive Income and How Do I Build It? |

I consider passive income to be as important as active trading income. In my opinion, generating steady passive income is absolutely critical for traders who are relying on the financial markets for their livelihood.

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In today's video, I will go one step ahead and show you how I recommend trades to generate passive income. I hope it passive income on options be useful to you.

Professional traders use this strategy regularly and I believe you need to know about it too. I hope the markets are treating you well. You have your finger on the pulse of the market and you're watching what's happening in the financial markets all around you.

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In my past videos I have often talked about and elaborated upon why generating steady income or passive income or even income from fixed income securities is absolutely critical for traders who are basically relying on trading the financial markets for their primary source of income.

The reason is not very far to seek.

In brief, let me just recap about what I have normally elaborated upon in my other videos. While you're battling the markets while you're trading the markets, and you're navigating through the markets are weaving in and out of the traffic as it were, you cannot keep yourself preoccupied about your home and hearth expenses or what you'd want to call survival expenses.

That has to be taken care of by your fixed income or other income so that you don't you're not forced to square up your transactions because of want of finance. So you basically twin track or even multi track your income sources so that no one activity infringes or forces you to act against your intended blueprint because there is a cash crunch in another line of activity. That is basically the modus operandi or the prime focus on what we are trying to do here.

It's called the Fast Income Alerts. It's about option writing here.

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We try to sell options so that we passive income on options the premium. Now the buyer of an option pays the premium.

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Here we are trying to sell an option. The modest operandi or the prime reason for selling the option is to receive that premium so that premium becomes the income. Your investment is the span margin that you pay for selling that option or writing that option.

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So the return on investment is calculated as the income earned on the investment, which is the span margin paid to the exchange through your broker. Primarily the focus will be on the stock indices, not so much on the USDINR where, of course, there will be trades, but they will be few and far between as compared to the Nifty the Bank Nifty. If you care to check your statistics, you will realise that a lion share off the turnover in the derivative segment comes from the indexes, the Nifty 50 and the Bank Nifty.

So since these two indices are most heavily traded counters where the bid and the offer price is, the difference between the buying and selling quotes is very, very small, it actually becomes very easy for trader to get in and get out of a trade, and your execution costs tend to be lower because the slippage or the difference between the two prices is very narrow.

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It's not difficult to get anything between 15 lakh to 22 lakhs, 23 lakh lots being traded in the futures segment in the USDINR. So navigating in and out of these counters is not really a problem. This is an income generation scheme. This is not a multibagger scheme where you will double and triple your money in a month.

But a dream without a plan is just a wish. To put some wheels on that dream, you need to consider passive income. There are plenty of different passive income options and explanations of how to build it. What Is Passive Income?

This is not a stock trading scheme. This is to earn a rate of return, which is calculated in percentage terms on your investments most of the times. What you will get is a rate of return higher than bank fixed deposits.

Once in a while, you might get above average returns also.

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As in all financial market trades, there are always trades that surprise. Is this a bulletproof risk free trade? No, not at all. I am not saying that there will be no losses.

There will be a couple of months where you might even have to hit your stop loss and you might lose a little bit of money.

What Is Passive Income and How Do I Build It?

But like I said, this is an income generation scheme. So your return, if it is, say, hypothetically 1.

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So to that extent, this is a scheme where your return and your downside are likely to passive income on options contracted, as compared to a stock futures or in index futures, high risk trade in the markets. A lot of professional investors a lot of professional traders believe in writing options because we know that option writing has a higher probability of success as compared to option buying.

So the probability of success and I stress upon the word probability, not a guarantee, is fairly good trading options strategies option writing, which is what we are doing in the Fast Income Alerts service.

The average millionaire is estimated to have seven streams of income. Most millionaires have figured out additional streams of income other than their mainstream. Here are a few passive income ideas to help you build up your personal wealth.

In case you have any queries, you can always feel free to write to customer service and I do hope to see you there. Before I sign off from this video, let me remind you to click like on this video if you're watching it on YouTube.

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In the comments section, do let me know what you think about this video and what you would want me to record in my next video. Also, don't forget to subscribe to my YouTube channel. Do refer this video to your family and friends and help me reach out to traders to help them get into the mould of knowledge based trading and investments. Please don't take very good care of yourself, your trades, your investments, and your family.

How to Make Passive Income by Writing Options

Vijay Bhambwani signing off for now till we meet again in my next video. Thank you for watching. Stay safe and have a great trading day! I'll show you how to make thousands of rupees of passive income in just a few hours from the market. Stocks or Indices?

Get the Course Learn More Finding Passive Income Ideas with This List Each suggestion is ranked by how much effort you need to put in upfront before you might start seeing some money come in. A score of one takes the least effort, while a score of five requires the most. Usually, just one of these is not going to be the million-dollar answer. You should try out some of the low effort passive income ideas and one or two of the higher effort ones and see which work best for you. Plenty of online savings and checking accounts are available to people who want a little more bang for their buck.

January 4, In this volatile market, what is the better option for traders: the indices like the Nifty and bank nifty or individual stocks? Find out