[Nords]

I'd love for this strategy to work! This seems to be one of the few ways to make money in a prolonged sideways market. It'd work even better if that happens to be the sort of market we'll be in for the next 5-10 years.

What if you sell naked puts and the company announces a 50% dividend cut? The market would whack the price by at least 15%. You'd end up owning a contrarian deep-value asset with a dividend below 3%. Admittedly I can't even remember the last dividend cut from a large-cap stock.

What if you sold naked puts on GM in March (before it fell off the cliff)? As I see it, you'd buy the stock shortly afterward and watch it go on to achieve more double-digit losses. (Of course it'd have a great yield by then!) The strategy would have "worked" but not many would be able to look at a portfolio deep in the red and say to themselves "I'm gettin' a great dividend!"

I've read a couple books on options trading and I need to explore this concept, but I'm cautioned by a trader who says "I didn't understand options until I'd done a couple hundred trades, and after 500 trades I still have questions." I sure hope he's talking about the more esoteric strategies and not just writing covered calls...