Money For the Rest of Us · Wednesday, September 23, 2026
David Stein explains that income generated from selling options, such as puts or calls, should not be confused with investment returns. He likens this income to selling insurance, emphasizing that it does not negate the underlying risks or potential for losses associated with the strategy. The host warns against promises of high income from such strategies, highlighting that they can overlook significant downsides.
“But what we don't want to do is confuse the income, the high levels of income we can get from selling protection, selling puts or selling calls, as part of a covered call strategy. We cannot forget that that income is not the return. This is insurance.”
“And low stress trading emphasizes this is an insurance type strategy. But they ignore the potential for losses.”
“And we just don't want to be taken in by the promises of high income. And that's what low stress trading is doing. They're promising very high income.”