kiwing100

I read the article - it seems that retail investors are writing options - both puts and calls. My sense is that retail investors are looking for income especially in light of low interest rates on their cash deposits. I would not be surprised if their brokers are recommending this strategy to them. It is interesting to see that retail investors go hunting for income yield when cash deposit rates are low - I have seen it happen several times - these investors forget about the downside risk on their capital when all they focus on is the income yield - especially when the income yield strategy has worked well recently. It will most likely end up horribly as they seem to be writing naked call options.

Unemployment is also a key variable - if a household loses their key source of income and do not have sufficient savings or other form of income (e.g dividends from portfolio) to help cover costs in the interim period, default on a mortgage is an increasing possibility.

A simple suggestion. Calculate your expected return for each of the investments under consideration. You should be buying those which have the highest expected return. Perhaps buy a basket of the top 5-10 names to give you some diversification (especially if there are some financials in that list)