Q: I have been a subscriber to Retirement Millionaire for over a year, and am a new "trial" subscriber to Retirement Trader. I took your advice "Do not Retire" and continue to operate my small company here in Canada. As I do not have a great deal of spare time to put on my investments... were you me... how would you best make use of David Eifrig's investment advice? My wife Grace and I had the pleasure of meeting you in Cafayate in March 2011, which prompted me to begin following your investment advice. Thanks. - B.H.

Doc Eifrig comment: As I always remind subscribers, I'm barred by law from giving out individual advice on specific stocks... but our strategy is the same for everyone: Pick companies that have a long history of creating quality products that are used everywhere. Then, be sure the companies reward the owners in dividends and share buybacks (when the stock is cheap). We've been selling options on these companies and doing well. I suspect this pattern will hold for some time.

Q: I trade primarily from an IRA account. When you recommend selling a call option on one of your stock recommendations, is one of your primary considerations picking the option with the highest time value to expiration that is within a two or three month expiration window? - B.C.

Doc Eifrig comment: Yes... For new subscribers, "time value" is the value given to the amount of the option price that's not "in-the-money." That means an option with a strike of $20 would have the most time value right at $20.

So an option with one month left until expiration might be priced at $3. And with two months until expiration, that time value may be $4. At three months, it's $5. The idea here is simple... if we sell one-month options 12 times in the year, we'd get $36. But if we did the two-month, we'd only make $24. The three-months would generate $20 a year. So which do you do?

Another consideration is the different amounts of downside protection - the longest-dated option one gives the most.

Finally, you need to look at how fast the time value decays. As I told another subscriber last month... the greatest amount of time decay in options happens about six weeks from expiration. So we make the most money per day from week seven to week five. That's why I like to sell the two-months-to-go options... We ride right across that sweet spot of time decay.

Occasionally, we'll go to three months if we get a sudden spike in volatility. That way, we've locked up extra premium per unit of time for a longer period of time.
