Brian Shannon;
I buy and sell mainly mutual funds and a small portion of my portfolio in stocks. I want to start trading options to increase my income due to the fact my job is ending in March of 2012. My account has about $100,000 and I want to generate an income from this to live and at the same time save money. What is the best way to invest this money to get the most income out of it? Do you think options are a good way to go? I also have a property with equity of $450,000.00. Should I cash out some money from the property to invest? What’s your opinion? I’ve worked for someone for 28 years and I want to now work for myself. What do you think?

Thank you
Gregory L



It sounds like you are looking to make a massive transition. My first advice would be to go slowly. Replacing income through trading is a much different task than supplementing your retirement account and you are looking to get involved in a very risky way with options. Of course, the risk you are exposed to depends on the strategies you implement.

I would definitely not recommend cashing in on your home equity, that is your nest egg, protect it! Even with the 100K you have available, I would suggest that you start with only 1/3 to 1/2 until you figure out what strategies you are comfortable with and plan to implement in the markets. After you have figured out your strategies, you will still have to face the larger, more difficult obstacle of mastering your emotions and not feeling like you have to make a certain amount to maintain your prior income.

Trading is not easy. Go slow, learn all you can and develop the strategies which make sense for your personality. I definitely encourage you to pursue your dream, but be realistic about it and I hope it goes well!