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Play Editor's Note: This remains an extremely volatile market and I'm hearing and reading a lot more discussion about the odds of a retest of last week's lows. It may not be soon but possibly by year-end. I don't normally discuss option plays on Premier Investor but one way to take advantage of the high volatility is to sell options.

A great way to do it is a covered call. If you have a long-term portfolio then consider selling covered calls against it. You could generate some extra income. It gets a little more tricky if your stock goes up and you don't want the stock called away but it's worth looking into.

Another great way to put this volatility to work for you is selling puts. Let me explain. Let's say you have wanted to buy a few stocks because you really believe in the company and want to own the stock. Then consider selling puts on it. You collect the premium now. If the stock trades under your strike price it will probably be "put" to you, a.k.a. you'll be forced to buy it. However, if it's a company you want to own then there isn't a problem.

Here's an example. If I had talked to you back in the summer when Apple Inc (AAPL) was trading between $170 and $210 and I said would you want to own AAPL at $100, you'd probably say yes. Well currently AAPL is at $104. You can sell the November $100 puts for over $10. That immediately puts over $1,000 in your account per contract. If you get put the stock at $100, then you don't have any risk until AAPL trades under $90.00. If AAPL doesn't trade under $100 or you don't get put the stock then you keep the $1,000 and can do it again after November options expire. Of course AAPL's share price will be different in late November and the volatility may not be so high so you could collect less premium.

Now this is just a brief description of the strategy and interested investors should do more research with their broker. Just remember; first don't do this on stocks you don't want to own. Second, make sure you have the funds or margin available to buy the stock if it gets put to you. Most options on stocks are American style and can be exercised at any time if they're in-the-money.

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