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I recently wrote about several stocks that I regularly sell put options on in order to create additional portfolio income. I received emails from a number of people about this subject so I am writing a follow up in order to give some current options trades I am pursuing now. You can read my last article on options here.

The options I focus on are for stocks I am willing to buy at current prices. When I sell out of the money puts on these stocks, I would be buying them for even less (if the option is exercised) than I could if I were to buy the stock at current prices. Options are not for everyone, and it is important that you do not take excessive risks by creating too large of a position based on any one stock. That is why I have included several option plays to consider.

As I told one person recently, when you sell put options, you are basically in the insurance business. Since you are agreeing to buy stock at a predetermined price on the set date, it is like you are insuring another investor against losses. In return for accepting the risk of losses, if a stock goes below the strike price, you collect the option premium.

I tend to focus on stocks that provide rich option premiums. This option strategy works best as part of a well diversified portfolio. While I believe all of these options will expire worthless, (which means I will not have to buy the stock), I am not concerned if I am forced to buy these names. Here are the option trades for May options expiration:

LDK Solar (NYSE:LDK) is trading at about $11.06. The 50 day moving average is $12.15 and the 200 day moving average is $10.47. LDK has very strong earnings potential and based on guidance from the company, it appears they could earn over $3 per share in 2011. This puts the P/E ratio at about 4 which is extremely low for one of the leading solar companies. Book value is listed at $7.80 per share.

Which LDK options to consider: Since the moving averages are between $12.15 and just over $10, I would go with $11 puts for now. Selling the May $11 put nets about $60 per contract. If the option is exercised, the net cost basis would be about $10.40 per share. I am happy to own this leading solar company if the option is exercised; if not, I will collect about 6% of the price of this stock in less than a month.

ReneSola, Ltd. (NYSE:SOL) shares are trading at $9.29. The 50 day moving average is $9.89 and the 200 day moving average is $9.91. SOL is estimated to earn about $2 per share in 2011. This puts the P/E ratio at just over 4 which is extremely undervalued for one of the leading low cost solar companies. Book value is listed at $5.91 per share.

Which SOL options to consider: Since the moving averages are around $9, I would go with $9 puts for now. Selling the May $9 put nets about $40 per contract. If the option is exercised, the net cost basis would be about $8.60 per share.

Trina Solar, Ltd. (NYSE:TSL) has pulled back to about $27.24. The 50 day moving average is $28.07 and the 200 day moving average is $26.09. TSL is estimated to earn over $4 per share in 2011. This puts the P/E ratio at about 6. Multiple analysts have price targets of about $40 per share for TSL. Book value is listed at $16.73 per share.

Which TSL options to consider: Since the moving averages are between $28 and $26, I would go with the $26 puts for now. Selling the May $26 put nets about $85 per contract. If the option is exercised, the net cost basis would be about $25.15 per share.

Jinkosolar Holding Co., Ltd. (NYSE:JKS) has pulled back to about $24.28. The 50 day moving average is $25.90 and the 200 day moving average is $25.26. JKS has earnings estimates of about $5.42 per share for 2011. This puts the P/E ratio at about 5. The shares have received multiple buy ratings with price targets of about $40 for these shares. Book value is listed at $17.05 per share.

Which JKS options to consider: Since the moving averages are around $25, I would go with $23 puts for now. Selling the May $23 put nets about $120 per contract. If the option is exercised, the net cost basis would be about $21.80 per share.

Nokia Corp (NYSE:NOK) shares are trading at $8.68. Nokia is a leading mobile phone company. The 50 day moving average is about $8.63 and the 200 day moving average is about $9.68. Earnings estimates for NOK are just over 70 cents per share in 2011, and 80 cents for 2012, so the P/E ratio is about 12 on these shares. Nokia pays a dividend of about 46 cents per share which is equivalent to a yield of 5.4%.

Which NOK options to consider: Since the moving averages are around $9, I would go with $9 puts for now. Selling the May $9 put nets about $88 per contract. If the option is exercised, the net cost basis would be about $8.12 per share. An added bonus is that if you end up owning these shares, you can collect a solid dividend.

Perfect World Co. Ltd. (NASDAQ:PWRD) is trading at $26.84. PWRD is one of the leading online gaming companies in China. The 50 day moving average is $22.48 and the 200 day moving average is $24.59. PWRD earnings estimates are about $2.49 per share in 2011. This puts the P/E ratio at about 9 which is very low for one of the leading online gaming companies. The balance sheet is extremely strong with almost $5 per share in cash.

Which PWRD options to consider: Since the moving averages are between $22 and $24, I would go with $24 puts. Selling the May $24 put nets about $65 per contract. If the option is exercised, the net cost basis would be about $23.35 per share. Since these shares have rallied lately, I would wait on this option trade to see if the shares drop which would increase the premium received for this option. If the option contract nets about $100 each then, I would be inclined to make this trade.

The data is sourced from Yahoo Finance and Stockcharts.com. The information and data is believed to be accurate, but no guarantees or representations are made.

Source: 6 Option Trades That You Could Profit From in May

Additional disclosure: I am long some of the stocks mentioned and short some of the puts mentioned in this article. I am not a registered investment advisor and do not provide specific investment advice. The information contained herein is for informational purposes only.