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If momen­tum-led markets have shot stocks well below or above your personal buy targets, options provide an easy way to take advantage and earn some extra income.

I see two basic opportunities: 1.) Selling or "writing" "Covered Calls" on stocks you own that now trade above buy targets, and 2.) Writ­ing "Put" options on beaten down stocks you should own.

Call options convey the right to buy 100 shares of a stock at a set "strike" price by a specified date. Put options convey the right to sell 100 shares at a set strike price by a certain date. The value of the call increases as the price of the underlying stock rises; the value of the put increases as the stock's price falls.

When you write options, you get the opposite result. A covered call's value will fall to zero if a stock does not rise before it expires. You pocket the entire price or "premium." Conversely, a put's value goes to zero if a stock's price doesn't fall to its strike price by expiration.

If a covered call moves against you, the worst that can happen is you'll have to sell the stock at the strike price. If a written put moves against you, the worst outcome is you'll buy the stock at the strike price.

Energy Transfer Partners (NYSE: ETP) is a strong candidate for writ­ing a put option, whether you al­ready own this master limited part­nership or not. Management is buying Sunoco (NYSE: SUN), which it will then combine with assets of the former Southern Union now held by general partner Energy Transfer Equity LP (NYSE: ETE) in a 40-60 partnership.

My recommended option to write is Energy Transfer Partners December $42.50 Put (Symbol: ETP121222P42.5, Limit Order Price: $1.90 or more). That's a premium of $190 per option sold. Note that in retirement accounts you'll need to put up the full cost of buying 100 shares when you write the put, which will be $4,250.

If the unit price falls and the put is exercised, the worst that can happen is we'll buy this MLP at $42.50, a 5% discount to where it trades now. If not, we'll pocket the full premium.

Warning: The option price in this trade recommendation is as of 07/13/12 and will likely have changed by the publication date.

Source: The 'Write' Time For An Energy Transfer Partners Put