Gyroscopic Investing

Was thinking that maybe one way to generate a little bit of extra income might be to sell puts on your lagging asset, especially if you're getting close to a rebalance. 

Anyone have any experience or thoughts on this?

Selling covered calls may be a way to generate income as well.  I really don't have more than a very basic understanding of options, so I can't help you much.  I recently purchased an options book so that I can start to develop a better understanding of how I could use them, if at all.

I thought of this a few months back and brought it up...I was surprised by the tepid reception it received. Apparently the "no free lunch" principle applies. I still think it would be a good idea though. I'm curious if anyone starts implementing it successfully on a small scale.

I see selling options as like playing Russian roulette. You will win most of the time, but when you lose... Oh man. Very asymmetrical risk profile. Your returns will seem very consistent until one day your portfolio will likely blow up.

I think I would only do it if I knew I was going to die anyways and I wanted a bit of excitement/possibly more money.

Melveyr,

This would be true unless you are selling a quantity of puts that represents the amount of an asset that you would purchase anyway at a rebalance point. I guess the same would be true for selling calls.