There are strategies out there using both options and something called "hybrid options" to help investors use their existing stocks to generate income, including covered call writing, put selling and hybrid options securities like Stock Return Income Debt Securities (STRIDES).

Here's how to use these strategies, plus three options trades you'll be getting paid to make.

Options Strategy #1: Covered Calls

There's an options income strategy for every level of investor, and one of the easiest to implement and understand is covered call writing. Simply put, covered call writing means selling calls against stocks that you already own.

Covered call writing is a bet that a stock you already own will continue moving up or will trade sideways for a bit. The calls you sell (also known as "writing") are considered "covered" because you already own the underlying stock. This means if you are "called" to produce the stock, you are covered because you already have the shares.

Get 7 Tips for Writing Covered Calls here.

Income-Generating Options Trade #1:
Sell AXP Sept 35 Calls (ABZIG)

Financial stocks have outpaced every other sector in the latest move up for the S&P 500 (SPX). American Express (AXP) is one of the leaders in the latest rally for financial stocks. The stock enjoyed a technical breakout at $30 and has since rallied up to $34, where there is some serious overhead technical resistance that comes into play.

One of the ways investors can stay on a bull train, bring in some extra income and hedge their downside at the same time is to employ a buy-write strategy. A buy-write is a covered call strategy where you simultaneously purchase the stock and write the call contract.

With volatility so high, you can buy the shares of American Express (AXP) at $33 and then simultaneously sell the AXP Sept 35 Calls (ABZIG) for $1.25 per contract.

If the stock is trading above $35 by the closing bell on the third Friday of September, those shares will most certainly be called away for a $2 gain. Add the $1.25 in call premium collected and you pocket $3.25 per share. Divide that $3.25 gain by the cost basis of $33 and you get a 45-day return of 9.84%.

If you can roll your capital on a consistent basis every six weeks, you can understand why asset managers love this strategy. Plus, the $1.25 call premium brought in acts as a 5% downside hedge against any pullbacks or potential losses if the stock rolls over. It's a time tested tool for taking some money off the table without having to sell the stock.