Get Rich - Stay Rich - Investing for Monthly Income

Archive for the ‘Investing Strategy’ Category

From $5K to $1 Million By Selling Options

Many investors ask me how much money is require to start investing and to become a millionaire. As we all know from our simple start in life, you can grow from a humble beginning to achieving financial success and independence. This is what we focus on with our monthly income trades with subscribers. Here is a recent headline from a CNBC interview with Ron Baron:

Any patient investor can turn $5,000 a year into nearly $1 million, says billionaire investor Ron Baron. “You have to have a small amount of money and invest it regularly for a long time,” Baron says. “It’s all about compounding,” the Baron Capital founder says, referring to the power of making regular investments and reinvesting the returns.

You have undoubtedly heard it said before – compounding returns is the eighth wonder of the world or man’s greatest invention. But to an investor it is a great wealth builder. While many income investors think of compounding dividends, this can also be accomplished by option sellers by compounding the option premium received by selling either put or call options. I think about the premium received as soon as the option is sold can be readily reinvested or compounded immediately.

Here is the formal definition from Investopedia:

Compound interest is interest calculated on the initial principal and also on the accumulated interest of previous periods of a deposit or loan. Compound interest can be thought of as “interest on interest,” and will make a deposit or loan grow at a faster rate than simple interest, which is interest calculated only on the principal amount. The rate at which compound interest accrues depends on the frequency of compounding; the higher the number of compounding periods, the greater the compound interest.

The “Rule of 72” is an easy way to calculate how long it will take to double you money based on compounding returns. For example, an investor has a dividend stock paying an annual 5% dividend. Using the rule of 72, dividing 72 by 5 indicates the investor will double his money in 14.4 years. Not bad for a dividend producing asset. Now, let’s compare this to selling options. If you make 2% per month on average, you can double you money in 36 months (72/2=36). This is only 3 years compared to 14.4 years for the 5% dividend stock! Which investment do you want to pursue?

This is the theory behind our strategy to sell puts and covered calls at get rich investments. We can generate consistent income on a monthly basis that will provide us the opportunity to compound our money and returns at a faster pace than the buy and hold dividend investing.

Learn how to compound your money and the best stocks to use in this strategy to move from $5,000 to $1 million.

Follow us on Twitter – @GetRichStayRich

Join the Monthly Income Newsletter voted the best value for option income trading.

You Can Help End Poverty

New Income trade for 130% Annualized Return

Income Opportunity for 130% Option Trade
As income investors, we seek to create consistent monthly income by selling options to collect monthly premiums.  This has been successful for our investors for years.  Option selling offers another method to diversify investing strategies beyond traditional dividend investing.  We have combined technical stock events with our strategy to identify high returns option selling opportunities. This income trade will generate a return of more than 130% annualized.
 
Stock:  Zumiez (ZUMZ) is a leading specialty retailer of apparel, footwear, accessories and hardgoods for young men and women who want to express their individuality through the fashion, music, art and culture of action sports, streetwear, and other unique lifestyles. As of October 28, 2017 it operated 694 stores, including 604 in the United States, 51 in Canada, and 32 in Europe and 7 in Australia. ZUMZ operates under the names Zumiez, Blue Tomato and Fast Times.
ZUMZ announced that total net sales for the four-week period ended October 28, 2017 increased 10.0% to $61.5 million, compared to $55.9 million for the four-week period ended October 29, 2016. The Company’s comparable sales increased 6.6% for the four-week period compared to a comparable sales increase of 10.2% in the year ago period.
 
Earnings Per Share (EPS) was up 49% compared to the same quarter in the prior year. This tells us the company increased earnings and/or decreased the number of shares.
Return on Equity (ROE) is 8.01% for the latest twelve months. This reflects how efficient the company has been at turning a profit on the money shareholders have invested.
Chart: We have detected a “Symmetrical Continuation Triangle (Bullish)” chart pattern formed on ZUMZ. The stock’s price has broken upward to confirm a classic chart pattern, offering a target price for the intermediate-term in the range of 21.00 to 21.70 for a 19% price increase
Subscribe to Monthly Income Newsletter
Follow us on Twitter – @GetRichStayRich

Income Trade for 45%

As income investors, we seek to create consistent monthly income by selling options to collect monthly premiums. This has been successful for our investors for years. Option selling offers another method to diversify investing strategies beyond traditional dividend investing. We have combined technical stock events with our strategy to identify high returns option selling opportunities. This income trade will generate a return of 45% annualized. We are coming off great trades such as RES and STM.

Stock: Gaslog (GLOG) is an international owner, operator and manager of liquefied natural gas (LNG) carriers. The Company provides support to international energy companies as part of their LNG logistics chain. The Company’s owned consolidated fleet consists of 27 LNG carriers, including 22 ships in operation and five LNG carriers on order.

Trend: We have detected a “Continuation Diamond (Bullish)” chart pattern formed on GasLog Ltd (GLOG). This bullish signal indicates that the price may rise from the close of 17.45 to the range of 22.00. The pattern formed over 244 days which is roughly the period of time in which the target price range may be achieved. GasLog Ltd has a current support price of 16.80 and a resistance level of 17.60.

Strategy: We have an opportunity to sell options for income with GLOG as the stock should trade higher in the coming weeks. I recommend to place your trade and exit when you have locked in profits due to the stock price moving higher. Our goal here is to make income short term so we can exit and compound capital into another trade.

For medium risk option trade, look to sell an November 2017 17.5 PUT for about $1.00. This creates a return of 6.0% with 49 days to expiration. This is an annualized 45% return.

For a conservative trade, you can setup a covered call trade. You can purchase 100 shares of RES and sell an November 17.5 CALL option for about $0.80.

We continue to identify winning option trades to generate income and to exit early as the stock bullish patterns moves prices higher.

Follow us on Twitter – @GetRichStayRich

Join the Monthly Income Newsletter voted the best value for option income trading.

Option Income Trade for 43.6%

As income investors, we seek to create consistent monthly income by selling options to collect monthly premiums. This has been successful for our investors for years. Option selling offers another method to diversify investing strategies beyond traditional dividend investing. We have combined technical stock events with our strategy to identify high returns option selling opportunities. This income trade will generate a return of 43% annualized. We are coming off a great trade in STM for a 40% gain.

Stock: RPC, Inc. (RES) provides a range of oilfield services and equipment for oil and gas companies involved in the exploration, production, and development of oil and gas properties in the United States, Africa, Canada, Argentina, China, Mexico, Eastern Europe, Latin America, and the Middle East. The company operates in two segments, Technical Services and Support Services.

Trend: We have identified a bullish “Upside Breakout” chart pattern. This bullish signal indicates that the stock price may rise from the close to the range of $25. The faster moving average recently crossed above the slower moving average, signaling a new uptrend has been established. The PMO supports the uptrend price movement.

The MACD is above its signal line and positive. The configuration is positive. Moreover, the stock is trading above both its 20 and 50 day MA (respectively at 19.54 and 20.12). RPC Inc is currently trading near its 52 week high reached at 23.36 on 25/01/17.

Strategy: We have an opportunity to sell options for income with RES as the stock should trade higher in the coming weeks. I recommend to place your trade and exit when you have locked in profits due to the stock price moving higher. Our goal here is to make income short term so we can exit and compound capital into another trade.

For medium risk option trade, look to sell an October 2017 22 PUT for about $0.90. This creates a return of 4.3% with 36 days to expiration. This is an annualized 43.6% return.

For a conservative trade, you can setup a covered call trade. You can purchase 100 shares of RES and sell an October 22 CALL option for about $1.10.

We continue to identify winning option trades to generate income and to exit early as the stock bullish patterns moves prices higher.

Follow us on Twitter – @GetRichStayRich

Join the Monthly Income Newsletter voted the best value for option income trading.

Selling Puts for Monthly Income

When you buy an option, you are hoping for a move in the stock based on a chart or event or your brother-in-law’s advice (bad move there).  Hopefully, you watch the option move up and then — when greed, fear or satisfaction set in — you sell and make a profit.  Or you watch it go down and either have an automatic stop loss in to sell it when it hits a certain level or, like most traders, you keep your fingers crossed and hope for the best … until the pain of losing on paper is greater than the fear of losing real money and you sell at a loss.

In a recent survey, results showed three out of four options traders still trade this way.  Accordingly, the same survey showed that three out of four options expired without being exercised or with any value.   And yet, the traders who took the “sell” side of the trade put money in their pocket on Day One of their trades, every single time.

Selling is a low-risk option strategy and a low-risk way to generate high monthly income and a great entry point to purchase stock at a lower price.

Here are several things to consider:

When you sell an option, you are collecting the cash up-front.  You are already ahead.

When you sell an option, you are transferring risk to the buyer.  Yes, when you sell options, you assume some risk but not to your capital.

This cash you collect upfront gives you the ability to manage the position – you have cash in hand to “close” or buy back the put or call, at a profit or loss, without using any or a good deal more capital.  This enables you to conserve capital, the basis for regular monthly income.

And accepting cash enables you to create targets for your positions.   The sum of these targets, when set properly, gives you a target income for the month … and that is what this is all about.

And selling puts let’s you decide the entry price when buying stock.  For example, you can sell a put to purchase a stock that you will sell covered calls against when it is put to you.  Then, you sell monthly calls until the stock is called away.  Then, back to selling monthly puts to re-enter the stock.  Rinse and repeat!  Over and over in the stocks that you want to generate monthly income.

Selling puts is actually a bullish tool.  The advantage to selling puts over buying calls is evident in the math:  The odds of winning are significantly increased.  Many professional traders use the short put strategy to buy stocks at prices they want.  Nobody wants to pay the highest prices to own shares, but when the stocks pull back – and stocks always pull back – the market helps you to get in at a better price.

But what if you don’t want to buy the stock?  Don’t sell puts on stocks you wouldn’t want in your portfolio.  You will get taken out of the trade if the buyer wants to exercise their rights (to “put” stock to you at the option’s strike price), and those are the kind of stocks you probably want to own!

This is always the risk with short puts, but it’s hard to call it a “downside” when you end up owning a good stock at a great price.  Besides, even if you are assigned to take possession of the shares, you can always sell them on the open market.  In fact, you can often get out for a better price and, thus, a profit … and repeat the strategy, if you choose.   Better yet, if the stock goes up and your put gets assigned, just sell a covered call against the shares and you’ve just established a new position in your portfolio — and another way to profit!

We are focused on generating consistent monthly income by selling options for premium using low risk strategies. You can get FREE trades at getrichinvestments.com

Follow us on Twitter – @GetRichStayRich

Join the Monthly Income Newsletter voted the best value for option income trading.

Monthly Income from Option Trade

Income Trade Opportunity in JP Morgan (JPM)

For subscribers, we have been selling puts on JP Morgan (JPM) for several months. We consider this a perpetual income play by selling options for monthly premiums. In fact, we have collected over $1500 in monthly cash during the past 6 months! This is a great way to create investing income that exceed the typical dividend strategy.

As income investors, we seek to create consistent monthly income by selling options to collect monthly premiums. This has been successful for our investors for years. Option selling offers another method to diversify investing strategies beyond traditional dividend investing. We have combined technical stock events with our strategy to identify high returns option selling opportunities. This income trade will generate a return of 13% annual return.

Stock: JPMorgan Chase & Co. operates as a financial services company worldwide. It operates through Consumer & Community Banking, Corporate & Investment Bank, Commercial Banking, and Asset & Wealth Management segments.

We have identified a “Continuation Diamond (Bullish)” chart pattern formed on JPMorgan Chase & Co (JPM on NYSE). This bullish signal indicates that the price may rise from the close of 93.11 to the range of 105.00 – 107.00. The pattern formed over 143 days which is roughly the period of time in which the target price range may be achieved.

JPMorgan Chase & Co has a current support price of 91.28 and a resistance level of 93.19.

The RSI is above its neutrality area at 50. The MACD is positive and below its signal line. The stock could retrace in the short term. Moreover, the stock is trading above both its 20 and 50 day MA (respectively at 92.13 and 89.17). JPMorgan Chase is currently trading near its 52 week high reached at 94.51 on 06/07/17.

Strategy: We want to sell a cash secured put on JPM using the September 2017 92.5 PUT. For each 100 shares of JPM stock you buy, sell one Sept 92.5 PUT for a $1.35 credit or better. That’s potentially a 1.5% return in 41 days or 13.3% annualized return compared to a 2.1% annual dividend yield.

For investors wanting to take a long position in JPM, this lowers the stock price for entry as each premium received lowers your initial cost basis. You can continue to sell monthly put options until the stock is put to you. Then, you can sell covered calls each month for additional monthly income. And, you collect the stock dividend.

This is a great example of how investors can create monthly cash from these income producing strategies. This is an excellent way to create a side hustle income without consuming too much of your time each day. For others, they have built an income large enough to live on without being employed by the man. When your monthly income exceeds your living expenses, you have achieved financial independence.

Follow us on Twitter – @GetRichStayRich

Join the Monthly Income Newsletter voted the best value for option income trading.

The Dirty Little Secret of Option Trading

secret-to-option-selling

Options are a like a ticking time bomb in your hand.  If your preferred method of trading options is to buy calls and puts, that’s like telling the market to just take your money and pay you back “someday, maybe … if you feel like getting around to it.”

The truth is, every second you own that option contract is like the second hand of a bomb counting down to zero… blowing up into a useless piece of paper.  Why would anyone want to trade options when the deck is stacked against them?  Most options traders think of buying options as having “Stocks on Steroids” in their trading accounts.  The sad reality is, they continue to cling to that hope, even while they continue to lose money . . . trade after trade (after trade…).

What Happens to All Those Losing Trades, Anyway?

You know that for every option trade, there are two sides.  Buyers can’t buy without sellers.  If the options you buy aren’t making you money, you can be certain that the sellers are PROFITING CONSISTENTLY from your losing trades.  It’s time to turn the tables … literally. When you move to the other side of the trade, you put those odds squarely back in your favor.  That’s how the pros trade . . . taking your money every single time you buy a call or a put.  But by becoming an option seller, too, you will understand why the pros prefer their strategy. For starters, you’ll probably quickly get addicted to collecting COLD, HARD cash upfront on every trade.

And, the “secret” to selling options is that you enter a trade that has a 99% chance of winning. They’re practically GIVING MONEY AWAY on the exchanges. It’s true – the market pays you to make your trades!  Not quite sold on selling yet?  If watching your account grow practically on command isn’t enough, let’s look at how simple it is to keep the returns flowing in. …

Generate a Paycheck for Life …

You can sell option contracts again and again and again … for as long as you need or want to collect a monthly “bonus” without working harder — or at all!  Consider this . . .You could continue to fight the system and trade options in hopes of the next big MONSTER TRADE (the lottery ticket).  Or, you COULD pay yourself FIRST – bringing in $500 each week (or more).  Why not turn the tables in your FAVOR . . . and sell options like a PRO?  Stop trying to hit home runs by “buying options,” and start hitting singles and doubles to score more runs over time.

Join our Monthly Income Newsletter

Income Trade Opportunity in Nexstar Media

We have a new option trade for monthly income to share with subscribers. I have decided to take early profits on the CF trade as it moved above my $30 target price today for a great income in only 10 days. I will take early profits so I can continue to compound my capital be entering new trades.

As income investors, we seek to create consistent monthly income by selling options to collect monthly premiums. This has been successful for our investors for years. Option selling offers another method to diversify investing strategies beyond traditional dividend investing. We have combined technical stock events with our strategy to identify high returns option selling opportunities. This income trade will generate a return of 5.8% using the forward month options.

Stock: Nexstar Media Group, Inc. (NXST) operates as a television broadcasting and digital media company in the United States. It focuses on the acquisition, development, and operation of television stations and interactive community Websites in medium-sized markets. The company will report earnings on August 8.

A “Symmetrical Continuation Triangle (Bullish)” chart pattern formed on Nexstar Media Group Inc (NXST). This bullish signal indicates that the price may rise from the close of 61.75 to the range of 73.00 – 76.00. The pattern formed over 55 days which is roughly the period of time in which the target price range may be achieved.

A Symmetrical Continuation Triangle (Bullish) is considered a bullish signal, indicating that the current uptrend may continue. The formation occurs because prices are reaching both lower highs and higher lows. The technical event occurs when the price breaks out of the triangle formation to close above the upper (descending) trendline, thereby confirming the pattern.

The RSI is above 50. The PMO is above its signal line and positive. The PMO is breaking above its zero level to indicate further upside. Moreover, the stock is above its 20 and 50 day MA (respectively at 60.04 and 59.91).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Strategy: We want to sell a covered call on NXST using the August 2017 65 Call. For each 100 shares of NXST stock you buy, sell one August 65 covered call option for a $61.45 ($63.25 – $1.80) debit or better. That’s potentially a 5.8% assigned return with a 3.0% downside protection. If you want more downside protection, you can purchase an August 60 PUT for less than $0.25 per option.

For PUT writers wanting to lower their cost of entering this position. You can sell a August 65 PUT option for $3.70. That’s a potential return of return of 6.0%.

Investors should consider taking profits early as the stock price moves higher toward the $65 option strike price and exit if there is a pull back below support levels. You can use the PCD strategy if you want to use this stock for Monthly Income.

This is a higher risk trade than we normally place in the Monthly Income Report. However, this is a nice setup with a positive merger announcement, positive technical confirmation and increased premium from selling options for income.

Follow us on Twitter – @GetRichStayRich

Join the Monthly Income Newsletter voted the best value for option income trading.

How to Generate a 10% Return in 45 Days

In our Monthly Income Report, we look for opportunities to utilize option selling to generate income. While we focus on selling cash-secured puts and covered calls on high quality stocks, we sometimes identify high return trades. We like to have 2 or more stock or company events leading to positive confirmation that the stock will continue its trend. This month we have identified a stock with a bullish technical indicator that has potential to generate a 10% return in only 45 days.

Stock: Alkermes plc (ALKS) is a biopharmaceutical company. The Company is engaged in the researching, developing and commercializing pharmaceutical products that are designed to address medical needs of patients in therapeutic areas. The Company has a portfolio of marketed drug products and a clinical pipeline of products that address central nervous system (CNS) disorders, such as schizophrenia, depression, addiction and multiple sclerosis (MS).

Alkermes just announced positive preliminary top line results from ENLIGHTEN-1, the first of two key phase 3 studies in the ENLIGHTEN clinical development program for ALKS 3831, an investigational, novel, once-daily, oral atypical antipsychotic drug candidate for the treatment of schizophrenia. ENLIGHTEN-1 was a multinational, double-blind, randomized, phase 3 study that evaluated the antipsychotic efficacy, safety and tolerability of ALKS 3831 compared to placebo over four weeks in 403 patients experiencing an acute exacerbation of schizophrenia. The study also included a comparator arm of olanzapine, an established atypical antipsychotic agent with proven efficacy.

ALKS will announce earnings on July 27 but should be positive on this news.

This stock has formed a pattern called Flag (Bullish), providing a target price for the short-term in the range of 61.50 to 62.30 (see chart below). We think the stock can hit the target price within 6 weeks or less. The price recently crossed above its moving average signaling a new uptrend has been established. While we like the upside potential in ALKS, we want to protect the downside against market changes.

Technical Setup on Alkermes ALKS

Strategy: We want to sell a covered call on Alkermes using the August 2017 60 Call. For each 100 shares of ALKS stock you buy, sell one August 60 covered call option for a $54.50 ($58.70 – $4.20) debit or better. That’s potentially a 10.0% assigned return with a 7% downside protection. If you want more downside protection, you can purchase an August 55 PUT for less than $2.00 per option.

This is a higher risk trade than we normally place in the Monthly Income Report. However, this is a nice setup with a positive news announcement, positive technical confirmation and increased premium from selling options for income.

Let more about creating monthly income here.

Covered Calls for Life

There are many different styles of covered call writing.  Some people never do more than write calls on stocks in their portfolio to generate additional income.  Other people buy stocks only for the purpose to write calls then sell them. Covered call strategies include active trading for directional moves, for traders with long-term time horizon and those seeking low-risk or limited risk trades.

For the conservative investor, you can write calls that are deep-in-the-money which limits the amount of risk in the trade.  This is a good strategy for those who are fearful of losing money.  For the lazy investor, they should look to a longer call time horizon that is many months out or even sell a leap call.  For the monthly income investor, they should sell calls at-the-money which expire during the next month.  This serves the purpose of creating a monthly income that is updated at the monthly expiration date.

The conclusion is that you can utilize the covered write strategy that best suites your income needs and personal investing style.  Or you can use more than one strategy to mitigate your risk level in income investing.  I sell calls when the market is reaching over priced levels for downside protection.

Join our community to generate monthly income using options strategies like covered calls.  We now have new spots open for new members.

Subscribe for FREE Trades

Subscribe for FREE Trades

* indicates required
/ ( mm / dd )
Archives