Get Rich - Stay Rich - Investing for Monthly Income

Posts Tagged ‘create income’

Kick Off Your Wealthy New Year

Today, we say goodbye to 2016 and open the door to a fresh start in 2017. This is the time of year we embark on hairy ass new goals in hope of transforming our lives. Hey, I am one of you too. I have goals to improve my health, lose some weight and more achieve community related goals. Of course, the one constant is to maintain focus on growing my investing income. My foundation for income is the PCD Income Strategy.

I use put selling to create my favorite income strategy – the Put-Call-Dividend (PCD) Income Strategy. This is simple selling puts each month on a select stock to collect monthly income. If the stock gets put to me, then I sell covered call options for more income while also collecting dividends paid by the stock. I sell call options for premium each month until the stock is called away from me. Then, I will start selling puts against the stock again. This strategy is exactly why I only sell puts on stocks I want to own – world class, strong dividend stocks.

I view the PCD Strategy as an opportunity to collect up to three separate income streams from a single stock selection. I prefer this strategy compared to the buy and hold of owning a stock that only pays dividends every quarter and may have a capital gain in the future. This prevents me from having to time the market and wait for a return. I want to create monthly income so the PCD Strategy presents the best opportunity to achieve this objective regardless of market direction.

Remember this: Someone’s sitting in the shade today because someone planted a tree a long time ago. This is your year to get started growing your income tree. Join our monthly income plan to jumpstart your 2017 goals.

How to Create a Better Lifestyle

Warren Buffet has always discussed the concept of Mr. Market. This is an idea around each trading day Mr. Market offers you the price to purchase a stock in the stock market. As an investor, you must decide if you want to but the stock at this market price. Is the stock overpriced, undervalued or will the market crash in the coming days? As investors, we can’t predict the future direction of stock markets. And if anyone tells you they can, then run away from them. To get around predicting the stock market, I sell puts on stocks to generate monthly income and I usually win regardless of what the market does in the coming weeks.

When we sell a put option, we are selling someone the right, but not the obligation, to sell shares of the underlying stock to us at a price that we select called the strike price on or before a date that we select called the expiration date. In return for undertaking this obligation, we are paid a certain amount of cash called the premium that the market determines.

Should the put buyer decide to exercise that option by selling his shares to us on or before its expiration date, we are obligated to buy those shares at the strike price. To cash-secure this transaction potential, we deposited the appropriate amount of cash into our brokerage accounts to purchase those shares at the strike price minus the cash premium received.

How often does a put get exercised? This is variable but most research indicates about 80% of options expire worthless or do not get exercised. When a put option expires worthless, the investor keeps the cash premium as their return. Put writers or sellers continue to sell put each month to create and capture the cash premiums. This is the monthly income to supplement your lifestyle.

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