Get Rich - Stay Rich - Investing for Monthly Income

Posts Tagged ‘perpetual covered calls’

How to make $3K in Extra Monthly Income

The year 2016 was another stellar year of total returns and monthly income. Our perpetual covered call strategy was a big winner.  In this strategy, we create a covered call position to sell monthly call options for income and buy a long dated put option to protect our downside risk.  The put cost is spread across several months so the cost is low per month and will only slightly diminish our monthly income.

As we close out 2016 and reset for 2017, we are reviewing the results we obtained from the perpetual covered call strategy during the past year. In terms of total return as tracked in the monthly spreadsheets, the average across all positions was 27.8% during 2016. In the past year ending 12/17, the S&P 500 only returned 12.75% and the DJIA returned 16.8%. Therefore, we more than doubled the S&P and beat the Dow Jones significantly while generated significantly more income. The average monthly income across our open positions was $152 for each position with 100 stock shares! AND this includes the cost of having a long put to protect against downside risk on each position.

The average cost of 100 shares across all positions was $5,278 which generated an average of $152 of income each month. A $50K portfolio will generate an average of $1500 per month while a $100K portfolio creates $3,000 every month! This is proof our income strategy works. We target a 2-3% return per month on average.

We had no losing positions in our perpetual call portfolio in 2016. We had 3 positions with returns greater than 40%and all but one with returns greater than 12.7% of the S&P 500 in 2015.

The table below shows the results for each perpetual covered call position during 2016. This table is the same information as displayed in the monthly tables for each position (based on owning 100 shares of stock and selling one covered call each month). This is for portfolio tracking only as subscribers will own more than 100 shares and sell like size amount of call options for income each month.

2016-covered-call-results

 

 

 

 

 

 

 

Click to enlarge chart

September 2012 Monthly Income Plan Update

As we approach the end of the September option expiration cycle, the Get Rich Monthly Income Plan had a great month for investors.

In January, we kicked off the perpetual covered call strategy. For those who are new to this concept, let me share the rationale of this income investment. This strategy was created to produce monthly income with stock dividends and covered call premium. In addition, there is a protective, blanket put, to ensure the volatility in the market does not affect your return of capital.

We will be adding one new perpetual covered call each month to keep fresh ideas on the table. We will follow the progress of the perpetual covered calls each month the year. I will email premium members with trading directions when an action is required. Here are some of the results for 2012:

Perpetual Covered Call Returns:

Stock 1 – Oil Company has an YTD total return of 153% including dividends and special dividends.

Stock 2 – Drug Store Company with an YTD total return of 68.1% including dividends.

Stock 3 – Technology Company with an YTD total return of 27.3% including dividends.

Year to date, the SPY (S&P 500) is up 16.1% and the Powershares S&P 500 Buy-Write (PBP) is up 8.16%.

We also provide a list of stocks for monthly covered calls. Here we change the list each month based on investing in the right stock for monthly income. For the September option cycle, this was a great month for our Monthly covered call trades.

We made monthly returns of:

7.83% on GME,

6.91% on LAD,

3.8% on COH, and

3.4% on PSX,

We have added the covered put trades as an additional way to sell premium and to enter stock positions. I frequently sell puts to enter a new stock position because (1) I get the stock at a lower price than it is trading at the market. (2) I get to produce income from the premium I receive when selling the puts. If the stock is above the put strike price at expiration, I keep the premium and have the opportunity to sell more outs or just purchase the stock cheaper because I have the put premium to cover partial costs. I have used this technique for several months on the same stock before I get the stock put to me. This creates enough income to really lower the total cost of the stock. Then, when the stock is put to me, I sell calls (covered) to earn more income until the stock is called away. Then – rinse and repeat.

For investors wanting to create monthly income, the Get Rich Monthly Income Plan is right for you. Click here to learn more.

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