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Posts Tagged ‘put writes’

A 600% Trade in 2 Days for Fast Cash!

On Dec 5,subscribers sold PUTs on US Steel (X) for $1.24 per option.  Our stock chart indicator identified an Ascending Continuation Triangle in the stock.  This is an indication the stock had positive momentum and was ready to break out.  Our strategy is to sell PUTs on the breakout and buy to close the PUTs to lock in profits.  This allows subscribers to close out of trades early (locking in profits) to compound your dollars into more trades.  The more compound trades increase the total monthly income.

So how did the trade work out for investors?

On Dec 7 (yes only two days later), subscribers bought to close the PUTs on X for $0.30 per option.  X was trading at $29.84 at the trade entry but jumped to $33.00 per share in the following days!  We closed the position to lock in fast cash following the stock breakout trade.

This resulted in a gain of $94 per option sold in only 2 days.  If you had sold 10 PUTs, you would have made $940 in 2 days on one trade.  This is a 3.3% cash return in 2 days or 600% annualized trade.

Join the newsletter for only $29.99 is the best deal for making monthly income.  Let’s see, spend less than $30 to make $940 on one trade and a few $thousand each month in extra income!  Join the Monthly Income Newsletter to create your income monster.

 

Here is the details of the US Steel (X) Trade shared with subscribers on Dec 5:

Stock: United States Steel Corporation (X) produces and sells flat-rolled and tubular steel products primarily in North America and Europe. It operates through three segments: Flat-Rolled Products (Flat-Rolled), U. S. Steel Europe (USSE), and Tubular Products (Tubular). The Flat-Rolled segment offers slabs, rounds, strip mill plates, sheets, and tin mill products.

Chart: We have detected an “Ascending Continuation Triangle” chart pattern formed on United States Steel Corp (X on NYSE). This bullish signal indicates that the price may rise from the close of 29.84 to the range of 33.20 – 34.00. The pattern formed over 29 days which is roughly the period of time in which the target price range may be achieved.

United States Steel Corp has a current support price of 27.10 and a resistance level of 30.21.

Strategy: We have an opportunity to sell options for income with X 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 a December 2017 30 PUT for about $1.00. This creates a return of 3.4% to expiration in 10 days or greater than 124% annualized.

For a conservative trade, you can setup a covered call trade. You can purchase 100 shares of X and sell a December 30 CALL option for about $0.90 for an assigned return of 3.4% in 10 days for a 124% annualized return.

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

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Income Trade for 70% Return

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 70% annualized.

Stock: Teck Resources Ltd is engaged in the business of exploring for, acquiring, developing and producing natural resources. The Company’s activities are organized into business units that are focused on steelmaking coal, copper, zinc and energy. It operates in five segments: steelmaking coal, copper, zinc, energy and corporate. The corporate segment includes all of its activities in commodities other than copper, coal, zinc and energy.

The RSI is above its neutrality area at 50. The MACD is negative and above its signal line. The MACD must break above its zero level to trigger further gains. Moreover, the stock is above its 20 and 50 day MA (respectively at 21.51 and 21.89).

Chart: We have detected a “Double Bottom” chart pattern formed on Teck Resources Ltd (TECK). This bullish signal indicates that the price may rise from the close of 22.42 to the range of 23.90 – 24.30. The pattern formed over 18 days which is roughly the period of time in which the target price range may be achieved. Teck Resources Ltd has a current support price of 21.22 and a resistance level of 22.93.

 

 

 

 

 

 

 

Strategy: We have an opportunity to sell options for income with TECK 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.

We are selling PUTs to take advantage of the stock price move to the upside. For conservative traders, you can create a covered call trade using the call for downside protection.  Before you can become a millionaire, you have to start thinking like one.  It isn’t just a pathway to wealth.  It’s a way of life… a belief system… a mindset – and it will show you how to build a full, rewarding life.

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You Can Help End Poverty

How to Make 6% per month using Income Trades

At Get Rich Investments, we focus on creating monthly income. One strategy is to sell puts on select stocks we identify being in a break out stock price position. The concept is simple, stocks with momentum will move higher in the short-term time period. To make monthly income, we sell puts on these stocks to capitalize on the price movement. If it moves higher, the value of the puts will decline. Investors can then buy to close the puts to lock in gains.

Then, back to selling puts for more monthly income if the stock is still a great selection. This can be a great strategy for monthly income as momentum stocks we trade have recently had a price breakout from a previous trading range. It’s alright for a stock to move up within a nice trading range. This makes the amount of premium collected higher based on some volatility. But we do not want to risk our trading capital by taking big losses so we exit the position to take profits in many cases.

For example, we had two put trades that each produced 6% in the past month. Here are the details:

On September 29 we entered a PUT trade on Gaslog (GLOG) that expired with a 6% gain. For subscribers, we sold puts on Grubhub (GRUB) that expired with a 6% return in our November Monthly Income Plan.

GLOG: 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.

GRUB: Subscribers: Look at the November 2017 52.5 PUT trade. For each 100 shares of GRUB stock you want to control, sell one Oct 2017 52.5 PUT option for a $3.00 debit per option or better. That’s potentially a 6.0% return on the PUT trade.

Why would an investor sell put options instead of just buying the stock? You already know my response to this question – to create monthly income. These trade examples are proof that we can earn high returns on income trades.

We monitor the market looking for stocks poised for break outs to sell puts for income. We provide several trades in the monthly income newsletter and several additional trades as opportunities arise.

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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.

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You Can Help End Poverty

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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Compounding Returns with Option Selling

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 double your money.

Get started today with the Monthly Income Report.

The Secret to Great Investment Returns

People ask me all the time what is the real secret to great investing returns.  They have lost faith in the talking heads on TV who are selling their latest investments hyped as the place to be in today’s market.  Often times these investments only separate the investor from their money. I have a proven strategy that is more rational so any investor can generate income by investing in great companies. My premise is cash doesn’t lie so when you have it in hand (or in your investing account), you know you have made money.  Probably the two most important attributes to making money on a stock investment is (1) buying a great business model; and (2) buying at the right price. I constantly see investors buying a great business but at a price too high to ever generate a return.

I have this thought leadership built into my investing strategy. One, I only buy great blue-chip stocks that have validated profit margins and competitive advantages. Many refer to these stocks as market dominators because they have well recognized brands such as Walmart, Intel and others. Two, I look to invest in these great companies at the right price. My research will point me to these stocks trading below fair value. These are the companies that will give us market beating returns with lower than average risk.

We further lower the purchase price by selling puts on the great stocks we want to own. Each month or so, we will sell a put options at the money to collect premium income. This premium income lowers the purchase price with each sell until the stock gets put to us. For example, selling an option put for $1.00 per contract in 3 consecutive months gives the investor $3.00 or $300 in cash. If the stock is trading at $40 per share, the put selling drops the investors cost to $37 per share ($40 – $3 = $37) In the meantime, the investor is earning an average of 1-3% each month in income.

This is the power of this strategy – creating income streams while buying great businesses at a discount price.

Learn more here: Monthly Income Newsletter

 

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