My Secret To Walking Away With Gains While Other Traders Suffer Losses
Last month, on my instruction, a few thousand traders walked away with thousands of dollars in cash.
I’m not saying that to brag or boast — I wasn’t brought up that way.
I’m telling you because I want to help ordinary investors and retirees everywhere.
With today’s climate of economic uncertainty and global unrest, we need the best tools available to ensure a high, sustainable income… no matter what happens on Capitol Hill, to the economy, or to the American dollar.
That’s why I use a put selling strategy that targets the lowest-risk opportunities to make the highest gains possible.
Selling puts is how I generate an incredible supplemental income, often reaching into tens of thousands of dollars. Let me show you what I mean…
The first thing you should know about put options is that they give the buyer the right to sell 100 shares of stock at a predetermined price — known as an “exercise price” or “strike price” — anytime up until the option’s expiration date. The investor selling the put promises to buy the shares if the buyer of the put exercises their right to sell the stock. Put options are only exercised when the stock price is in the money, i.e., below the exercise price.
Most of the time, the put options I recommend are trading above their exercise price, which means they simply expire worthless. When that happens, my readers just walk away with the money they received for selling the put as pure income.
Last month, I recommended a handful of low-risk, high-income put option trades to my readers. On July 21, our put options on American Airlines Group (NYSE: AAL), Methanex (NASDAQ: MEOH), Clovis Oncology (NASDAQ: CLVS), Deckers Outdoor (NYSE: DECK), RH (NYSE: RH) and Wynn Resorts (NASDAQ: WYNN) all expired worthless at the close. All in all, we collected a fair amount of income from our options that expired in July!
Selling one contract of each option generated… $234.
Selling two contracts of each option generated… $468.
Selling five contracts of each option generated… $1,170.
Selling 10 contracts of each option generated… $2,340.
That’s how most expiration months go, with all of our options expiring worthless and readers pocketing a few extra thousand dollars. All of this just from selling a few put options. The key is my Income Trader Volatility (ITV) indicator, a tool I created to tell me when an individual stock’s volatility has reached a short-term peak. This allows me to balance the potential risks and rewards of options selling.
Unfortunately, I don’t have the space in this issue to explain my indicator as thoroughly as I’d like, so I’ve put together a special presentation that goes over all of the details, including why I developed it in the first place, how you can apply it to your own trading, and the secret to why it’s so effective.
The Other 7%…
Remember how I told you my indicator finds options that expire worthless 93% of the time?
That’s an incredible track record. But it still leaves us the question: What about the other 7%? What happens then?
This is where my strategy gets even stronger.
My second half is a natural addition to the first one I showed you and gives us the chance to reverse what looks like a losing trade, so you can make money anyway.
However, thanks to the accuracy of my indicator, I don’t get many chances to show Part B in action. But that changed in July, when Best Buy (NYSE: BBY) shares fell just below our $55 strike price only days before our option was scheduled to expire.
Here’s what happened next…
The selloff occurred after Amazon (NASDAQ: AMZN) announced a deal with Sears (NASDAQ: SHLD) to sell Amazon-enabled appliances that “will allow customers to change the temperature on their air conditioning by talking.” In other words, Sears said it would be offering the same ability customers can already get by visiting Best Buy and buying a $200 Nest thermostat or a Samsung smart appliance.
At that point, we could have bought back our put options for more than we originally received for selling them. That option would have ended our trade in a loss. Nothing to do from there.
Instead, I told my readers that the selloff appeared to be yet another case of market overreaction and that I believed there was a high likelihood of a rally right around the corner.
So, instead of closing our trade, I allowed it to be exercised. Because shares of BBY were trading below our $55 exercise price on the expiration date, we were required to buy 100 shares for $55 per share — a total purchase of $5,500.
Not even two weeks after that, Best Buy had rallied back above $55. On August 1, I sent out another alert to readers telling them to sell their 100 shares of BBY at the market price. The low for the day was $59.09 (which is the price we used for the official Income Trader portfolio), although shares traded as high as $59.54 that day, which means some readers walked away with an even bigger profit!
Any reader who sold just one put contract on BBY when I originally recommended the trade made at least $472. (That’s $63 of income from selling the put option + $409 profit for selling 100 shares of BBY for a total of at least $5,909.)
Selling two contracts of the option generated… $944.
Selling five contracts of the option generated… $2,360.
Selling 10 contracts of the option generated… $4,720.
All of that from an option most traders would have closed two weeks earlier for a loss!
If you’re interested in learning how you can generate a track record like this — or turn losing trades into winners — I’ve put together a presentation explaining exactly how the ITV indicator works, as well as more info on how my Income Trader subscribers and I are taking control of our portfolios to generate thousands of dollars in extra income.