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Investing Ideas Make 3% per Month – Every Month Selling Covered Calls
Investing Ideas Make 3% per Month – Every Month Selling Covered Calls 
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China Telecom Corp. (CHA:NYSE) Here’s the secret that no one wants you to know: One simple technical indicator called the Death Cross can give you sensational profits on falling stocks. What is a Death Cross? Basically, it’s when a stock’s 50-Day Moving Average drops below its 200-day Moving Average… and price with it. |
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| Make 3% per Month – Every Month Selling Covered Calls |
| Thursday, 07 February 2008 | ||||||||
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I love bear markets. Bear markets create opportunities. Bear markets restore equilibrium and logic to stock prices. And the best part of all – bear markets cause option premiums to inflate faster than a rubber raft at a fourth-grader's pool party. That's great news for folks who want to sell covered call options. Selling covered calls is a strategy that creates income for investors who agree to sell shares of stock at a specified price by some future date. And selling calls creates a built-in insurance policy against downside risk. For example, back in December, I told subscribers to Advanced Income – my covered call writing service – to buy shares of the S&P Homebuilders ETF (XHB) and sell the March 21 calls against the shares. The stock was trading at $19.73 at the time, and we sold the calls for $1.80. So basically, we got into the stock for $17.93 ($19.73 – $1.80). We'll profit on the position as long as it stays above that level. Since the stock is currently trading for $20.79, I don't see much of a problem. The best thing though, is that even if XHB falls below $17.93, we can sell additional calls against our shares and recoup any downside. That's the beauty of covered call writing. You can buy a stock, create immediate income, protect your downside, and continue your income stream as long as you own the shares. It's a fabulous strategy for dealing with bear markets. And it's a terrific strategy to use for generating income. I started writing Advanced Income back in September. Since then, we've sold out two positions for gains of 7% and 8% in two months. We're sitting on four other positions (including the XHB trade) with current gains of 16%, 6%, 6%, and 4%. As we've been accumulating gains, the S&P 500 has lost 13%.
Like I said before, I love bear markets. Selling covered calls on low-risk stocks is the single best strategy I know to profit when stocks are falling. Oh sure, you can buy puts and speculate on the downside – but there's risk involved in that (if you got caught short during the snap-back rally of the past two weeks, then you know what I'm talking about). On the other hand, if you want to make 3% per month – every month – which is what we're currently doing with Advanced Income, then you need to sell covered calls. Best regards and good trading, Jeff Clark P.S. My goal for Advanced Income is to generate 15%-20% income per year while taking minimal risk. We're way ahead of that goal so far, and I'm looking at several opportunities right now that will increase that lead. Source :The Growth Stock Wire This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
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