Many Of Our Put-Selling Trades Have This One Trait In Common…

In my premium put-selling service, Income Trader, I often recommend selling puts on stocks that are near new 52-week highs.

Now, I know that’s probably surprising for a lot of people who sell put options. As you know, options premiums are higher when volatility is high. You’d imagine that the best way to generate a large amount of income for a trade is to sell puts when stocks are falling — not hitting new highs.

It’s also the best way to generate a lot of risk.

My goal each week in Income Trader is to identify put-selling opportunities that generate safe income. That means selling options on high-quality stocks that are unlikely to lose much value.

I look at a variety of factors, but studies have shown that new 52-week highs are more often followed by additional highs than crashes. We are trying to put the odds in our favor, and buying strength helps us to do that. The worst thing for our strategy is having losses eat away at the income that we’ve consistently pocketed, week after week.

The increase in premium that occurs when a stock pulls back is due to the uncertainty about whether the stock is pulling back or selling off. If the price decline continues, then the put that is sold has a higher probability of being exercised.

Now, I have no major problems with selling put options on stocks that have had recent pullbacks. But we don’t always have that opportunity. Good stocks spend much more time going up than they spend going down, and waiting for a pullback often means missing out on great trades.

For experienced options traders, it might make sense to create a watch list with several trade possibilities and wait for a pullback. Since a pullback can turn into a selloff, this approach requires experience and a great deal of skill. It also requires the time to dedicate to watching the market action to follow those stocks and spot the ideal selling time.

I designed my approach to find high-probability income trades. Sometimes that means ignoring tempting but dangerous opportunities.

CVX Is Our Latest Pick Trading At Its 52-Week High

Today’s trade is in another stock trading near its highs, Chevron Corporation (CVX).

This oil-and-gas giant is widely considered to be at the top of the pack as far as quality and its future prospects.

In fact, the company entered the Covid-19 pandemic with one of the strongest balance sheets in its industry. As a result, now that we’re seeing demand for oil recover, many other companies are having to address relatively high debt loads, while Chevron is ideally positioned to benefit from rising oil prices.

In 2021, we shares of CVX climb 46% as both Brent and U.S. West Texas Intermediate (WTI) crude soared more than 50%, thanks to the global recovery from the Covid-19 pandemic putting a huge strain on supplies.

To this day, the oil market remains tight. That’s a big part of why this stock keeps setting new 52-week highs.

Adding fuel to the fire is the situation on the Ukraine-Russia border. Russia is the world’s third-largest oil producer, and a conflict in Ukraine could result in a major slowdown in Russian oil reaching the market. With oil supplies already tight, even a minor disruption could tip the already tenuous balance between supply and demand.

Even if the tensions between the two countries soften, analysts expect oil to continue its march toward $100… and even higher. If oil prices keep moving higher, it should lift CVX along with it, which will be good for our put position.

Additionally, the stock just recently flashed an Income Trader Volatility (ITV) “buy” signal.

CVX is at its 52-week highs... and on an ITV buy signal.

How I’m Trading CVX Stock

Interested in this trade? You could buy shares of CVX at its 52-week high and hopefully catch some more upside.

But I found a better trade… One that allows my subscribers and I to collect 1.5% in income in just 31 days. That’s a respectable 18% annualized. And all without buying a single share of the stock.

How are we doing this at Income Trader? By using a high-income, short-term put option on CVX.

Now, I understand not everyone is comfortable selling options. But you shouldn’t let that fear or nervousness keep you from taking advantage of this tool. Because that’s what options are — a tool for traders. They can be as risky or conservative as you want them to be. It all depends on the strategy you’re using.

Like I mentioned above, my strategy is one of the safest around. In fact, I’m making a guarantee to new subscribers to show how low-risk options can be. If you follow along with my trades and don’t make money at least 90% of the time... I’ll work for you for free. That’s how confident I am.

I recently released a special report that will tell you everything you need to know, including how some of my readers are making about $748 a week from selling options. Simply follow this link to check it out.