How We Turned A Falling Stock Into A Winning Trade

There is a lot going on in today’s issue of Income Trader. So I’m just going to jump right into it.

Today, we’re going to close out our position in Blackstone Inc. (BX) — a stock that has fallen nearly 15% since we sold our original put option back on June 1 — for a GAIN of about 10%.

This is an awesome example of what makes the Income Trader strategy is great in almost any market environment. Just because a stock’s price is down, it doesn’t mean we’re stuck with a loss.

If you’ve been with Income Trader since the beginning, you’ve probably read more than a handful of issues going on about “selling options on great stocks that we’d be happy to buy at discounted prices.” And that’s exactly what we aim to do.

When we sell a put option on a solid company like Blackstone, our expectation is for the option to remain above the strike price and eventually expire worthless, allowing us to collect income on a 20% margin. It’s an efficient way to generate a safe and predictable income stream from a market that doesn’t offer many sustainable high yields.

But as we’ve seen this year, things don’t always turn out as we expect.

As many of y’all know, Amber’s two favorite words are “risk management.” So it’s no surprise she designed the Income Trader strategy with a built-in safety net.

Here’s how it all works:

When we run all the Income Trader screens, it gives us a list of high-quality companies that are usually good additions to any long-term portfolio… stocks that we’d be happy to own.

When we sell the put option, we pick a strike price that offers a significant discount to the stock’s current price. If our option ever expires below our strike, we’ll still be buying the shares at a bargain level.

When we sell covered calls, we’re making our portfolio work for us, wringing out every extra dollar we can until the stock returns to a fair value price. At that point, our shares are either called away or we can sell them on the market, usually for a nice profit.

Of course, that’s not to say that every position is a guaranteed win. That’s a pipe dream no investing strategy can achieve.

But it does mean that we have several layers between us and a loss. And that’s what makes this strategy so powerful. Even when the stock doesn’t move — or goes down! — we can come out ahead.

This isn’t just theory. We’re seeing it in action today with Blackstone. You’ll find more details on that trade further down in our Covered Calls portfolio.

That brings us to our next point of action for today — our new put option trade.

Or should I say… trades.

So far this year, we’ve had a handful of “no trade” weeks, and to make up for that, we made a promise to offer a second Income Trader pick whenever the opportunity presented itself. And this week, that’s exactly what happened.

Two companies — Nike, Inc. (NKE) and The J. M. Smucker Company (SJM) — have passed all of our Income Trader screens. Like Blackstone, these are both phenomenal companies that have been successful for decades. They are both stocks that I would be happy to buy at a discounted price.

And they’re both currently on ITV “buy” signals, which means it’s an ideal time to sell put options.


This week, I’m recommending short-term put options for each of these stocks, protected by meaningful technical support levels. As always, these options will expire before the company is scheduled to announce earnings, which means we shouldn’t have any big company news to contend with.

The point is, trading options could be a way to increase your income by hundreds or even thousands of dollars every month. But you need to know the ropes before making trades. That’s where my premium Income Trader service comes in…

Each week since February 2013, I have provided my subscribers with low-risk put selling opportunities. And so far, more than 90% of my trades have been winners.

I recently sat down with my publisher for a tell-all interview to explain how it all works.

You can go here to check it out now.