A Simple Strategy With a 100% Win Rate
My years in the military have allowed me to see the world in a totally different way.
While deployed overseas, I tracked IED locations, went on convoy missions and gathered intelligence from local villages.
I learned the importance of analyzing data to forecast what was likely to happen, and I used this data to determine the level of risk our soldiers were dealing with.
The typical mission was scheduled to take seven days but almost always ended up taking longer due to roadside bombs and the occasional unruly hostile who decided to shoot at us.
These experiences opened my eyes to the bigger picture — not just in the military, but in everyday life — and taught me to think outside the box. And that has paid off in a big way in the financial markets.
When I was first introduced to the myriad of different investing techniques and strategies, like most I found myself overwhelmed. That’s when my training came in handy; I started to look at the market from a different angle.
I put my years of service analyzing data, forecasting and risk assessment to work, and I was quickly drawn to a little-known but massive market — one that isn’t talked about often in the media.
Options have a negative stigma but, when used correctly, they can be a powerful income-generating tool.
As Chief Investment Strategist for Income Trader, I dive deep into company balance sheets, income statements and cash flow statements to identify stocks with the best potential for generating immediate income by selling put options.
The companies I sell puts on must first pass my rigorous fitness test. They must have strong financials and great management, must reward their shareholders and must provide a product or service that will be used for decades to come.
Here’s an easy way to think about how put selling works…
Imagine your dream house in your hometown (a good stock). It’s in a great neighborhood and has great schools surrounding it — everything you ever wanted in a home. You know you would love to own this home, but you want to get a good deal on it.
Let’s say this home is worth $500,000 (like a stock’s share price). You walk over to the owner of this dream house and offer to buy his home if the value drops below $450,000 (the put’s strike price) in the next 30 days.
In return, the homeowner gives you $10,000 (your premium) for the right, but not the obligation to sell you the house at this predetermined price of $450,000.
Why would he do this?
For the same reason we buy insurance on a home or vehicle — the assurance that we will get some value out of our property in the event something unfortunate happens.
In this case, the owner of this dream house is willing to fork over $10,000 for the assurance he can sell his home for $450,000 even if the market says it’s only worth $400,000 in 30 days. And you’re willing to take the risk of buying this home for $450,000 because this is a beautiful, structurally sound house that you’ve done your research on.
When the 30 days go by, the deal with the homeowner expires. If the house is worth $450,001 or more, you don’t get to buy it for $450,000, but you do get to keep that $10,000 (the premium you collected) as pure profit. But if the house’s value drops below $450,000 within that 30-day period, then you get to purchase your dream home at an incredible discount.
Put simply, this is as close to a win-win as it gets — you either get to buy your dream home for a discount, or you get paid $10,000 with no strings attached.
This is exactly the way we approach put options in my Income Trader advisory. Every month, my subscribers and I sell put options on solid, healthy companies. In most cases, we will simply collect our instant income and walk away. But if for some reason a stock’s price drops, we’ve done our homework and know we’re getting an excellent deal.
Here’s another great thing about this strategy: You can scale up the amount you trade to increase your income potential. If you sell, say, 10 put contracts on a stock instead of just one, you can earn 10 times the income.
So far the strategy has been working great. Since launching in February 2013, we’ve made 105 of these trades and all 105 have made a profit — a perfect track record.
If you want to learn more about selling put options to generate income, I’ve put together a special report detailing exactly how easy it can be. To find out how you can start making successful trades with me today, follow this link.