Do you realize that you can actually be paid to buy stocks at
the price of your choosing?
Yes, that's correct. Someone will pay you cash today for your
promise to buy a stock you want at a cheaper price than where it
is currently trading. It's simple. It's real. And it's totally
legitimate. And if you are a serious investor . . . it's a
For some reason, however, the old regime of the financial
industry would have you think otherwise. But do we really care
what they think? They have led us astray for years, so why should
we continue to listen to their archaic ideas?
The only requirements for this strategy is that you find a
stock that you want to own, come up with a price that you're
willing to pay, place the trade and collect your income.
Yes, it is that simple.
As a professional options trader for roughly 15 years, I have
discovered that most
are best within certain types of market environments. However,
this strategy - known as a favorite among options professionals -
works well in any market environment: bullish, bearish or
neutral. So what is the strategy to generate income without
owning shares? Selling puts, or put option selling. The semantics
don't really matter.
Selling puts is the best way to obtain the stock you have been
eyeing for a much lower price than where it's currently
When a stock price is inflated, most investors enter a limit
order to buy the asset at a lower price. Yes, they sit and wait
and wait . . . and wait some more. In most cases this goes
on for months with nothing happening other than lost opportunity
costs. In fact, it's been shown that more than 99% of all
investors do it this way.
on a stock that you wish to hold in your portfolio, you could be
collecting income, thereby lowering the cost basis of the stock
even further. We've been doing just that in our
High Yield Trader
portfolio for big gains. I'll get to that in a second.
Selling a put option
means that you are obligated to buy the 100 shares at the
strike price if the buyer so chooses prior to the expiration
date. This, of course, won't happen until the stock price drops
below the strike price.
This is where you - the put option seller - come in. Since you
want to own the shares (albeit at a lower price), you sell a put
option and just wait until options expiration. If the stock
closes above your chosen price (the strike price), the put
expires worthless and you get to keep the entire premium
collected at the outset.
If the asset closes below the strike price, you will be put
(assigned) the stock that you wanted. In other words, you will be
obligated to buy the shares at the strike price. You now own the
stock you wanted … at the lower price you were willing to
Just think how much you could reduce your cost basis if you
did this for months. Everyone knows you're supposed to buy low
and sell high. This advice is so common and so basic. And yet,
almost no one talks about how to buy low - let alone how to sell
Here's how selling puts works - and we've used this strategy
to collect nearly 29% in income on a stock that has only gained
11.6% over the same timeframe.
Back in June 2013, shortly after we introduced High Yield
Trader to the public, Microsoft (Nasdaq: MSFT) was trading at
$34.27. At the time, the stock was outside of what we wanted to
pay. We wanted to own 100 shares of the shareholder-friendly,
blue-chip, dividend-paying stock at $31 a share for a total cost
Under normal circumstances, while we waited to hopefully get
in at $31, our capital would sit idly on the sidelines making
next to nothing. But if we sold puts at the strike price ($31 in
this case) of our choosing, we get paid while we wait.
So we did just that. We sold a put option with a strike price
of $31 that expired in one month for $0.30, or $30 per contract
(one option contract = 100 shares), for a 4.38% return for
roughly 30 days. We've done a similar transaction five additional
times over the past nine months for a total return of 28.9%. I've
done the same thing in
, Wells Fargo (
), Gold Miners (
) and Marvel (NYSE: MVL) for returns of 34.2%, 16.9%, 41.0% and
16.3%, respectively….all in under nine months.
And we will continue to do this into perpetuity, assuming that
the stock price remains above our strike price. Of course, if we
end up buying the shares at the strike price, we own the stock at
our stated price, which is what we wanted in the first place.
This is why professionals prefer to sell puts. They know if
done correctly, the strategy has the potential to own a stock for
next to nothing.
Please, if you have any questions on how to generate income by
selling puts, do not hesitate to email me. Once you learn how
simple and powerful the strategy is you will never bother buying
a stock or
in the traditional manner again. I will be discussing various
aspects of how I sell puts for income over the next few weeks.
My Gameplan for the Year Ahead - Earn $1,200 a
If you missed Andy Crowder's latest options webinar… don't
worry. We've uploaded a full, on-demand recording of the event on
our site. During this video, you'll discover exactly how he's
planning to make consistent profits in 2014, no matter which
direction the market moves. Including, free action-specific
trades you can execute immediately - gains you can earn in as
little as 15 to 28 days! You'll also get his entire presentation,
including the lively Q&A session. Options videos and
courses can run as high as $999, but this 60-minute presentation
is completely FREE.
Click here to watch this video now.