The Top 'Instant Income' Opportunities This Week


I want to tell you about one of the best strategies in the world for beating an overvaluedmarket . I use it to generate thousands of dollars in "Instant Income " from the best companies in the world.

If you haven't guessed it already, my strategy involves selling options. And right now, we have a huge opportunity...

In just a minute, I'll give you five potential trades to consider today for collecting immediate income. First, let me explain how it works with a couple of past examples.

Recently, subscribers to my Income Trader  newsletter made $130 in "Instant Income" from a $520 "down payment" on Questcor Pharmaceuticals (Nasdaq: QCOR) . That's an immediate return of 25% in 43 days, or 212% a year . And back in July, I collected $100 in "Instant Income" from OSI Systems (Nasdaq: OSIS)  for every $900 I set aside. That's an 11.1% return in 45 days, or 90.1% a year. Remember, this is how much income we made per contract. You can scale up as much as you want.

You see, option prices are determined by several factors , including the underlying stock 's price, the exercise price of the option and the amount of time until the options contract expires. These can all be easily determined.

But one factor that is more difficult to assess is volatility.

Options prices, in general, tend to increase when volatility is high. That means we generate more income when selling options in volatile markets. We want to sell puts when volatility is dropping from a higher-than-average level.

And right now, I am expecting some volatility...

The S&P 500 index is struggling near 1,700, and stocks have delivered large gains in the first seven months of the year. The market is currently overbought and is due for a pullback. That should lead to more volatility.

Until then, I've identified five stocks showing above-average volatility. These trade candidates were identified by the Income Trader Volatility (ITV) indicator. ITV is a very useful indicator for put sellers; it tracks the volatility of specific stocks.

As I mentioned, options prices, in general, tend to increase when volatility is high. These stocks should offer above-average premiums and are very likely to move higher over the next few weeks. If you're looking to make "Instant Income" trades, I can't think of a better list of stocks to start your research.

I urge you to research the companies on my watch list to be sure the trades fit your risk profile. I recommend that readers close the trade before expiration rather than allowing the put to be exercised. If you decide one of these trades fits your risk profile, you'll need to act fast. Options premiums tend to fall, or "decay," as time passes, so many of these premiums will be lower by Monday.

The list also includes the probability that the suggested options will expire worthless. This is found with an options pricing model, and it is only a probability. Because I am not providing in-depth research on each company, I am including the probability as a way for you to evaluate risk. Options I recommend always have at least a 70% probability of expiring worthless, which means there is only a 30% or less chance the put will be exercised at expiration - and you'll get to keep that income without having to buy the stock.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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This article appears in: Investing , Investing Ideas , Stocks

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