In last week's article, I revealed a
unique technique self-directed investors
use to safely generate regular 8%-12% income streams on their
In a yield-starved environment, this strategy has been a
The strategy is called "selling covered calls." If you aren't
using this strategy … well, you're missing out on THE most
revolutionary income strategy in the investment arena.
Over the past year alone, this income secret could have
doubled your dividend payouts on some of the best stocks in the
The good news is you can still use this investment today. It's
not the type of opportunity that you can miss out on - because
it's based on the quality stocks you probably already own.
(Again, if you are not aware of this revolutionary
strategy, I highly recommend you
attend our upcoming FREE teleconference
and ask a few questions next Thursday, April 25
at 2 PM.)
Today, I want to show you just how powerful this strategy
Let's use one of the most popular dividend stocks in the
market … Intel.
Intel is a well-respected, shareholder-friendly company that
dominates its industry. The company has reliable cash flows and
pays consistently rising dividends. Simply stated, it's one of
the steadiest stocks in the market and that is exactly what we
are searching for when employing a covered call strategy.
It is imperative that we use the world's safest and most
reliable blue-chip stocks.
I can't emphasize this point enough: when it comes to
selling covered calls I only use stocks that are
well-respected, shareholder-friendly and with a history of
paying consistently rising dividends.
So let's get back to Intel.
Right now you can collect an extra 2% in income every quarter
in addition to the regular dividend payout (which right now is
above 4%) - just by being a regular shareholder.
Added up, that comes to an additional 8% in income for the
year for a total yield of more than 12% - essentially tripling
your dividend payout.
Let me briefly show you a few numbers, so you can plainly see
how useful covered calls are for safe, steady income.
Let's say you own 100 shares of Intel, which is currently
trading for $21.50. You can sell a call option that gives the
buyer the right to buy your shares for $23 at any time over the
next 93 days. For this privilege, you collect $0.44 per share, or
$44, for selling that right. This $0.44 payment represents an
instant 2.0% yield on your investment.
If Intel rallies above $23, you would be obligated to sell
(for a 7% gain) your shares for $23, but you keep the $0.44 you
got for selling the call. The $44 in income that you brought in
at the onset is yours to keep. You never have to give it
Now if Intel isn't trading above $23 by the time the option
expires in July, you can do the same or similar trade all over
And just think …you can do this 2.0% transaction four times in
one year for an extra 8.0% while collecting Intel's safe 4.2%
regular dividend. That's triple the dividend for using this
simple and reliable strategy.
On a $10,000 stake, that would generate more than $1,213 each
year. That's well above the yield for a typical blue-chip
dividend stock. More importantly, it's the type of income yield
that you can actually depend on and use in this low-yield
Of course, this strategy takes a little bit more work than
what you might be used to. But as many self-directed investors
have discovered, it's simple to learn ... and simple to use once
you get the hang of it.
Editor and Chief Options Strategist