Markets

Use This To Find The Best Stocks For Extra Income

In last week's article issue, I detailed the first part of my two-part income strategy (if you missed that issue you can read it here ).

In simple terms, my strategy helps you collect extra payments from some of the best stocks on the market -- in addition to dividends and capital gains.

What's more, the payments start arriving within a day or two of buying the stock... and are often much bigger than a dividend payment.

My strategy, which involves selling covered calls, is one of the most basic options strategies around, making it easy for anyone to do.

However, there are certain times when this strategy works better than others. Likewise, there are certain stocks that are better to use this strategy with.

That's why I've developed a series of indicators that tell me when it's time to pull the trigger on a particular company.

For example, one of my special indicators lets me know if a stock is undervalued.

I call it my "magic" number. It is much more useful for determining whether a stock is undervalued than popular valuation metrics like the price-to-earnings (P/E) ratio and price-to-sales (P/S) ratio. When the magic number is less than 1.0, it signals a stock is undervalued and could be a perfect candidate for selling covered calls.

For example, there's an oil transportation company named American Railcar Industries (Nasdaq: ARII ). Most people have never heard of it, but I recommended it in January 2014. But before I decided to sell covered calls with ARII, I first calculated this number.

The magic number reading was at 0.77, signaling the shares were undervalued by more than 20%. You can see below that the trade worked out perfectly.

Payments Earned Via American Railcar

My special indicator helped me pocket $795 instantly, which is money that's mine to keep no matter what. It isn't a dividend payment, a loan or anything like that. It is something called an "options payment," because it's reserved only for those who use the specific type of options I'm sharing with you today.

In addition to the $795 payment from ARII, I pocketed $200 in dividends and $605 in capital gains when I sold the stock.

Time and again, I've used this number to spot when good companies are trading well below their fair value.

With a number like the P/E ratio -- which most rely on for a stock's valuation -- you're only getting half the story. My magic number also factors in the company's growth prospects. And it's been incredibly precise for years now.

But this is just one indicator I use. I have several others. I calculate them for all my trades, and when they're all flashing "buy," I rush out an alert to readers of my premium advisory, Maximum Income .

And more often than not, they make a nice windfall.

Here are some options payments received by actual readers:

Options Payments January-March 2015

I'd like to give you the opportunity to make the same kind of gains.

To help you get started, I've put together a free guide. It tells you everything you need to know to begin using my strategy immediately.

It's called: Using Options Payments to Earn Thousands in Monthly Income .

In it, you'll find a detailed write-up of exactly how my strategy works... and how easy it is to sell covered calls.

It also contains a more detailed explanation on the "magic" number I use to determine if a stock is truly undervalued, along with other indicators I use to make sure I only recommend the best of the best. I share each of them with you in this report.

But here's the best part...

The report also links you to my latest trade. You'll find the company's name and ticker as well as a full profile. Based on my analysis, this stock is a "buy" and could hand you hundreds of dollars in the next 48 hours -- in addition to dividends and capital gains.

But there's no guarantee it will stay that way for long... so if you're interested, I encourage you to act fast.

Again, this report is completely free. It will show you exactly how people across the country are using my strategy to take control of their financial future. Go here to access my report .

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

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