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This strategy generates cash income from the sale of call options. We get to keep this cash income and spend it anyway we want regardless of what happens to the price movement of the underlying stock/ETF.
We focus on stocks/ETF’s with rich option premiums. This allows us to collect cash payouts over the course of one year, that exceed the original cost basis to purchase 100 shares of the stock/ETF.
When you generate a 100% cash return on your stock position, a lot can go wrong and you will still profit:
When you purchase a stock, the stock must go up in price to profit. A stock spread trade on the other hand can profit if the stock trades up, down or remains flat.
When you buy a call option the underlying stock must increase in price above strike price of the option at expiration or you will incur a 100% loss of the option premium.
You are always faced with the possibility of a 100% loss when trading options. When you buy a call option, many times the underlying stock will not make the expected move prior to option expiration which can result in a total loss of the option premium.
Option spread trades, however, can profit if the underlying stock is up, down or flat at option expiration. Most of our option debit spreads can produce a 30 to 40% return if the underlying stock is flat at option expiration. This provides a much better risk/reward ratio and gives option traders a much better chance at success.
In this video let’s look at combining fundamental and technical analysis to find stocks and options with the best profit potential.
Chuck’s brokerage account statements show there is $2.69 million in actual profits over the past two years for his stock and option trades:
• $853,848.72 in open trade profits
• $1.839 Million in closed trade profit
Learn how this simple to use analysis can give you the edge in profiting in any type of market condition.