How to walk away with profits on losing stocks _ profitabletrading


After a few months of this — and more than a few sleepless nights — you check your computer screen to find the stocks in your portfolio are right back where they were before.

But what if I told you that these periods of intense market volatility are prime time for one of the safest, most reliable ways to earn extra income? (What’s more, you don’t even necessarily have to be “right” about the stocks you pick.)

Many investors own stocks and simply hope that dividends and capital gains will be enough. Future of marketing 2016 Hope isn’t a strategy, though.

Euro fx And studies show that most individual investors underestimate how much money they’ll actually need during retirement.

For those who are unfamiliar, covered calls let you make a deal with other traders who want to pay you cash upfront — money that goes straight into your brokerage account — for the opportunity to buy a stock you already own at a higher price.

So you collect this cash immediately and then potentially get more money from selling your shares at a profit. Python tutorial google You can sell covered calls on most publicly traded stocks, and you can repeat the process over and over to generate more income.

Just ask my colleague Amber Hestla, head of Profitable Trading’s Maximum Income service. Usd to inr forecast 2016 Amber teaches traders how to use this entry-level options strategy to earn hundreds — sometimes even thousands — of dollars in extra income.

A covered call strategy requires you to sell call options on a stock you just bought or already own. Usa today puzzles For every 100 shares you own, you can sell one call option, and in return, you are paid a premium.

Since you earn this income upfront, it offsets some of the downside risk in the stock by reducing your cost basis. Euro to aud conversion And because you own the shares, you still get to participate in some of the upside.

Let’s use Phillips 66 (NYSE: PSX) as an example. 45 usd Shares were recently trading for about $82. Cny to usd chart Let’s say you bought 100 shares at that price. Usd cad forecast today You could sell a call option on Phillips 66 that expires in March with a strike price of $85, which trades for about $0.90.

This means if you execute this trade, you’ll earn a premium of $90 ($0.90 x 100 shares). Us stock market futures That’s a return of 1.1% ($90 premium/$8,200 cost of shares). Usd to sar converter That may not sound like much, but it’s money you wouldn’t have had otherwise. Usd chf exchange rate It’s also more than a third of PSX’s current annual dividend yield. Binary to text What’s more, once this trade expires in March, you can repeat a similar trade again and again. Binary addition (For the record, if we annualize this trade out, you’d earn income of 8.7% from your position in addition to dividends.)

Now, as long as the stock price stays below $85 on the date the options expire, you get to keep your shares. Bloomberg world markets futures Conversely, if the share price rises to $85 or above, you’ll sell the shares for $85. Msn news Since your cost basis is $81.10 (the $82 per share paid minus the $0.90 premium you received), you see a net profit of at 4.8% in 46 days. Nyse futures market That’s an annualized return of 38%.

Now here’s where covered calls can really save your bacon. Famous quotes about love and life Let’s say you recently bought 100 shares of Phillips 66 thinking they would rise. Stock market futures today But something happens that you didn’t anticipate (like an earnings miss) and the stock drops by 5% to $77.90.

If the stock stays at that level through March 17, then you’ll keep the $90 per contract and continue to own the stock. Oil meaning in the bible Since you own PSX at a cost basis of $81.10, what would have been a 5% loss is now only a 3.9% loss.

That helps soften the blow a bit. Pregnancy quiz boy or girl And since you had enough faith in the company to buy shares in the first place, you should be able to sleep soundly knowing that either the stock price will rise or that you can hold on and keep selling covered calls on the position. How to code in binary The latter lets you earn income (not to mention collect regular dividends), reduce your cost basis and minimize losses until things turn around.

This isn’t just theory, either. Binary operation As Amber points out, this is exactly what happened with one of her recent trades in Maximum Income, Goodyear Tire & Rubber Company (NYSE: GT):

Even though our shares have declined in price, the money we’re generating from selling options counters the loss. Binary to hexadecimal chart Essentially, while other investors sit back and hope the gains will come to them, we’re using covered calls to actively create the gains we want to see.

For every 100 shares we own, we’ve been able to collect $220 from selling four covered calls, as well as an additional $20 in dividends — more than enough to cover the $121 drop in our shares’ value. Usd to kwd If we’d simply been holding shares of GT this whole time, we’d only have received the $20… Ascii table binary and we’d be down $101 on our position.

In this market, where safe income is tough to find, selling covered calls on high-quality stocks could be one of the best — and easiest — strategies available. What is futures in stock market In fact, Amber has released a short video detailing how you could “skim” up to $850 a week in extra income from Wall Street by using her strategy. Silver chart history You can watch it here. Stock market futures today bloomberg Most Popular Articles