It’s one of the easiest and safest ways to generate 20%-plus returns on a regular basis. Once you’ve mastered the technique, I wouldn’t be surprised if you stopped trading stocks or buying and holding investments for years at a time. That’s how powerful this strategy is — it can drastically improve the way you make money in the markets, forever. That goes for conservative income investors and aggressive traders alike. #-ad_banner-#The technique is actually pretty simple, but it requires some investors to leave their comfort zone. You see, it involves options, one of the most misunderstood corners of the financial… Read More

It’s one of the easiest and safest ways to generate 20%-plus returns on a regular basis. Once you’ve mastered the technique, I wouldn’t be surprised if you stopped trading stocks or buying and holding investments for years at a time. That’s how powerful this strategy is — it can drastically improve the way you make money in the markets, forever. That goes for conservative income investors and aggressive traders alike. #-ad_banner-#The technique is actually pretty simple, but it requires some investors to leave their comfort zone. You see, it involves options, one of the most misunderstood corners of the financial world. Many investors steer clear of options because they have a reputation for being risky, but that’s not always the case. Covered calls, one my favorite ways to generate large income streams and capital gains, can be more conservative than buy-and-hold investing. In fact, The Wall Street Journal calls it “one of the most conservative… strategies available to professional and individual investors alike.” Simply put, covered calls allow you to get paid upfront to potentially sell a stock you own at a higher price sometime in the future. Whether the stock goes up or down, you can come out ahead. Read More

Selectivity has always been a part of my professional life. Whether it was during my time in the military or in my career as a trader, I quickly realized how important this skill is in determining success or failure. From my time in the Army, I can say with authority that the military is a highly selective group. I spent some time as a recruiter and learned how to evaluate potential recruits. When considering someone for life in the Army, we looked at their test scores (intellectual ability), physical fitness, their height and weight, their character (community involvement and criminal… Read More

Selectivity has always been a part of my professional life. Whether it was during my time in the military or in my career as a trader, I quickly realized how important this skill is in determining success or failure. From my time in the Army, I can say with authority that the military is a highly selective group. I spent some time as a recruiter and learned how to evaluate potential recruits. When considering someone for life in the Army, we looked at their test scores (intellectual ability), physical fitness, their height and weight, their character (community involvement and criminal history) and medical history. Each factor was important and well defined. #-ad_banner-#To succeed in the Army, someone needs to be smart enough to complete fairly complex tasks from memory, fit enough to get out of the way if something goes wrong while helping others get to safety, not so tall that they can’t quickly fit into an armored vehicle under fire and not so small that standard safety equipment will be too big for them. The military lifestyle is a demanding one. Work is often physically and mentally exhausting. Instead of going home to your family at the end of… Read More

My years in the military have allowed me to see the world in a totally different way. While deployed overseas I tracked IED locations, went on convoy missions and gathered intelligence from local villages. I learned the importance of analyzing data to forecast what was likely to happen in the future, and I used this data and information to determine the level of risk our soldiers were dealing with. The typical mission was scheduled to take seven days, but always ended up taking longer due to roadside bombs and the occasional unruly hostile who decided to shoot at us. This… Read More

My years in the military have allowed me to see the world in a totally different way. While deployed overseas I tracked IED locations, went on convoy missions and gathered intelligence from local villages. I learned the importance of analyzing data to forecast what was likely to happen in the future, and I used this data and information to determine the level of risk our soldiers were dealing with. The typical mission was scheduled to take seven days, but always ended up taking longer due to roadside bombs and the occasional unruly hostile who decided to shoot at us. This has opened my eyes to see the bigger picture. Not just in the military, but in everyday life. I believe my experience assessing risk in the military allows me to think outside the box and take a different angle on a problem or situation. In this case, it’s the financial markets. #-ad_banner-#Today, there is an onslaught of different investing techniques and strategies. And when I was first introduced to them, I found myself, like most, overwhelmed. That’s when my training came in handy, and I immediately looked at the market from a different angle. I was instantly drawn to a… Read More

Let’s be frank for a minute. After the pain and suffering caused by the global financial crisis, not to mention the losses many investors experienced, a lot of people still feel disillusioned with Wall Street. Maybe you’re one of them. I don’t blame you if that’s the case. After all, the crisis we experienced wasn’t some unpredictable market anomaly that was entirely unpreventable.  It was a house of cards built by large banks, risky traders and short-sighted government policies that came crashing down on our heads. And while some of the culprits have paid the price for their… Read More

Let’s be frank for a minute. After the pain and suffering caused by the global financial crisis, not to mention the losses many investors experienced, a lot of people still feel disillusioned with Wall Street. Maybe you’re one of them. I don’t blame you if that’s the case. After all, the crisis we experienced wasn’t some unpredictable market anomaly that was entirely unpreventable.  It was a house of cards built by large banks, risky traders and short-sighted government policies that came crashing down on our heads. And while some of the culprits have paid the price for their mistakes (Lehman Brothers, Bernie Madoff… to name a few), others got away largely scot-free.  #-ad_banner-#But if you’re one of the many investors who has used this painful experience as an excuse to sit out of the market, my advice to you is stop. It’s one of the worst mistakes you could make with your portfolio. In fact, I would argue that if the events of the financial crisis taught us anything, it’s how incredibly important it is for individual investors to take charge of their own portfolios. Now, many investors are doing just that. They’re doing their homework, looking for… Read More

Most people think investing success is a matter of finding good stocks and buying them when the odds favor a rise in the price. They buy a blue-chip stock like Procter & Gamble, Amazon, Philip Morris or MasterCard — monitor their position closely, collect any dividends that may come in… and hope things work out.  True success, however, also involves knowing when to sell and how to use all the investment tools at your disposal to reach your goals.  While most investors have studied different methods of analyzing what stocks to buy and when, few have considered all of the… Read More

Most people think investing success is a matter of finding good stocks and buying them when the odds favor a rise in the price. They buy a blue-chip stock like Procter & Gamble, Amazon, Philip Morris or MasterCard — monitor their position closely, collect any dividends that may come in… and hope things work out.  True success, however, also involves knowing when to sell and how to use all the investment tools at your disposal to reach your goals.  While most investors have studied different methods of analyzing what stocks to buy and when, few have considered all of the possible trading tools at their disposal. #-ad_banner-#As for me, I’m not interested in simply buying good stocks, waiting for dividend checks to come in, and hoping for the best.  Instead, I’m interested in earning income. Now. That may sound a little greedy, but I assure you it’s not. In fact, some of the world’s best money managers and hedge funds have the same goal. One way we can achieve this is with options… Most individual traders would probably say that options are among the riskiest investments anyone could make. They’re partially right — trading options the way most individuals do… Read More

Most people think investing success is a matter of finding good stocks and buying them when the odds favor a rise in the price. They buy a blue-chip stock like Procter & Gamble (NYSE: PG), Amazon.com (Nasdaq: AMZN), Philip Morris (NYSE: PM) or MasterCard (NYSE: MA), monitor their position closely, collect any dividends that may come in — and hope things work out. #-ad_banner-#True success, however, also involves knowing when to sell and how to use all the investment tools at your disposal to reach your goals. While most investors have studied different methods of analyzing what stocks to buy… Read More

Most people think investing success is a matter of finding good stocks and buying them when the odds favor a rise in the price. They buy a blue-chip stock like Procter & Gamble (NYSE: PG), Amazon.com (Nasdaq: AMZN), Philip Morris (NYSE: PM) or MasterCard (NYSE: MA), monitor their position closely, collect any dividends that may come in — and hope things work out. #-ad_banner-#True success, however, also involves knowing when to sell and how to use all the investment tools at your disposal to reach your goals. While most investors have studied different methods of analyzing what stocks to buy and when, few have considered all of the possible trading tools at their disposal. As for me, I’m not interested in simply buying good stocks, waiting for dividend checks to come in, and hoping for the best. Instead, I’m interested in earning income. Now. That may sound a little impatient, but I assure you it’s not. In fact, some of the world’s best money managers and hedge funds have the same goal. One way we can achieve this is with options. Most individual traders would probably say that options are among the riskiest investments anyone could make. They’re… Read More

The week after options expire is one of my favorite times of each month. That’s because, as usual, it means it’s time for readers of my premium advisory, Income Trader, and I to review our trades. And so far, we’ve seen outstanding results. #-ad_banner-#This past month, six put positions expired worthless. For those of you who are unfamiliar with options, that’s a good thing for us. You see, every time I make a trade, I get “Instant Income,” or money upfront for selling a put contract. And when the options I sell expire worthless, that income… Read More

The week after options expire is one of my favorite times of each month. That’s because, as usual, it means it’s time for readers of my premium advisory, Income Trader, and I to review our trades. And so far, we’ve seen outstanding results. #-ad_banner-#This past month, six put positions expired worthless. For those of you who are unfamiliar with options, that’s a good thing for us. You see, every time I make a trade, I get “Instant Income,” or money upfront for selling a put contract. And when the options I sell expire worthless, that income becomes pure profit. We have now closed 41 put option trades since last February, and 39 (95%) have expired worthless. And with the help of another income-generating strategy, covered calls, the other two trades also delivered a profit (you can read more about covered calls here). You can see the positions we closed in January below: Every trade we closed this month made a profit. Even my “worst” trade — FFIV — made a 3.9% return in just a 65-day trading period. That may not sound like a lot at first, but if you were to get a… Read More

Bear markets bring lower prices and increased volatility. The increase in volatility is at least partly caused by the lower prices. As prices fall in a bear market, investors become worried that prices will continue falling. These worries will lead many investors to sell, and this adds to the downward pressure on prices. We can see both of those forces at work in this chart for SPDR S&P 500 (NYSE: SPY): #-ad_banner-#In a bear market, volatility increases, and it can remain at elevated levels for some time. Sustained volatility could be helpful to traders… Read More

Bear markets bring lower prices and increased volatility. The increase in volatility is at least partly caused by the lower prices. As prices fall in a bear market, investors become worried that prices will continue falling. These worries will lead many investors to sell, and this adds to the downward pressure on prices. We can see both of those forces at work in this chart for SPDR S&P 500 (NYSE: SPY): #-ad_banner-#In a bear market, volatility increases, and it can remain at elevated levels for some time. Sustained volatility could be helpful to traders looking to minimize their losses in a bear market. Covered call options can help investors boost their profits at any time. This is a conservative strategy that generates income from exiting positions in your portfolio. A call option gives the buyer the right to buy a stock at a predetermined price (called the “strike” or “exercise” price) for a predetermined amount of time. Call sellers have an obligation to sell the underlying shares to the buyer if the buyer exercises that right. With a covered call, you sell a call option on a stock that you own. The risk is… Read More

Today, I’m going to let you in on one of the market’s best-kept secrets… It turns out investors are willing to pay you to sell stocks you already own at a profit.  You read that right. And you want to know the funny thing? Oftentimes, you don’t even have to end up selling. You simply take their money. And rest assured, it’s all perfectly legal. I can’t believe investors are missing out on these payments…  #-ad_banner-#For those who are unfamiliar with this simple technique, it may sound strange. But savvy investors are using it to generate thousands of dollars in… Read More

Today, I’m going to let you in on one of the market’s best-kept secrets… It turns out investors are willing to pay you to sell stocks you already own at a profit.  You read that right. And you want to know the funny thing? Oftentimes, you don’t even have to end up selling. You simply take their money. And rest assured, it’s all perfectly legal. I can’t believe investors are missing out on these payments…  #-ad_banner-#For those who are unfamiliar with this simple technique, it may sound strange. But savvy investors are using it to generate thousands of dollars in extra income every year. It’s one of the easiest and safest ways to generate 20%-plus returns on a regular basis. Once you’ve mastered the technique, I wouldn’t be surprised if you stopped trading stocks or buying and holding investments.  That’s how powerful this strategy is: it can drastically improve the way you make money in the markets. That goes for conservative income investors and aggressive traders alike.  The technique involves selling options — specifically covered calls. A call option gives the buyer the right — but not the obligation — to buy a stock from the call seller if it’s… Read More

Risk is a fundamental part of investing. It might be easiest to understand by using bonds as an example.#-ad_banner-#​ With bonds, the only investment that is considered to be risk free is short-term Treasury bills. For now, risk-free investing offers a return of 0.04%. At that rate, $1 million in retirement savings will provide $400 in income. Most investors don’t have $1 million, so their actual return from safe investments would be even lower. Because risk-free investments offer the smallest returns, pursuing higher income means accepting more risk. Treasury bills that mature in a year are an example… Read More

Risk is a fundamental part of investing. It might be easiest to understand by using bonds as an example.#-ad_banner-#​ With bonds, the only investment that is considered to be risk free is short-term Treasury bills. For now, risk-free investing offers a return of 0.04%. At that rate, $1 million in retirement savings will provide $400 in income. Most investors don’t have $1 million, so their actual return from safe investments would be even lower. Because risk-free investments offer the smallest returns, pursuing higher income means accepting more risk. Treasury bills that mature in a year are an example of how income and risk can be increased. This investment carries the risk that inflation could decrease the value of the principal invested in the bills. One-year T-bills are currently yielding about 0.1%, an amount that does not keep up with inflation. Investors are losing money, on an after-inflation basis, on all Treasurys with less than five years to maturity. This demonstrates that inflation risk might not be well understood by many investors because rational investors should not accept a nearly guaranteed loss in buying power. To beat inflation, investors are forced to accept what bond investors call credit risk. Read More