Monday, March 4, 2013
For many years now, I've made a bold claim... that retirees could safely earn 12%-20% income streams on their savings.
I know it sounds crazy... but my Retirement Trader readers have used the strategy behind this claim to close 108 consecutive winning positions.
They've used it to rake in thousands of dollars every month in extra cash.
This strategy involves making discount offers on blue-chip stocks. You make these offers using one of the most powerful – and most misunderstood – financial tools ever created: stock options.
When most folks hear the words "stock options," they think of risky bets on volatile moves in the stock market. But nothing could be further from the truth.
A stock option is simply a contract between two people. One type of option is called a "put option." The person who buys a put has the right – but not the obligation – to sell a stock at a given price, in a given time period. The person who sells a put has the obligation to buy a stock at a given price, in a given time period.
Done properly, selling put options is one of the greatest money-making strategies ever created. And it's simple, once you get the hang of it. All you have to do is agree to buy safe, blue-chip stocks for a discount. The market will pay you hundreds – even thousands of dollars – to do so.
Take one of my favorite blue-chip stocks, Intel (NASDAQ: INTC). Intel is the world's biggest and best producer of semiconductor chips. These are the tiny "engines" that run computers, cell phones, and any other high-tech device. They are in nearly every electronic device around you.
Because of overblown fears about the global economy, Intel is an incredibly cheap stock. At the current share price of $21, it trades for 10 times earnings and yields a safe 4.4%.
Intel is a cyclical company that is being left for dead by many technology pundits. Don't believe it. This company spends more on research and development than its three closest competitors (AMD, ARM Holdings, and Texas Instruments) make in profit.
Intel will reap the harvest as its next generation of super-fast and cool-running chips get put into everything from your toaster to your tennis shoes. This stock belongs in everyone's portfolio.
You can get a great deal by buying the stock at $21. But by selling put options, you don't have to settle for "just" a good deal. You can set yourself up for a great deal.
Right now, you can sell the May $20 2013 put option for $0.48. By selling this put, you're agreeing to buy Intel for the discounted price of $20 per share come May. For every 100 shares you agree to buy, you'd receive $48.
If Intel declines below $20 per share, you buy the shares. But since you received $0.48 per share for selling the put, your "real" purchase price is $19.52 ($20 minus $0.48). This is a 7% discount to Intel's already-cheap current price.
If Intel rises from its current level to $22, you simply keep the cash payment. Traders aren't going to want to sell you their Intel shares for $20 when they can sell them for $22. If Intel just "treads water" and stays at $21, you also keep the payment. Traders aren't going to want to sell you their shares for $20 when they can sell them for $21.
I think we can expect the stock to rise. Intel is a safe, cheap stock... and it's unlikely to fall further. But if I'm wrong and Intel falls, you can buy shares for a 7% discount to today's price. You'll own a great company and you can start collecting dividends.
I know this can sound confusing if you're not used to the idea. But just know this: You can get paid for agreeing to buy shares of valuable companies for less than their current share prices.
As I mentioned, my readers and I have put together a tremendous track record using this strategy. Many write in to say it has completely changed the way they invest... and changed their retirement for the better.
It's helping people earn hundreds or even thousands of extra dollars a month.
Here's to our health, wealth, and a great retirement,
In February, Doc showed readers another way to use options to boost your income on blue-chip stocks. Using this method, you can easily quadruple the amount of income you collect from these stocks... without taking on any additional risk. Walk through the numbers to see how it works here: There Are Safe 15%-20% Yields Available for Retirees... Right Now.
Former Wall Street darling Apple hits a new 52-week low... shares are down nearly 40% since their September highs.
Search-engine provider Yahoo hits a new 52-week high... shares are up 50% over the past six months.
Silver stocks First Majestic Silver and Endeavour Silver fall to 52-week lows.
Japan's Nikkei Index soars nearly 30% over the past four months.