October 2018 went down as one of the worst months for the stock market in a very long time.
Trillions of dollars of wealth were wiped out. Not fun if you had much of your nest egg invested.
But just like all other sell-offs before it, this too shall pass. It always does.
Some recoveries take a bit longer than others. In the end though, the market will rally again.
The question is...can you handle the volatility?
Most people can't, especially if they're watching the market constantly. They will end up selling near the bottom, and then agonize as they watch the market rally again without them.
I have two solutions for you:
1. You can stay away from watching the news and just be oblivious. Sometimes this is the best course of action, as it keeps you from making irrational and emotional decisions.
2. You can sell out-of-the-money (OTM) put options like I do.
Investing in the stock market has been the best performing asset class over the last 100 years. But you have to be in it to win it.
By selling OTM put options, you're making an agreement today to potentially buy a stock you want at a much cheaper price than where it currently trades. You will only be obligated to buy the stock if it falls to your pre-determined level by the option expiration date. If it doesn't, you're off the hook.
Either way, you keep the income given to you when you first enter the trade. These upfront payments add up over time and leads to piles of cash in your account. This is the backbone of my put-selling strategy.
And with the current market swoon, you can sell put options that pay more because of the increased volatility (option premiums go up when markets get erratic).
In addition to the higher payouts you can receive, you can sell put options at strike prices even further below than their current depressed levels. This makes your potential future entry point that much better.
Let's use IBM as an example.
For over two years now, IBM has been hovering above and below $150 per share.
You could've easily been selling put options at the $100 strike level for months on end, collecting nice sums of cash, all the while knowing that you'd be fine buying IBM at $100 per share if it fell that far.
It never did fall that far, and so you never had to follow through on your end of the bargain.
But with IBM now plumbing new lows near $123 per share, you could easily sell the $75 put options and obligate yourself to buy it at that price ($75).
IBM hasn't touched $75 per share since the heart of the 2008-2009 financial crisis. And even then, it didn't stay there very long. It went on to hit all-time highs of $215 a few years later.
Quality stocks find a way to move higher. Choosing them wisely on your end and selling put options on them is a great money-maker. If you ever have to follow through and buy the shares, you'll be doing so at great levels. Most likely, they'll rebound, and capital appreciation will follow!
Buying IBM at $75 per seems like a great deal to me.
This is what we do in our options trading service. We sell out-of-the-money put options on great stocks. If we have to follow through and buy them, so be it. It'll be a great trade.
But so far since launching in January 2017, we have yet to buy any stocks. This is because we choose levels that are extremely difficult for the stock to fall to. Instead, we just keep collecting the upfront income and move on.
Every single trade is followed in our public Track Record. See for yourself.
We end up closing out every trade by buying the put option back for a cheaper price than what we originally sold it for. This locks in a profit, and a win.
We had a 100% win rate in 2017 and so far the same in 2018.
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Give me your comments and questions below.