[SelfPaid]

Hi Roosher's,
I recently Posted a Thread about why Buying and Holding Stocks is not such a Smart Idea in our Century.

What I did Not do was Provide an alter alternative Solution.
So here it is : Selling Insurance ( Selling Put Options)
I am Not at my PC so I am going to Post a few links that can Provide you with an greater understanding of what that means but let me explain it ase simple Ase I can.

Imagin you have on 100K in the Bank and you want to create an Income Stream ( Casflow) or just increase that amount Buy investing into Stocks.
So Selling Insurance could do both Things for you.

1. You research a Stock that you are happy to Own at Lower Price it's currently Trading.

2. You Research what other people will Pay you if you Buy the Stock at that price.

3. If you have found a Good Stock and a Good Premium Someone is willing to Pay you. You make a Promise just like an Insurance Company to Buy the Stock if it Drops to that Price and you will get a certain amount of Money (Premium) for you're Promise.

Just like a Car Insurance get's Money for Prominsing that they will refund you're Car Repair cost if something happens.

So Now there are 2 Possible Outcomes:
1. 20% of the Stocks actualy hitt the Price at the end of the Contra t period arround 30 Days. So you will have to Buy the Shares at the agreed Price.

2. 80% Chance At the end of 30 Days the Share Price is Not at the Price you want to Buy it. Which means you just keep the Premium, nothing else Happens and you can repeat the same process.

So How is this better than simply buying and Holding ?
I think you have allready guessed it : Short Awnser Less Risk and more Return, Semi Passive Income Stream.

What's The Time Investment ?
30 Minutes a Month to Research and 3-5 Minutes a Day just Checking the Price.
Return on you're Money: If you do it Conservative with a 100K Account you would Invest 50 K and generate between 4 and 16% per Month I calculate with 8% on average.

Which means 4000 a Month Befor Tax ( depending where you live you might Not have to Pay anytax) But in Germany we have the Abgeltungs Steuer it's like Capital Gains tax which means 25% Tax ( a reason for me to move somewhere Else) But it Beats the 45% Tax that you would Pay earning that Income in a regular Job.

Warren Buffet used this Strategy aswell http://www.forbes.com/sites/baldwin/2012.../?view=pc.

And it's regular People who got Creative and Put Money Out of there House or superanuation to generate Income. There is on austrian Guy 73 years Old who Generates arround 40. k a Month with 400 K Capital so it's clearly Not just something for Billionares.

So if you're thinking about investing Into the Stock market think again and Maybe do you're Research on Selling Put Options, Writting Covered Calls or similar Strategies that will help you 're Money Grow much faster and don't Take Ase much Time as a Day Job.

Plus if you choose to you can create Location Independence since I am learning that in Most countrys you can live Good on far Less than 4 or 40 K a Month

I hope that provides an alternativ for some Guy's and please make sure to educate you'reself and do you're Own Research before you Start with Real Cash. You might want to Start with Paper Money that you understand how ist Works and Maybe Look into investing Into a Blook or a course or just looking for Someone who Knows what he is doing so that you do the right Things.

If you like me Sharing about other Strategies I use to make Money or generate even much higher Returns than 8% Per Month just let me know I can make another Thread if you have Less than 100K you might Need a Way to generate that don't you ?

If you want to know which course I would Buy just ask me and I can Provide that aswell other than that. Wish you Succes researching Educating, implementing and making Money Using the Strategy.
Take Care
Eric

PS: For people who don't understand my Language hehe here is a link to investopedia which explains the Strategy aswell http://www.investopedia.com/articles/opt...z2Do3JM8t9
Hope that helps
Peace

I just read that 55% of Americans from Age 18 on can't survive more than 25 Days without a Job and help from the Goverment in the US.
27% of that number are so broke, that they can't survive 2 Days without a Job.
Please don't be on of that Guy's since that are the People who genrate Social unrest and destroy Propertys, Kidnap ect in a Worst Case Szenario.
That are the people who will so anything to survive not because there bad but because they are hungry. So if I where Part of that 55 or mich worse 27% I would do something about that circumstances Ase soon Ase Possible.

[Batman]

Great post

[deepcov3r]

This is a good strategy but I think 4% per month is somewhat high. if the stock goes down and you own it, you have to do a different strategy unless you have unlimited money or credit. It's not a bad situation, you can sell covered calls on it but that rarely makes you 4%. You're not selling anything are you?

[BIGINJAPAN]

I have been using this strategy for years. But you should only be using it in a bull market. With QE, QE lite, QE2 it made sense to pull this strategy off. Now not so much. The market is to choppy for this. I will sell puts on weekly options now for companies such as google, apple and FB. But I am a high risk taker and nothing gets you out of bed in the morning like weekly put options on apple.

As for the returns, making 4% a month is easy with options. Once you learn enough you will see how easy it is. I am not surprised that most people don't know this as even wall street guys don't really understand them. A highly succesful option trader can double his principal every year, regardless of an up, down or sideways market.

But remember this, selling naked options is what blows banks, hedgefunds and investment firms up. It is true that 80% of options expire worthless, but when selling naked you have unlimited risk and it only takes one wrong move to blow your whole account up. Especially if you sell calls. There is unlimited risk to the upside if you sell a call. At least if you sell a put it can only go to zero, but technically a stock can keep climbing. Also when selling options I like to do 45 days out, you get more time premium that way, but again that is if you have a general direction of which way the market is going. Right now I try not to look past a week.

[jerome]

wrong post

[SelfPaid]

(12-01-2012 01:41 PM)BIGINJAPAN Wrote:  

I have been using this strategy for years. But you should only be using it in a bull market. With QE, QE lite, QE2 it made sense to pull this strategy off. Now not so much. The market is to choppy for this. I will sell puts on weekly options now for companies such as google, apple and FB. But I am a high risk taker and nothing gets you out of bed in the morning like weekly put options on apple.

As for the returns, making 4% a month is easy with options. Once you learn enough you will see how easy it is. I am not surprised that most people don't know this as even wall street guys don't really understand them. A highly succesful option trader can double his principal every year, regardless of an up, down or sideways market.

But remember this, selling naked options is what blows banks, hedgefunds and investment firms up. It is true that 80% of options expire worthless, but when selling naked you have unlimited risk and it only takes one wrong move to blow your whole account up. Especially if you sell calls. There is unlimited risk to the upside if you sell a call. At least if you sell a put it can only go to zero, but technically a stock can keep climbing. Also when selling options I like to do 45 days out, you get more time premium that way, but again that is if you have a general direction of which way the market is going. Right now I try not to look past a week.

Great to hear that Big in Japan.
Since when have you been Trading ?

There are still people Using this Strategy Even now After qe3.
I Personaly spend Most of my Time Day Trading Silver since I make a Bit more than 4% a Month.
I am thinking about Separating my Investments and Networth more from my Lifestyle and Casflow. And this Strategy is in my opinion Perfect for that.
I am New to the Money Game but for me it's about Mastering skills to make Money and buying up undervalued Real Estate and Land arround the Globe. So everything I do know is to prepare for that.

Seprating my Personal Income from my Investments helps me since every 10K I spend is mor than 1 Million I Loose so living a Good Lifestyle in a more Cheaper Country is a Smart Choice for me.

So I would use this strateg on a Monthly Basis and choose Shares that will probably Not get excercised unless I choose to since I am just After the Monthly Casflow.
I still have to learn a few more things and I have Less experience or Knowledge about it than I have with my Day Trading Strategie since that is Basis of my Semi passive Income.
So I am happy that this forrum hase some Options Traders.

[SelfPaid]

(12-01-2012 10:06 AM)Batman Wrote:  

Great post

Thanks happy if it benefits, I See that there are people Out here Having some experience with that Topic so I am Glad I made the Post.

[SelfPaid]

(12-01-2012 10:56 AM)deepcov3r Wrote:  

This is a good strategy but I think 4% per month is somewhat high. if the stock goes down and you own it, you have to do a different strategy unless you have unlimited money or credit. It's not a bad situation, you can sell covered calls on it but that rarely makes you 4%. You're not selling anything are you?

No I don't sell anything: I used to sell Door to Door Ase I was Kid in the Summer hollidays but that day's are gone
All I do is Buying Low and Selling High when the lemings get in everyday 5 Days a week.
And Invest Into other Peoples skills wich means If I don't know how to make Money doing something I Share 25% of the Profits with Someone who is the best at doing it.
I make much better Returns and have Less Stress than if I would have to convince Someone Else to Buy something from me.

The reason I Talked about a product is because I choose to Buy it and I see the value in it for me. i am always willing to Pay for acces to people that are much better at a Skill than I am. If Warren Buffet would offer a Coaching on investing I would Pay what ever it Takes that's how I think and it Safes Time and Money in the Long run.
But you don't have to do what I do.
You can learn Most of things True Someone Else who is Good at it and learning by doing if you're ready to Invest the Time and Energy Into it.
You could Even learn just True Videos and articles that you can find for Free online it's you're Choice what fits you better.

Eric

[juice]

I use a similar strategy that generates an average of 5% monthly. I don't like having naked shorts because of the blow-up potential but I do sell put spreads or often have iron condors on as well.

Also, I think the 80% of options expiring worthless is highly dependent on how far OTM you are selling. If anybody wants to talk more about this, let me know!

[lavidaloca]

Sorry but if I'm reading this correctly you guys are essentially doubling your money yearly or atleast gaining more than 50% of your principal doing this? Is there high risk because I would think everyone would be doing it if the results were "that good."

[SelfPaid]

(12-02-2012 03:18 AM)lavidaloca Wrote:  

Sorry but if I'm reading this correctly you guys are essentially doubling your money yearly or atleast gaining more than 50% of your principal doing this? Is there high risk because I would think everyone would be doing it if the results were "that good."

No it's Not High Risk it's low risk I Personaly use other low Risk Strategies to achieve much mor than 100% a Year. The reason why people don't do that because they don't now about it.

It Sounds conplicated and hase comicated Language but it's simple. Most People just know to Put there Money into the Bank or to a Fund Manager since that's what they are programmed to do and you might know that Inflation Eats Most of that Money. The Rich get Richer because they do Things that the poor and middle class don't do.

If you actualy want to become Wealthy in this Century you can't do what everybody does you Need to do what Works and bring's Great Results. That's the reason I droped Out of School in 13. Grade and don't have Job. I had to learn to generate Income Streams and Build up Capital outside of the System.

So if you learn this Strategy it Becomes as Easy as riding a Bike.
People think Day Trading is Risky they are right if they don't know what they are doing if you know what you're doing Things become simple and have Less Risk.
Hope that Makes sense

[lavidaloca]

I understand the concept I studied business as my undergrad and considered going into banking but went into Law. If you don't mind sharing some of your other strategies I think it would be of a great deal of interest to many people on this board. I'll admit I thought you were trolling originally with some of your posts but you seem to have a lot of very legitimate information.

[SelfPaid]

I actualy don't understand what Trolling means since am New to the online forrum World.
I just do things and don't often think about the effects on other peoples reality and it Looks like I made some mistakes in my First Posts.

I am happy to Share the Strategies I use Daily I will Open a New Thread to Show an Alternative Solution to buying and Holding Gold and Silver.
And I will do that on my pc so I can Run it True my spellchecker.

I taugt it to my mother and she was able to generate 600% in arround 3 Weeks that is 6 Time her invested Money and she doesen't realy have a clue about Investing and is hyper focussed on her carere.

So that might be interresting to people who have Less than 100K since you Need to Build up you're Capital to be able to Truely Profit from Selling Insurance in my opinion.

[juice]

(12-02-2012 03:18 AM)lavidaloca Wrote:  

Sorry but if I'm reading this correctly you guys are essentially doubling your money yearly or atleast gaining more than 50% of your principal doing this? Is there high risk because I would think everyone would be doing it if the results were "that good."

Being a net seller of options is high risk so you need to have good risk management rules in place. Also, I try to diversify among various sectors & indexes so as to minimize the risk that everything will go against me at once. Some months I may be up over 5% while others may be negative months but, on average, one can make a lot more than a typical index because of the levered nature of options. I do not have a full year with this strategy yet but I can let you know that I am up ~25% YTD (started in May) while the S&P 500 is up ~13%.

I quantify everything before entering a trade. Basically, I have a profit target, adjustment/rolling points, and max loss point. Once the initial position is entered, I enter target and max loss orders as well as set alerts for adjustment points. The entire idea here is to take emotion out of trading. As far as position selection, I choose from a list of about 30 stocks & indexes that have liquid options chains. From there, I take a look at the technical picture and implied volatility (very important in options) of each on a weekly basis. Once that is done, I rank each ticker and make decisions on neutral or directional positions that I'd like to enter. I probably spend about 5 hours a week on my trading.

Let me know if you have any more questions about my process.