On Friday, we showed you how we've been able to generate safe, double-digit returns with our "trading for income" strategy of selling covered calls and naked puts. These trades are consistently bringing in hundreds of dollars… thousands of dollars… even tens of thousands of dollars per month for our readers. For example, we just received this note from reader T.G.:
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As T.G. notes, when we sell naked puts and covered calls, we're not "swinging for the fences." We're looking to generate small amounts of income over and over and over. At the end of the year, those small income "hits" add up to big returns.
As you can see in the chart below, shares of Coke fell 14% from mid-May through the beginning of September. And over the last three weeks, shares are up 4% off their lows.
As T.G. said, trading for income isn't a "get rich quick" idea. But if you're like many folks, you've tried "swinging for the fences" with risky strategies. That almost never works. Following conservative option strategies does work. Consider putting this safe strategy to work today with Coke.
Shares of technology giant Apple hit a short-term low on September 16...
The company had recently revealed its two new iPhones – the 5C and 5S. We discussed the release in the September 11 Digest.
The market was disappointed. Apple shares fell as much as 6% that day – dropping to less than $470. Shares continued falling, eventually bottoming at $450.12 on September 16.
The following morning, DailyWealth Trader co-editors Brian Hunt and Amber Lee Mason sent a trade alert...
This recent pullback [in Apple] sets up an excellent put-selling opportunity: Right now, you can sell the November $450 puts for $20.80.
If Apple is trading below $450 come November, put-sellers will end up buying shares at a 5.5% discount to today's dirt-cheap price. At that point, you'll start collecting Apple's 2.7% dividend, and you can turn around and sell covered calls to generate even more income…
If Apple holds above $450 or rises higher, put-sellers will get to keep the $20.80 free and clear. That's a 4.6% yield on your purchase obligation in two months... 28.1% annualized.
Apple was oversold at $450... And we believed the stock had a floor at that price. Billionaire investor Carl Icahn initiated a $1 billion position in Apple around $460.
The new iPhones went on sale over the weekend... And the results were incredible...
Apple sold 9 million iPhones in the weekend debut – nearly doubling its previous iPhone record. Analysts were expecting sales between 5 million and 7.75 million units.
"While we've sold out of our initial supply of iPhone 5S, stores continue to receive new iPhone shipments regularly," Apple CEO Tim Cook said in a statement. "We appreciate everyone's patience and are working hard to build enough new iPhones for everyone."
The company also announced quarterly revenue would be at the high end of its forecast of $34 billion to $37 billion... And gross margins will be 36%-37%.
Apple rose as much as 6.3% on the news, before settling at a 3.5% gain to $484. Subscribers who followed Brian and Amber's recommendation are on track for a 4.1% return in two months, which equates to an annualized gain of 25.2%.
In the September 19 Digest, we told you about the release of the latest installment of Take-Two Interactive's blockbuster video-game franchise – Grand Theft Auto V (GTA V).
The most financially successful video game of all time was Activision's Call of Duty: Black Ops 2, which sold $1 billion in its first 15 days. We reported GTA V sold $800 million on its debut.
Over the weekend, Take-Two announced the game crossed $1 billion in sales in its first three days. "We believe this marks the fastest that any entertainment property, including video games and feature films, has reached this significant milestone," a company representative said in a statement.
Shares of Take-Two Interactive are up 0.5% to $17.07 today.
Digest readers know well… Porter has long been bearish on solar-energy technology and the companies that sell it…
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And based on an article we found in the Sunday Wall Street Journal, he's not the only one...
Utilities are fighting back against calls that they accommodate solar power...
In most cases, solar panels don't generate 100% of the power residents use... As Porter has often said, the biggest problem for solar power is called "night." And at night (and other times when panels aren't drawing much power), solar-powered homes draw power from the same grid that serves regular utility customers.
But when solar panels generate a surplus of power… it flows into the grid. And most utilities are required to pay customers for that power.
As Sunday's Wall Street Journal points out:
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In other words, solar customers are having it both ways. And major utilities in states like California and Arizona aren't happy.
Arizona utility Arizona Public Service Co. estimates its approximately 1 million residential nonsolar customers pay around $18 a year to subsidize its 18,000 solar customers.
"Everyone who's using the grid ought to pay their fair share of the grid," says Jim McDonald, a spokesman for the utility told the Journal.
Arizona Public Service Co. presented two alternatives to the current net metering laws... And both options would boost the average solar customer's monthly bill by $50 to $100.
New 52-week highs (as of 9/20/13): EnerSys (ENS), Laredo Petroleum (LPI), Qlik Technologies (QLIK), Sturm, Ruger & Co. (RGR), and Triangle Petroleum (TPLM).
We've long preached the benefits of adding certain options-trading strategies to your arsenal... And judging from today's mailbag, you're learning and profiting from our advice. How have you fared trading options? Let us know at feedback@stansberryresearch.com.
"Kudos to you for waiving your copyright restrictions to Friday's Digest. You have been Paul Revere for a long, long time now. Allowing your subscribers to distribute this message aids us in also sounding the alarm." – Paid-up subscriber Rick Barton
"One year ago, I knew nothing about the concept of options. Today, I am selling Apple put option contracts at a discount of 12% or more to Mr. Ferris' buy up to price...
"Mr. Ferris wants Apple to bring home that portion of the $147 billion dollars which are in accounts outside of the US, pay the tax and it will enhance shareholder value. On the other hand, one could say that $147 billion in cash especially that portion of it in foreign investments could be viewed as a hedge against the Bernanke printing machine. If any of this is true, then the Apple put trade could be considered to be one of the most conservative investments in the world. Whatever I have learned which make any sense has been from all of you at Stansberry and Palm Beach Letter." – Paid-up subscriber John Bertrand
Regards,
Sean Goldsmith
Miami Beach, Florida
September 23, 2013