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Collecting “Market Commissions” on Stocks — Jeff Clark
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It’s baaaack! Jeff Clark’s Advanced Income investment newsletter is now being sold using yet another ad that has a clever invented name for his strategy — this time, we’re told that you can make a “market commission” on your stock and pull in money from your broker in just ten minutes.
“Beginning right now, you could begin pocketing hundreds of dollars in guaranteed commissions on any one of 3,500 publicly traded stocks.”
And apparently this new strategy is “4 times better than dividends!”
Longtime Gumshoe readers (and I love you, every one) will probably instantly recognize this for what it is — it’s the grandson of the California Overnight Dividend, which last graced these pages almost a year ago, and the nephew of the Transfer Dividend, which we started seeing back in January … heck, as long as we’re on that track, I suppose it’s also a distant cousin of the more suave and debonair Unclaimed Dividend that we wrote about back in June.
So what is a “market commission,” you ask? You’ve come to the right place!
It is, of course, yet another ad for a newsletter which follows a strategy of buying stocks and selling calls against that stock for income. I won’t go into much detail on it here, he gives several examples of stocks that you could have traded using this strategy, including Panera Bread, GE, Frontier Oil, Valero, and, in this example, Citibank:
“You see, most people think that dividends offer the most extra income…
“But with “Market Commissions” – you can collect nearly 4 TIMES more income than even the best-paying dividends on the market… up to five days a week.
“As the millionaire former broker who explained this to me puts it, “Dividends are becoming a thing of the past.”
“Take a look at Citigroup (C) – and you’ll see what I mean…
“If you’d owned 100 shares of Citigroup – you’d have made $476 in dividends last year. Not bad, if you didn’t know any better.
“But by taking 10 minutes to collect a single “Market Commission,” you could have made a total of $1,505 – 4 TIMES MORE, wired directly to your trading account.”
All true, I’m sure — and this strategy can certainly bring in plenty of income as long as you are disciplined and focus on that income, and don’t try to get too big for your britches or worry about any capital gains you might lose (probably not many lately, admittedly).
If you want a fuller discussion of the strategy of selling covered calls for income, we’ve talked about this many times before and the basic strategy has been around for decades and hasn’t really changed — visit the California Overnight Dividend writeup if you’d like more details.
The short answer is: you buy a stock, then sell a call option against that stock.
That’s it — the proceeds from selling that option are your “market commission” in the words of the Stansberry & Associates copywriters.
If you choose a nearby expiration month and a stock that is volatile enough to have some premium priced into the options, you can get some decent premiums that do, for many investors, add up to a pretty good annual yield of well over 10%. Investors who want large capital gains won’t like this strategy, because if your stock goes up too far or too fast you’ll lose the shares, and those who follow this strategy also always need to have a plan in place for what to do if the stock goes down precipitously — you’ve still got your options premium, but you could also certainly have significant capital losses if you choose the wrong stocks or opt not to extricate yourself from them.
That’s my shorthand summary of the previous writing on this, for a much fuller discussion go on and read about the California Overnight Dividend or the Transfer Dividend — they are the same thing. There is, apparently, nothing new under the sun … just new names for old ads.
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Subjects: Advanced Income, dividends, Jeff Clark, options
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Hi All– I assume that the above teaser on “Dividends…” is the asme as this one from Stansberry & Associates,
“Millionaire former broker reveals the…
10-minute Secret to Collecting a $720
“Market Commission”
Beginning right now, you could begin pocketing hundreds of dollars in guaranteed commissions on any one of 3,500 publicly traded stocks.”
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StockGumshoe Reply:
August 13th, 2008 at 7:52 pm
Yep — right you are.
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David Zweigle Reply:
August 14th, 2008 at 9:35 am
And Christopher Mayer’s “endless paycheck”?
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Thanks Gumshoe, thought it must be selling covered calls.
Why can’t they tell it like it is!
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I agree with Pat. I guess all this creative marketing makes more folks interested, and it is sort of an entertaining read…. however i believe it’s very much bordering on dishonesty.
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Thanks gumshoe!! Iam a fairly new reader and I get several newsletters and always depend on you to sort them out.. Great Job!!! thank you.
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This sounds a lot like Wade Cook’s seminar, when he switched from Notes (mortgages discounted)to covered option writer, on to naked options too. I think somewhere between he filed bankruptcy or something like that.
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farley 5 Reply:
August 14th, 2008 at 9:58 pm
WOW! A blast from the past. Wade was a taxi driver that thought he could make money doing seminars. I was using options extensively in the 80’s and decided to attend one of his seminars. I cringed every few minutes because the information was either blatently wrong or Wade was stretching the truth. Unfortunately, the folks in the room buying the tapes and books could not afford to buy them let alone scrape the money together to actually trade. One attendee sent me the reco list a few months later and most were a total loss for this poor guy. If it sounds too good to be true ……
[Reply]
Big Mo Reply:
August 15th, 2008 at 8:55 pm
Yes, remember WIN? That was the acronym for Wade Cook’s Wealth Information Network. Unfortunately, the stock went bust.
I don’t consider Wade a shyster, though. I’ve read a couple of his books and they did have some good, solid investment information presented in layman’s terms. Any investment carries a certain amount of risk, Wade’s or anybody elses. He often emphasized that in his writings. So don’t beat him up too bad.
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I was in the states 95-99 and fell victim and lost 2000$ or more buying their books. subscribing to their services that are run by a group of demented clowns and attended one of their useless siminars. They were really good in making you feel like a future Warren Buffet! where you will be catching money from wall street like catching butterflies in the garden with a net. What a group of crooks! I guess I was more demented than them.
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It always seems like somebody is painting a pretty rainbow and almost promising a pot of gold at the end of it. I remember as a kid trying to find the end of a rainbow. Trouble was the end kept moving as I moved. Never did find the end of the rainbow that day or any thereafter, but what great physical exercise.
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Thanks for your article on market commissions.I was seriously considering buying their newsletter but decided to google it first,and there you were.Thank you again!
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Wow, I got excited when reading about Jeff Clark’s market commissions. As a beginner you don’t like to get ripped off. So thanks gumshoe for your lowdown about this old concept. I’ll keep my money to myself.
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Ive actually done covered options calls before, you can stake is a step further and buy a put out of the money to cover on the way down.
Ive tried for years to come up with a fool proof way to extract options premiums safely…there just isnt….somehow, when you sell an option, you better be sure it doesnt move against you by more than the premium, and whenever you buy an option, you automatically forfiet the premium and must hope the stock move up past the stike by at least the premium.
Well…thanks for the info!!! Im glad I didnt spend $500 to learn something I currently already do!!! THANK YOU STOCK GUMSHOE!
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I am almost convinced but suspected it’s too good to be true. Thank you Stock GumShoe! You did a great job explaining and helping me keep my $500 to myself.
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I just joined the Oxford Club and received an advertisement from their investment U for these Jeff Clark market commissions. Is the Oxford Club legit?
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destry Reply:
September 7th, 2008 at 2:06 pm
The Oxford Club (And “Investment U.”)is a pretty good Investment Letter…They all will offer teasers to get you to add to your subscription…
Except “Financial Intelligence Report”.
The most complaints, come from those who don’t think it’s fair to have to decide which recommendations fit, and which don’t. Well…Some
letters will never make the distance; But most are decent if you don’t demand too much for your subscription…Like doing all of your thinking for you.
[Reply]
Nuccia Reply:
September 8th, 2008 at 1:25 pm
I so glad I decided to Google “market commission”
After reading everyone’s comment,I’m convinced that market commission income is ” a pie in the sky”
I’m happy you gave me the low down ,before subscriving to the $500.00 newsletter!
thank you
[Reply]
What is the “Amazing 10 minute work week” a teaser for Extreme Value newsletter?
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On this subject, has anyone taken in and considered that they are offering a 90 day guarantee? They appear to be a large newsletter publisher and I’m sure you would get your money back if you’re not happy. You could paper trade for the first 30 or 60 days to see how it would work and if it doesn’t then get out. Is there anything wrong with this thinking?
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He Jeff Clark says you do not buy or own a stock to collect. He also says you make money whether it goes up, down or stays the same.He states you do-not buy options and it has nothing to do with that. What is it?????He says it is a trigger in the options market,Quick-draw. What does he mean???
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Professor Whaley of Duke (now Vanderbilt) was falsely referenced as supporting this strategy. I emailed him and he was referring to “buy-write” or “covered calls,” which requires a purchase of a stock or basket of stocks for which call options are written or sold that cover the position. That is completely different than the claim of the email that neither stocks nor options need be purchased. Typically, this strategy outperforms stocks in bear markets and underperforms them in bull. If you want to check it out, go to http://cboe.com/micro/bxm/introduction.aspx. This form of deception shouldn’t be allowed, and would nix any investment on my part, esp. at $500 annually.
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Diane Reply:
October 13th, 2008 at 4:18 pm
Strictly speaking he may be telling a version of the truth, if he’s talking about buying calls, and then selling calls again those. You can, in fact, write covered calls without buying stock, as long as you’ve bought calls.
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Even old traders can be perplexed by these advertisement “Market Commissions” and their varients. One wonders did I overlook something, but checking this out brings reality to the “Dog and Pony Show”. Afterall the smell of money raises our hunting instincts, but care about the prey shows them for what they are: skillful fishers of money.
There is nothing wrong with the “covered call strategy” and it has its time and place to enhance one’s portfolio. But to call it something that it is not is just plain deceptive.
Thanks for uncovering the truth.
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You got just half of Jeff Clark’s story. He recommends covered calls, but also selling (writing) options. You can sell naked options (what Clark usually recommends), or protect yourself by doing spreads. That’s how you can make money instantly without buying stock. Selling options can be highly profitable, but today’s extreme volatility increases the risk. When stock prices change 7%-8% in a single day, it’s easy to lose big.
[Reply]
Pete Reply:
December 6th, 2008 at 3:09 pm
Covered call writing alone is a fool’s game. You take on all the risk for limited gain. When done in combination with naked put writing it is possible to make good returns as it forces you to buy on market drops and sell on market rises in addition to the put premiums. However it takes great discipline, you still have most of the risk of a collapsing stock and you miss out on much of the potential gain of skyrocketing market. I have tried it in the past and it was more work and stress and tax record keeping than I was willing to keep up. When the volatility reduces back to normal then the options premiums reduce and the strategy returns are not so impressive.
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It seems that newsletter promoters are getting more deceptive or creative, (depending on your viewpoint) but what I find most annoying is that once you sign up for a relatively inexpensive service you are BOMBARDED with promos for more expensive service with some new angle.
I have complained vigorously to various of the Agors affiliated services about their practices, the ultimate insult being that the ANALYST whose services you thought you were paying for constantly introduces new services at ever higher prices. With the market slide no doubt they are also hurting as they are unable to attract the same number of new subscribers, (and like mutual and hedge funds have accelerated requests for redemptions) so prices seem to be coming down.
That being said, I have made some good money selling coverd calls but the stocks must be selected very carefully. As Travis pointed out, if the stock advances and gets “called away” you may end up sacrificing some potential profits. The BIGGER danger in my view is that you may LOCK IN to a steep decline, which is still okay if you selected sound companies you want to own for the long term, but you also risk locking in a loss that exceeeds the premium that you received.
As in any strategy it takes time and has a learning curve and requires due diligence too execute successfully in a volatile market.
The latest wrinkle being touted n several promos is selling naked puts on stocks you want to own long term. The idea here is by selling PUTS at a price you would want to buy a specific stock you get too KEEP the premium you are paid for the puts if the price does not drop to your buy point. The negative here is that you need to keep enough money in your account to actually BUY the stock should the price drop to your buy point.
BOTH strategies require some careful calculation, good guesswork and maybe a streak of luck to come out ahead!
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farley 5 Reply:
December 6th, 2008 at 4:21 pm
One strategy you may want to look at is the Calendar Spread. I have given many examples in the Forum. Buy the longest LEAP you can get. My training has me buy in the money. Then sell three month calls against the position. As the calls come to expiration, manage the trade by purchasing the call back and selling the next three month call. Certainly cheaper than buying stock and you have a determined risk for the trade. Be sure to read the disclosure, etc.
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I can confirm that the gumshoe nailed this one. I tried their 90-day trial period (with 10% refund fee). Jeff Clark has indeed made 38% gains, along side 54% losses. His current track record is at best break-even. My money is better off in a checking account where it won’t cost me $750 a year.
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