written by reader Stansberry’s Retirement Trader

By paperplays, May 31, 2013

Any idea how this works? Its a stratagy to buy options in layers that pay you off small amounts like $300 but you can set up 10 or so deals like this. I’m thinking buterfly stratles ? A $1500 discount available now , lets you in now at $2500. You get a private hot line number to discuss and explain investments.

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hacketet
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hacketet
June 1, 2013 10:08 am

It’s simply selling naked puts or covered calls with a strike just in the money and expiration about 2 months out. In a bull market the stock often gets called away and you get the premium, but you give up any profit above the strike. If the stock is in a solid uptrend you might want to select a strike just out of the money to improve your income. In a bear market you keep the stock and the premium. You can then sell another put or call to minimize losses. Stick with stocks that you want to own. Be careful though as the stock may be called away to pick up a dividend. The difference in premium between a 1 and 2 month expiration data is usually trivial so I prefer a 1 month time period.

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Max
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Max
June 9, 2013 5:33 am

Yes sadly Stansberry shows the income stream from this method but does not show the capital losses. Evidently if the capital losses equal or are greater than the income stream then this method is a waste of time.

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doc327hank
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doc327hank
September 27, 2013 10:55 am

This is a great news letter, except for the price!
Sure it’s Naked Put and Covered Calls, But the picks are virtually gauanteed not to fail. Well almost. You might roll it over, etc. but by the time you have closed the position you’ve made some money. At least so far.
And it’s for Retirees. Who want something easy and not take alot of time.
And yes, I am now going for one month more often than two. But I have a very low transaction fee. If I were still trading Options with Schwab, and with my position sizes, 2 months might be the way to go so tha the fees don’t eat up so much of the gains.
Over all I don’t know how many stars. Price would be 1 or zero, the rest would be 5 stars- what does that add up to?

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