See what I mean?
And these are just a few of the first-hand accounts I've received from hundreds and hundreds of grateful investors just like you who are now using options to generate steady income.
How I Started Generating All the Income I Needed With Options
I've been using options to generate income for more than a decade now. When I first started using options back in 2000, the stock market was making a fast retreat. And I realized that I needed more ways to make money than investing in stocks alone.
So I started looking at the alternatives, and I was excited to discover how versatile and how easy options could be. I wanted steady income, and options were clearly the answer.
I'm very glad that I started using options when I did. Because the S&P 500 has gone virtually nowhere since 2000. But with options, I've been able to generate steady income just about whenever I wanted.
With options, I'm no longer a victim of the market, or at the market's whims. I don't need stocks to go up to make a profit. Instead, I'm in charge, writing myself income checks on a regular basis simply by writing options that expire every month — even in a flat or down market.
In fact, with options, it no longer matters to me if the market goes nowhere. In fact, options soon became my main source of income!
By learning a few simple options plays, you too can generate income month after month. To use a football analogy, you can run the same play over and over again, even on the same company.
Take Portfolio Recovery Associates (PRAA), for example. We set up our first income play on PRAA back in August 2011.
Since then, we've collected three income payments of $1,122... $1,140... and $966. That's $3,228 in extra income.
All using one very basic income-generating option play. It's called "put selling". And it's one of the very first strategies I learned when I first started investing with options. It's still one of my 'go to' favorites for generating income today.
That's because it puts (pardon the pun) all the odds in your favor.
Let me explain. To do that, I need to share with you...
The #1 Reason Most Investors Lose Money With Options
As you may already know, an option is just a simple contract. It gives you the right to buy or sell 100 shares of an underlying stock at a set price (the strike price) by a set date in the future (the expiration date).
And as you've probably heard, there are two kinds of options: a call option and a put option. Call options go up in value when the stock price goes up. Put options go up in value when the stock price goes down.
Now the thing about options is that you can buy them... or you can sell them.
Now buying options can be risky. Because they expire in a number of months...because you have to pay a premium to buy them... and because you have to be right about the share price, the direction, the magnitude and the timing of the move. And all that works against you when you're buying options.
In fact, studies show that 75% of options held to expiration expire worthless. And that leaves the option buyer with nothing.
But in Motley Fool Options, we mostly sell options. Which puts all the odds in OUR favor. And it works perfectly with our goal, which is to make regular income that complements our long-term stock holdings.
Because when you SELL options, you get paid money right upfront. And when the option 'expires worthless' (as they usually do), the buyer gets nothing and YOU, the seller, keep all the income!
And that's why I love selling options so much!
Let me show you how Motley Fool Options investors used this simple options strategy to turn Portfolio Recovery Associates into some very welcome income...
Turn Your Stocks Into Income Gravy Trains
We've recommended selling puts on Portfolio Recovery Associates three times so far. And that's allowed us to collect a steady stream of income payments over the last year.
Here's how it works: Portfolio Recovery Associates is a debt collection company. Its motto is "giving debt collection a good name."
Back in August 2011, we had done our Foolish homework on Portfolio Recovery Associates. We had put the business under a microscope. Dug through the underwear drawers. Made a nuisance of ourselves asking questions.
When we were done, we felt we knew as much about the underlying business as the management team. And we were confident that the company was ripe for a put selling play.
We knew that by selling puts on the company, we would either make a boatload of income... or we'd have the opportunity to buy the shares at a ridiculously low share price in the future.
So on August 9, 2011, with the stock trading at $68.51, we recommended that Motley Fool Options members SELL the December 2011 $65 puts. And as long as the stock did not drop below $65, we would keep all the income.
So how did we do? We closed our position in December right before expiration, locking in $374 of income for every contract we sold.
If you had sold just three put contracts when we recommended them, you would have pocketed $1,122 in income.
But we weren't done yet. There was still plenty more income to be had. So in January 2012 we told Motley Fool Options members to sell the June 2012 puts and collect $380 per contract.
Again, if you had sold three put contracts when we recommended them, you would have pocketed $1,140 in income when the options expired worthless. (That just means that the buyer walked away with nothing, and YOU, the seller, kept all the income!)
Then in June 2012, we told Motley Fool Options members to sell the September puts and collect $322 per contract. If you had sold three contracts, you would have pocketed another $966 in income when the options again expired worthless.
That's a total of $3,228 in extra income... from just one stock... by adding a few simple options plays.
Now I think you can see why I love this strategy so much.
So Why Isn't Everybody Selling Puts?
So you might be wondering: If it's so easy, why don't more people do it?
Well, the simple answer is that they're afraid they'll end up owning the shares. You see, with put selling, if the stock drops dramatically, you end up buying the shares at the strike price you agreed to when you sold the option (but you still keep the income the put options paid you, so your cost basis on the stock is even lower than the strike price!).
And that's the big mistake that most people make with put selling. They do it on stocks that they would never want to own!
But here at Motley Fool Options, we ONLY sell puts on stocks that we would love to own at a lower price. It's like entering a "limit order" to buy stocks you like at a steep discount.
Now, at the risk of bragging a bit, I do want to point out here... with a more than 90% success rate on our closed trades, we don't end up buying many stocks when we sell puts here at The Motley Fool.
But we would have been very happy to buy Portfolio Recovery Associates for $61.78. Why? Because our estimated fair value of those shares was easily over $85. And in fact, the stock trades for around $95 today.
The good news is, with Portfolio Recovery Associates, the shares never dropped below our put strike price.
So we generated $3,228 in total income in a little over a year... on one single strategy... without ever having to buy a single share of stock.
Finally... You Can Stop Being Held Hostage by the Market
Now, put selling is a great way to generate income, and it's a great place for beginners to start.
And it doesn't matter if you have experience with options or not. Because we'll show you step-by-step exactly how to execute put selling and other income strategies in Motley Fool Options advisory service...
Learning to trade options was one of the most empowering experiences of my life. Finally, I was no longer held hostage to the market. I could generate safe, steady income for my family and I could do it month after month with confidence.
And that's our mission here at Motley Fool Options. To help individual investors just like you learn to trade options with ease and confidence. Which is why you get a lot more than just investing recommendations with Motley Fool Options.
You get a comprehensive education in options investing, from soup to nuts. So instead of spending a fortune on books and seminars, you can get up to speed quickly using our essential guides and following our step-by-step instructions.
Knowledge really is power. By adding options to your trading toolbox, you'll be giving yourself more than a great source of extra income... You'll be giving yourself the confidence to generate all the extra income you need under all types of market conditions for the rest of your life. Now that's empowering!
We provide plenty of "hand holding" for those who want it. We show you exactly how to get started — including how to place every trade. And we'll tell you whenever we need to follow up on a position with another trade down the road. You'll know exactly what your maximum risk and potential rewards are with each trade you make.
Nobody is going to make options clearer, easier, more logical, and more lucrative for you. And as a Motley Fool Options member, you'll have online access to me and my team at any point.
You'll get everything you need. Including the tools to make a handsome string of profits when stocks go up (as you've just seen) and when they go down. And even when they stay flat!
Now I'd like to show you two more income-generating strategies that enable members to take advantage of special situations.
They may seem a bit advanced to you right now if you're an options novice. But members tell us that with the training and guidance they receive, it doesn't take long before they're executing trades like these and really turbo-charging their returns.
And if you've traded options before, you should be able to dive right into these lucrative strategies to generate even more income.
Advanced Strategy #1:
What members are saying about Motley Fool Options:
"Actionable and profitable"
"Building family wealth..."
"Excited and impressed..."
"This month paid for my options subscription..."
Imagine being able to profit on a stock's upswing without buying it. It's easy to do with a synthetic long.
I know, it sounds like a pair of polyester pants that need to be hemmed... but it's actually a very versatile and profitable income strategy! And it gives you the benefits of owning a stock, without forking over the cash to buy it today.
Motley Fool Options members have used this strategy to make buckets of income on Monsanto for nearly three years in a row!
When we first recommended the synthetic long on Monsanto in March 2010, the stock was trading around $72.70 a share. So if you wanted to purchase 100 shares of Monsanto, you would have had to fork over a whopping $7,270.
Or, instead of risking a boatload of cash... you could have purchased the synthetic long. And the total cash cost would have been just $205.
Now as experienced traders know, this trade would have had a margin requirement. But even a 30% margin requirement would only mean you would have needed to set aside an additional $2,305 in reserve.
And that's still a whopping $4,965 less than the cost of the shares!
But that's not even the best part. The best part is that once you set up a synthetic long, after the stock moves up to where you think the stock is fairly valued, you can make a series of income overlay trades on it quarter after quarter. And you can continue to roll the trade forward into the future, so you can keep generating income from it...
It's just like selling calls against stocks you own. Only in this case, you didn't have to buy the stock upfront!
That's exactly what we did with Monsanto! We've racked up a steady stream of income over the past three years.
From March 2010 to today, we've made a series of follow-on income overlay trades, and we've extended the position out to 2015.
All told, we've collected $1,586 in income. And our total cash cost was only $205. So that's $1,381 in profits, and we never touched our reserve.
And if we were to shut down the synthetic long today (of course we're not about to do that to a nice cash cow like this, but if we were...), it would put another $1,245 in profits in our pockets for a total return of $2,626.
Now compare that to the guy who forked over $7,270 for the shares. He would have pocketed a total gain of $1,885, including share price appreciation and dividends.
So the shareholder forked over a whopping $7,270 in cash to make $1,885 in profits.
But the option buyer forked over just $205 to generate $2,626.
And that's why synthetic longs are such a great investing tool. You can put up MUCH less cash upfront — in this case only $205! And you can use the buying power of your other portfolio assets to generate a nice bundle of income — in this case a very nice $2,626!
Now, synthetic longs aren't for everybody. But for those who don't mind the margin requirement and want to generate some attractive returns, they can be a great addition to any options portfolio!
And that's the beauty of Motley Fool Options. We offer you dozens of trade opportunities every month. Everything is à la carte. So you can pick and choose the opportunities that are best for you, according to your investment goals. It's like getting a customized options investing service just for you!
I could go on and on about all the strategies at your disposal in Motley Fool Options and all the income you could make. But there simply isn't enough room here to tell you about all of them.
My team and I have used these same strategies to make money on 9 out of every 10 options recommendations we've closed in our Motley Fool Options service while generating tons of income for our subscribers.
And now you can take advantage of them too.
Because we have opened up Motley Fool Options again for a limited time to a select group of investors. And this is your chance to see for yourself how easy it is to generate extra income with options.
Motley Fool Options members like these...
"I am simply amazed..."
"I trust these guys, and it has paid off for me..."
"Made 3 times the cost of the subscription..."
They loved Motley Fool Options. I think you will, too. And with our 100% Satisfaction Money-Back Guarantee, you have nothing to lose by giving it a try...
If you're like many investors, you've heard dozens of so-called trading 'gurus' brag about what they can do for you. Well here at Motley Fool Options, we don't believe in blindly following anyone. And we don't believe in empty swagger.
That's why we stand behind our products with our 100% Satisfaction Money-Back Guarantee.
Here's how it works:
First, you can test-drive Motley Fool Options for the next 30 days with no risk whatsoever. Go ahead and kick the tires. Check out our amazing educational resources. Post questions on the boards. Follow along and paper trade our recommendations or trade them for real in your portfolio. All without risking a dime.
Because you can get your money back, up to the last day of your first month. For any reason, or no reason whatsoever. Just ask, and we'll give you a full refund.
Second, even after your 30 days, if you change your mind, you will receive a pro-rated refund for the remainder of your subscription term.
Which takes away nearly all the risk, making it possible to assure your spot in Motley Fool Options, and makes this sort of a no-brainer, right?
7 Reasons to Join Motley Fool Options Today!
Now those are some pretty compelling reasons to join. But they're just the beginning...
As a Motley Fool Options member, you also get a little "lagniappe." And I think it's one of the best parts about being a member.
"Lagniappe" is a Cajun word that means "a little something extra." It's the free gift merchants give their best customers as a thank you for doing business with them. Like the 13th donut you get when you buy a dozen.
Here at Motley Fool Options, we give you lots of lagniappe with every recommendation. That's because each recommendation gives you multiple ways to play options on a stock. So you can choose your level of risk, capital required, and sophistication.
For example, if you're a beginner, simply pick a more basic options strategy. If you're advanced, trade the more complex recommendation. We'll also give you suggestions to lower your risk. Or to lower your upfront investment. It's like getting three to five recommendations in one!
With other options trading services, you get one recommendation and one way to play it. But not at Motley Fool Options. Because at Motley Fool Options, we don't believe in 'cookie cutter' options trading. We understand that each investor is unique. With unique needs, risk tolerance, and investment levels. That's why we offer you lots of alternatives.
C. Orsini wrote us to say it was her most valued feature:
"... Besides the learning (great!!) and the opportunities that options open to us (how was I able to live without them?), what I value most about Motley Fool Options is the 'alternative trade feature'. Because the core recommendations do not always fit my needs, but I do quite well with the alternatives."
As you can see, there are lots of great reasons to join Motley Fool Options today. Not the least of which is to make money. And that brings me to this final often-overlooked benefit...
Motley Fool Options is more than just a series of options investment recommendations. It's an entire community of Foolish options investors. Investors who are passionate about what they do and willing to 'pay it forward' by lending a helping hand to new members.
It's a community unlike any other. You can ask any question online... from the most complex to the most basic... and someone will jump on and answer. Might be me... might be my co-advisor, Jim Gillies... might be one of our experienced and talented team members... or might be a fellow member who has faced the exact issue and has a world of advice to share with you.
If you've never used options before, I can't think of a better place to start than the Motley Fool Options community. We've got your back. It's like having your very own options investing posse riding shotgun with you. And you don't have to pay them a single penny in fees or commissions every time you ask a question.
In fact, J. Cross of St. Louis, Missouri, says it's the reason for his success!
"The only reason I have been successful is through the lessons from Jeff and Jim and Joe, and also from members of the forum. My portfolio is growing and the thanks go to many members of this group."
By now, you're probably wondering what all this shotgun support, expert education, and robust recommendations are going to cost you. Well, I've got good news: It's a whole lot less than you might expect...
Motley Fool Options regularly retails for $999 for a full year. And I think you'll agree that's a very reasonable price to pay for the kind of world-class options investing education and extensive real-time recommendations you get every week.
In fact, if you've looked around at options trading services before, you know they run $2,000, $2,500, even $5,000 per year and more. And almost none offer the kind of member benefits you get at Motley Fool Options.
But if you accept this special invitation, you don't have to pay anywhere near $999. That's because until midnight, December 11, 2012, you can join Motley Fool Options with this special invitation and SAVE $400!
You pay just $599 for the full year! That's a 40% SAVINGS off the regular price!
Why are we making you this special offer?
Because we know how powerful options are. We know how versatile and flexible they are. We know how much income they can generate. And we know that by making just a few simple options investments a year, you can make more than double the gains made by "just" stockholders.
But we also know that mastering new investment strategies can be intimidating. Whether you're making your very first options trade... or whether you've been trading calls and puts for years but want to try your hand at more sophisticated options strategies.
So we've dropped the price in order to give you a friendly little 'nudge' in the right direction. Because we know that once you see these income-generating strategies in action, you'll be hooked for life.
Just listen to these Motley Fool Options members who finally took the leap...
Made Back the Subscription Fee More Than Five Times Over!
So if you already know that Motley Fool Options is for you, you'll want to go ahead and reserve your spot today. Because I'd hate for you to get shut out and risk missing out on all of the great income plays we'll deliver over the coming months.
I really want you to find out for yourself just why options are one of the safest ways to generate steady income, particularly in this low interest-paying environment.
Next year, you too could be looking at 76% gains like Motley Fool Options member, Geoffrey P. of Sevierville, TN!
"My education level concerning options has definitely increased 500-fold in the past year. I closed year one with a 76% gain on my portfolio using many of the suggestions from Motley Fool Options. On top of that, I used the skills and the education to acquire option contracts on the various stocks that I have been following for a while that significantly increased the gains in my portfolio. 'Thank You' for a superbly successful year."
We've helped countless individual investors like Geoffrey P. build up a Foolish pile of dough. And now, we want to show you how you can do it too when you become a member of Motley Fool Options today.
And remember, you're still protected by our 100% money-back, no-questions-asked 30-day guarantee. Second, even after your first 30 days, if you change your mind, you will receive a pro-rated refund for the remainder of your subscription term.
Thousands of investors like you have already joined Motley Fool Options. And they're already benefiting from our amazingly consistent 90%+ win rate with options. Isn't it time you joined them?
You really do have nothing to lose, except the extra income that options can bring to your stock portfolio. So why not go ahead and pull the trigger today?
Advisor, Motley Fool Options
P.S. You may be wondering why on earth our notoriously conservative Motley Fool Co-founder Tom Gardner decided to launch an options advisory service. The answer is simple. He wanted to prove that it's not only possible to trade options easily and sensibly... but that you can actually use them to help generate a steady stream of income like $1,030, $2,626, and even $3,228... in all types of market climates... all while reducing your downside risk.
Long-time dyed-in-the-wool Fools are thrilled with the results. Like S.S. from Melrose Park, Illinois, who wrote to say: "I closed my NVDA covered call option at a 84% gain in 3 weeks!!! I would never ever thought about using options in my years of investing if it wasn't for Jeff and Jim. Thanks guys."
But don't just take their word for it. See for yourself what options can do for your portfolio! Take Motley Fool Options for a 30-day Risk-Free Test Drive now and find out why Barron's calls it "some smart advice"!
All figures as of November 27, 2012. Jeff Fischer owns shares of American Express Company. Jim Gillies owns shares of NVIDIA, Portfolio Recovery Associates, and has the following options: short DEC 2012 $15 calls on NVIDIA, short JAN 2013 $29 calls on Microsoft, and short JAN 2014 $25 puts on Microsoft. The Motley Fool owns shares of Microsoft. Past performance does not guarantee future results.
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