Other Voices: A Message From Tim Plaehn (Part 3)

Strangers want to put $300,000 into your IRA (starting October 10th)

Fellow Investor,

Check out this guy named Paul from Philadelphia.

He claims “Strangers have put over $300,000 into his IRA.”

And it’s true.

Paul doesn’t know the people depositing all that money into his account.

But it’s definitely no joke. That money is as real as a paycheck.

Paul is using the same strategy that I and a select group of my readers also use with wild success.

In fact, we’re 42 for 49 in 2019 using this same strategy.

The strategy (I shared it last email) is trading covered calls against your dividend stocks.

Covered calls are the best method I’ve found to boost the income you receive from the stock market.

Jaime Darcey, a 48-year old who own a Little Caesars pizzeria, says “I call it creating it my own dividend.”

Jack G. told me “I have increased my dividend income 100%... from $23,000 to $49,000.”

I believe it’s possible for you to collect an extra $103,000 in 24 months in addition to your dividend yield using this strategy.

One of our portfolios closed out every trade as a winner in 2018.

Paul from Philadelphia can do it.

So can you.

I understand your hang-ups about options.

...options are confusing and complicated...

...options “take too much time”...

...options are super risky...

I’m going to squash all of these myths on October 15th.

I had these same thoughts for years. Until I found covered calls could supplement my dividend checks without taking on huge risks...

Even better, you don’t need to stop what you’re doing with your dividend portfolio.

All you have to do is place the trades and watch the extra payments flow into your account.

And that’s only the beginning.

There’s a brand new way to squeeze even more income from these same stocks without selling them.

How the Covered Call Strategy Works
(steps the $300,000 man likely followed)

Again... and I have to stress this again...

I know options may stir up emotions, some good some bad. I myself used to feel options are a gambler’s playground... lots of upside, lots of risk.

And there are plenty of jokers out there rolling the dice.

However, covered calls have been proven to be the opposite. You take smaller risks, and create consistent income doing so.

Let’s think about this strategy in a concrete way.

Think of your dividend stock holdings as… say… a rental property you own.

Maybe after you earn $103,000 in extra income you buy a rental property in sunny Naples, Florida for $500,000.

White sandy beaches. Tourists caravaning in year-round. You picked the perfect spot.

You can charge a nice $2,000 per month to rent out your place. For the full year, you’re making a 5% return on your $500k investment.

You’re a genius.

Suddenly, another guy spots your lavish, cash-cow abode and would like your rental income for himself.

However, he’s heard rumblings the Naples’ housing market is on the decline. If he plops down $500k and a crash happens, he’d be in a world of hurt.

So, he says to you: “I’ll pay you $10,000 if for the next 60 days, you give me the option to buy your house at $525,000.”

That’s $25,000 above your home’s value.

__SCENARIO #1:SCENARIO #2:SCENARIO #3:__Which will happen 90% of the time -- the price of your house stays the same at $500k, and you keep his $10,000. Meanwhile, over 60 days, you collect another $4,000 in rental income.The Naples housing market booms and your house skyrockets in price to $525,000. You must then sell your house at a $25,000 profit, plus you collect his $10,000 payment and any rental income at the time.The housing market does indeed tank. The buyer was right. Your house drops to $450,000. However, you still collect his $10,000 and you still get your $2,000/month rental income.

In all three scenarios, you keep the $10,000 ‘option’ payment the buyer deposits.

  • In Scenario 1, you pocket an extra $10,000 and go on your way (that’s our goal with covered calls). Not to mention, you continue to collect your $4,000 monthly income. In under 60 days, you earned 2.5X your monthly income for really doing nothing.
  • In Scenario 2, you do indeed have to sell your house, but you make a $25,000 profit on top of the $10,000 option payment.

With our covered call options, this may happen as well.

We are required to sell our dividend stocks for a profit.

But, unlike the complications with buying real estate, you can go back to the market 10 minutes later and re-buy the shares.

Meanwhile, you’re $10,000 + $25,000 richer.

  • In Scenario 3, you lose value on your house, but you still collect the $10,000 option payment and still earn rental income.

Let’s circle back to trading options on your dividend income assets.

You do the same thing with your stocks.

You own stock.

Others want to rent them from you because they see the stocks moving in the future.

You collect guaranteed income right upfront. Money you keep.

In the end:

  1. You keep the premium free-and-clear and nothing else happens
  2. Your stocks get ‘called away’ by the other party, but you likely pocket appreciation on your stocks, plus the premium. (and you can go back and buy the stock minutes later.)
  3. Your stocks go down. You keep the premium and nothing else happens.

To point #3: Think about it...your stock would go down anyway if you held the stock. Why not collect some income to mitigate the losses?

Your dividend stocks will fluctuate with the market. Why not hedge your portfolio with those making ‘gambles’ like the guy who wanted to buy your Naples beach house?

Most folks gambling on options will win 10-30% of the time.

But, it’s possible for you to win op to 92%... of the time doing the opposite of most options gamblers.

I’m a conservative and contrarian investor at heart. So when I hear something like that, my ears perk up.

I’ll stop there today.

On Wednesday, I’ll reveal where I learned to master this strategy. It’s from an interesting man in Arizona you’ll want to meet.

Thanks as always,

Land, Fly, or Die

Tim Plaehn

Lead Income Analyst

Investors Alley

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