| JEFFRY TURNMIRE
When Stocks Drop Out Of Nowhere
In this morning’s Prosperity Pub newsletter, Jack Carter talked to you about an income strategy he’s been using for decades.
If you missed it, search your email for it. It’s worth your time.
He literally gives the building blocks for the income strategy he’s been using for decades.
The subject line for that email is:
Earnings… Will they outperform — or drop?
In any case, I wanted to cover one of the things he talked about.
As part of his strategy, he said that he sells a put option on a stock that is about 10% out of the money.
So if a stock is currently at $100, he’ll sell a put with a $90 strike price that expires in 4 days. (usually on a Friday)
If the stock is above $90 when the option expires, he’ll keep the full premium.
He also said that if the stock falls to $90 or below, it could turn into a losing trade.
Naturally, folks are always concerned about risk (as they should be), so they focus on the losing potential of this kind of trade.
But here’s the thing — part of the brilliance of Jack’s strategy is that he’s limiting his risk to an extremely tight time frame.
First of all, he hates trading on Mondays.
As a former Market Maker on Wall Street, he understands the volatility that Mondays can bring, so he prefers to stay out of the market and just observe.
As a result, he enters the market on Tuesday… and sells an option that expires on Friday. If you count Tuesday, he’s in the market for a grand total of 4 days. (Brilliant!)
I wasn’t able to find any studies that tell us how often a stock falls 10% or more in less than a week, but from personal experience I can tell you it’s rare.
Especially when you’re using a multi-point strategy like Jack’s that only has you using high quality stocks to begin with.
I’ve seen Jack’s numbers. His strategy has a win rate greater than 96%.
That’s about as close to perfect as any strategy I’ve ever seen. And a huge part of that is what we just discussed:
Selling options about 10% out of the money with less than a week to expiration.
Look at the stats yourself:
When Jack is winning more than 96% of the time, that’s a strategy that’s going to be hard to ignore for any good trader.
In fact, Jack’s been using this as his primary strategy for decades. There’s a reason he’s turning to income trading as his main strategy — and why I recommend you do, too.
If you’d like to learn more about it, Jack’s going live tomorrow, Tuesday July 18th @ 11:30am Eastern.
Click here to register your spot and hear more about his time-tested strategy.
Hope you check it out,
— Jeffry Turnmire | | | | |
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