Monthly Income: An Automobile Example
A MESSAGE FROM WADE COOK . . . Monthly Income: An Automobile Example.
Hello my friends. I've been teaching a lot of people about Writing Covered Calls, and introducing them to TDT, a new service that gets the real deals coming to you. It's called Thousand Dollar Thursday. I'd like to focus on a unique way (at least I hope it's unique) of explaining WRITING COVERED CALLS, a way of producing income for you.
Let's say George has a car. It's worth about $8,000 to $12,000. We all know cars are worth different amounts depending on your need to sell, or the contacts you have. Many of us sell sub-wholesale just because . . . we know of no other way. George finds a buyer at $10,000. That's a good price for George, but his buyer needs a few weeks to get the money. He offers George $100 to hold the car and not sell it to anyone else. George doesn't want to do it for $100, but they agree on $500.
Time starts ticking away. George has the $500, and it's his no matter whether the buyer actually buys the car or not. It's a good deal for both of them. Let's also say this $500 just pays for the extension in time, the right to buy the car. It doesn't apply to the purchase price. It's not a down payment. It could have been different, depending on what they negotiated.
In effect the buyer has an option to buy George's car. George does not know why he's buying the car, and he doesn't really care. In fact, George learns later the guy just wanted to lock down the price so he could sell to another guy for $12,000. He would net $1,500 if he did so in a timely manner.
This is not that common with cars, but you might be interested to know that this happens millions of times a day in the stock market. People buy a stock option to lock down the purchase of a stock at a certain price. Some of them, actually most of them, don't even really want to buy the stock. They want the stock to rise in price quickly and then their option is worth more money. They then sell it at a profit. A trade like this, profitable or not, takes about 18 seconds to conduct. Not so with cars.
Many people lose a lot of money with straight options. The stock has to move like they hoped it would or they'll lose all or part of their money. Many make a fortune, but many more lose a lot of money. It's a risky proposition, and we suggest you weigh out the risk and reward. Don't use more than 4% of your money in this type of risky play. And practice-trade relentlessly until you have figured it out. This type of trade is not what we're talking about. We want to get on the other side of this deal and be the 'George' in this transaction.
So now let's separate the amateurs from the wise souls who have seen the light. Look again at our example of the car for sale. It doesn't matter why George bought the car. It doesn't matter whether he bought the car for $15,000 or $5,000 and fixed it up. What does matter is that there is a buyer.
Let's move on to a stock deal. Remember, you would be part of a vast army of people buying and selling options. Ah, that's the key. Let’s say you have a stock at $10. The next month out option is going for 80¢ X 85¢. That’s the bid and ask. Typically, one buys at the ask and sells at the bid.
You have 1,000 shares of the stock. Options are in 100 share increments, called a contract. You can sell ten contracts, or to keep it simple, you can sell 1,000 times 80¢. That's $800. You get that cash now, actually it clears into your account in one day. It's available for you to buy other stocks, hold onto, or take out and pay some bills.
This is Writing Covered Calls. Writing means to sell. Covered means you own the stock in case someone actually wants to buy it from you. Calls are call options. And again, we're not in getting in harm's way by buying those risky options, we're selling them, pocketing the cash, and whistling our way to the bank.
It is not uncommon to get 5% to 15% in actual cash each and every month. This is no joke. People are willing to pay a lot of money to look down the price of the stock. Whether you actually sell the stock to them or not, you get to keep the $800. Just think about having a batch of stocks like this.
A NEW SERVICE
What if a company were willing to do the research, find the deals, and deliver a deal to your house every week? Back to the car. Someone shows up on Thursday with a $10,000 car, or a $2,000 car, and shows you that right now there is someone around the corner ready to give you $500 or $800 in option money to buy your car for an agreed upon price.
Then next week they show up with another new deal. Then again the week after that. You get to pick and choose. What would that be worth to you? This example pf the car only works so far. There are millions upon millions of such transactions in the stock market.
I am honored that Wealth Information Network, Inc., has asked me to participate in their new service called TDT. That stands for Thousand Dollar Thursday. Every week you as a subscriber will be presented with a new deal. The goal is to help you see the opportunity to make $1,000 or more every week. The assumption is for you to use $5,000 to $10,000 make this kind of money, just like the car. You can make more or less, depending whether you use margin, whether you buy-back the option and sell it a second or third time. The point is you'll be in the know and on the go.
TDT is a mere $97 a month. It's worth thousands, even tens of thousands of dollars. No one, and we mean no one, can or will provide such a service. And the bonuses are amazing. It's unique, exclusive and powerful. We say: A GRAND NEW DEAL EVERY WEEK.
© 2015 Wade B. Cook. All Rights Reserved. Go to www.wadecook.org for more in-depth information.