PATHWAY TO PROFITS: Lesson #8, Burnt Slap Up, Excess Income.
PATHWAY TO PROFITS: Lesson #8, Burnt Slap Up, Excess Income. I’m Burnt Slap Up. I heard that phrase, and yes, you guessed it, it was on the Blue Collar Comedy Tour. It means “It’s really cool.”—but I don’t speak or remember in Redneck, but that’s close enough. Sometimes it feels good saying it—you know, on those weird days.
But the feeling is real when I see people retiring off their income, paying off bills and living a better life. May I share a story of one of my students. His name was Bill and after my WALL STREET WORKSHOP he proceeded to run $18,000 up to over $80,000.
Bill then went to his wife and told her he wanted to retire. He was 56 years old, and like many other people that age, they have medical insurance, other benefits—and even though they dislike their jobs, they can’t seem to break away.
She said, “Sure, once you do it again.” He set out to repeat the process and didn’t make it. He turned to Writing Covered Calls, and started making around $6,000 to $8,000 a month. After 8 months he approached his wife again, and showed her what he had been doing. She now felt good about his living his job and retiring. What was the difference?
The answer is wrapped up in “Steady Monthly Income.” Think of all the things you can do at the time you replace your income with another, an independent source of income. And are you looking at these numbers. $6,000 to $8,000 a month times 8 months does not equal $80,000. So, why now?
Again, he’s proven his dedication to a process. Yes, we had a form of TDT back then, at $300 a month, but it was his efforts, to scale back a little and go for the monthly income.
ONE POINT: There is an important point here. Many people trade in straight options. Most people lose. They take the risk and we take their money.
We take no added risk in selling a call and taking in the cash now. We have to watch for the downside movement of the stock, but those concerns are mitigated with research, studying support levels, and placing a stop-loss order. The new risk is what we call, “Opportunity Lost Risk.” If we sell the $8 call and the stock runs up, we do not participate in that up-move. We get paid, and often paid well, to sell away the upside of the stock.
Just look at these prices. These again are for four + weeks.
CHK (Chesapeake Energy): The stock is $6.22 and the $6 calls are 85¢ to sell. Even after a 22¢ give-back, it’s still around 10%.
ECA: The stock is $6.90 and the $7 calls are 60¢ X 70¢.
BBG: The stock is $7.25 and the $8 calls are 60¢ to sell. Look at the 75¢ gain if we get called out at $8.
WLL: The stock is at $10.80 and the $11 calls are $1.15 X $1.25. The $10s are $1.65 X $1.80. Yes, this was in a recent TDT. Look at these numbers. You don’t need to know everything to get started. We’ll bring you deals like this every week.
SO WHAT ARE YOU WAITING FOR? If you think these brief lessons are good, wait until you see us in full stride. It is a true Quest for us, again, helping you get retired in an abundant way.