The Truth about Money, part seven
THE MYSTICAL, MAGICAL TRUTH ABOUT MONEY Wade B. Cook
PART SEVEN: A BEAUTIFUL CHORD
The basics of Covered Call Writing are quite simple. It is just this. We are going to buy an asset, then sell to someone the right to buy this same asset from us at a set price and on or before a certain date. We are selling away the upside movement on the stock, and getting cash now to do so. It is one of the most lucrative, yet little known strategies, in the stock market.
The effectiveness of Writing (selling) a Covered Call is not that hard to accomplish, once you know the basics. It’s always good, no matter the sport, the business, the endeavor, to hang around people who live and breathe the process. Having said that, it is easier than you think. In this section we’ll explore four ways to excel at this process. One way is no better than the other. In fact, they can be used simultaneously, but each method really does have a separate and unique use.
NUMBER ONE: The first use of this strategy is to generate monthly income. You use an asset to make money. Often, and with a little more training you can double-dip and get off two or more trades. I’ve done five trades in one month on Qualcom (QCOM) and NetFlix (NFLX). That was tough but it’s not that tough to get off two to three trades a month. This means you can take $8,000 and make $1,500 to $2,500 in one month. This is real spendable cash. Enjoy life.
In this first scenario, you focus on straight monthly income. You pull out enough to live on. You can figure out how much you need. If you need $4,000 a month to pay your bills, you’ll need about $20,000 to retire. If you don’t have that much, then get busy and start building it up.
NUMBER TWO: The second use of this strategy is to either quit your job or enter some kind of retirement. In fact, that is what TURBO MONEY is all about. You can write covered calls in an IRA or Pension Account. However, most of the people attracted to my seminars and books want to work up to that. Here’s the point: Starting with $1,200 in one scenario (36 months to retirement) or $5,000 in the other scenario (24 months to retirement), there is a way for you to build up enough monthly income to retire with $4,000 to $9,000 a month coming in.
Again, this strategy leaves the money alone for 2 to 3 years. You leave the money in the account and have it buy more stocks. You compound it. That is what several chapters in this book emphasize and explain. You don’t need to work harder, you need to get your money producing income, and income that lets you buy more stocks, to produce more income.
A few more insertions to come.