The torrid trading in tech stocks continues as the NASDAQ just closed at another record high.
The tech sector is led by the microchip stocks that keep giving option sellers very rich paydays.
We went back to trade a favorite chip stock of mine. Micron Technology ( ) is a pure play on NAND flash memory — the memory chips that go into mobile devices such as smartphones and tablets, thumb drives and, increasingly, laptops.
The stock is grossly undervalued compared to other tech outfits. It is also quite volatile due to Wall Street’s more than frequent overreaction to spot prices for chips…
…and that makes it a great income trading opportunity for option sellers.
We opened a long-term position (five weeks out) to generate a huge chunk of cash…selling the MU June 50 put in May and collecting a nice chunk of cash: $1.80 or $180 per contract.
Just after we opened the trade, good news from two other semi-conductor stock earnings reports came out and Micron’s stock price popped. It was an easy decision to take profits early buying back our option for $.80 and pocketing a $1.00 or $100 of cash in just 5 days.
And, my Options Income Blueprint members typically trade 3 contracts per trade…so that’s fast $300 of profit and a 2% return in just 5 days!
Another chip stock payday…
The Weekly Option Strategy So Effective, 93% of Investors Who Use It Make Money. This Special Report will teach you how to instantly add CASH to your account every week, every month and every quarter and NEVER put your portfolio at risk. Create Your Own “Extra Pay Day” Every Week.
About The Author
Michael Shulman is a 30 Year Veteran of the financial markets – as a trader, a financial analyst, a financial writer and most recently as an educator.
Mr. Shulman made his first option trade in 1985 – COMPAQ Computer calls – a position that expired worthless. His second trade broke even; the third brought him a year’s salary, a near twenty to one return on his investment. He has never looked back. He entered the financial publishing business formally in 2001 as director of research for ChangeWave Research’s institutional research business and as the writer and editor of Hedge Fund Investing.
He has published two books – Sell Short and Made in America – both of which can be found on Amazon.com, and he is a frequent contributor to reputable financial sites like Seeking Alpha, MSN, MainStreetInvestor, and Traders Reserve.
Most importantly, since 2010, he has dedicated himself to teaching income investors how to get more income from their portfolios using simple yet safe options selling strategies which produce income every week. This approach was developed from the ground up in Mr. Shulman’s own accounts, his goal to develop a strategy that cannot be replicated by institutional investors of any size and therefore independent of fads and trends that change too often to provide a consistent approach for individual traders.
His trade recommendations in his Options Income Blueprint, Perpetual Income Portfolio Club and Income Masters services maintain a 98% success ratio, meaning his trades produce the expected income 98% of the time. No one’s perfect.