In my “weekly paycheck” strategy, we typically sell put options with the goal of our option finishing out-of-the-money on Friday and the option expires worthless.
But there are times in the market where certain stocks set up for more aggressive trading opportunities.
Just last week we sold an “in-the-money” monthly put option… with a “weekly option” strategy.
We are in the beginning of a multiyear expansion of chipmaking capacity worldwide and the chip and semi-conductor sector stocks have been on a tear for the last few months.
Applied Materials (NASDAQ: ( )) is the king of the semi equipment sector and at the core of new chipmaking facilities. Last week looked like the perfect time to sell an in-the-money put on AMAT expiring 30 days out.
The premiums were much richer on the AMAT monthly put and if the chip stocks continued their upward trend, we could close our trade early with a big “weekly option” profit.
With AMAT trading around $46.82 I recommended my Options Income Blueprint members sell the AMT monthly 47 put for $1.44 in premium or $144 per contract.
Last week Applied Materials price shot higher to $49.50 on strong earnings from chip maker Micron Technology (NASDAQ: ( )) and our AMAT 47 monthly put premium dropped by $1.00.
I immediately sent out an alert closing the trade early by buying back our put option for $0.44 or $44 collecting $100 per contract of profit.
Most of our Options Income Blueprint members usually trade 3 contracts, which would’ve resulted in a $300 profit (before trading commissions).
By selling the more aggressive AMAT in-the-money put option with the further out monthly expiration, we pocketed 3 times the amount of cash then if we had sold the regular weekly AMAT put option.
This is just one of the many income producing tactics we regularly do inside my “weekly paycheck” trading strategy… here’s how you can get started with us.
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.