It’s probably not news to you, but some stocks are ripping dramatically higher.
While others — AAPL and TSLA, I’m looking at you — are lagging or completely crashing.
It’s a really narrow market that is marching higher.
And as crazy as it sounds, I expect the high flyers to continue flying even higher.
Because these stocks are primed to go higher when people think they can’t possibly go higher.
But there’s one question that keeps coming up from folks who own some of these high flying stocks…
“Should I sell these stocks now?!”
See, folks are feeling uneasy and don’t want a sudden downturn to wipe away all their earnings.
But by the same token, they don’t want to sell now and regretfully watch from the sidelines as the stock.
Hence the question I keep getting.
For those folks — and to anyone who’s ever been in a similar situation, I have a tip.
Buy some cheap insurance and stop worrying.
How?
Well, if you own 100 shares of one of these high flyers, sell an out-of-the-money call option.
Then you can use the premium you collected from that call option to buy an at-the-money put.
You’ll essentially be getting this put option for free, because you’re using the premium you collected from the covered call.
Even if you don’t have 100 shares of the stock, meaning you can’t sell a covered call…
It might be worth buying the put, because that put will soar if the stock drops.
Now, if the stock doesn’t drop by expiration day, your put will expire worthless.
But it’s a cheap form of insurance. It’s a small price to pay for a big potential profit.
Trade well,
Jack Carter
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