Tuesday… Dow opened down. Nasdaq opened down.
What’s interesting about this market is that it went up so hard, so fast for the past few weeks that it caught a lot of folks by surprise.
It’s one of the strongest, hardest rips higher I’ve seen in a while.
Now, I’ve said this next thing before, but I keep coming back to it because it’s the best way to find out what’s going on with the market.
Use this method I showed you back in June to spot the overall market trend.
The custom-build software I use — TrendPoint — tells me that all 3 indexes are technically in a bullish trend.
But they’re not as bullish as they were.
And some of that slowdown or pullback we’ve seen is because the market isn’t convinced that the Fed is done raising rates.
So one thing I’m suggesting to folks right now is to consider selling covered calls against stocks you own.
When you do that, the money you collect — premium, we call it — hits your account immediately.
And the other thing it does is it lowers your cost basis.
This is great because it gives you some cushion in case the market drops.
Plus, the CBOE even said in a letter to the SEC that covered calls had less risk than actually owning the stock outright.
So if you’re worried about risk going forward in markets like this… one of the best things I can tell you is to sell covered calls.
Just make sure you never sell a strike below your cost basis.
Another thing you can do for downside protection is buy a married put.
You can do this by buying a put that is the same price as your cost on the stock.
And that way if the stock drops, you can offload it to someone at your cost… or sell the put when it soars in value.
Other things I’m doing right now:
- credit spreads
- naked puts
Basically anything I can do to use stock as an asset to create income.
But don’t let me confuse you. If you want to get started, do what I said above:
- Covered calls will let you create income and reduce your cost basis from the stock you already own.
- And Married Puts will give you downside protection in case the stock drops.
Trade well,
Jack Carter
P.S. If you want to get started right away, watch this video. It shows you the one strategy I’m using in every market — week after week — and how you can do the same.