On today’s show:
- The Simplest Business: No Product, No Service, No Employees
- Why Other Businesses Are So Difficult: The Time Jack Had To “Kidnap” A Dog
- So Close, Yet So Far: Why Most People Fail In Trading (and how to avoid it)
- Getting Started Trading As A Business
- FREE Options play… complete with strike and expiration!
Jack says that everyone should have multiple streams of income. He thinks 10 streams of income is probably the magic number.
Jack explained why he considers trading the easiest business:
Once upon a time, Jack was a landlord. A tenant thought they’d take him for multiple months of free rent. Jack told him to get out by Monday. When Jack went to check on the house, there was a dog. Thinking it was abandoned, he took the dog. Later he got a call from the police and they arranged for Jack to return the dog and get his rent back.
Another tenant was running what seemed like a 24/7 garage sale throughout his house, treating the house like it was a warehouse. Jack was tired of the guy not paying his rent, so he acted like he was towing away a classic truck the guy had in the front yard. Instantly, the guy came back with cash to pay the back rent.
Jack also used to loan money. But he made so many enemies his wife made him quit.
The point is that people often don’t hesitate to invest in a business like real estate or a restaurant or other “normal” businesses. But they don’t realize all the headaches that come with it.
Jack says that people think the learning curve is much bigger than it is. There are some concepts that require learning. Yes it will require time, but for the most part people complicate it a lot and therefore quit before they even get started.
He says you can set up an LLC for yourself at minimal cost – from $50 to $350 depending on your state.
Then you open a trading account with that LLC at any brokerage firm and suddenly you’re trading in a business. You can even take deductions on education, expenses, etc.
But if you want to trade like it’s a business, you need to:
- block off time to learn and DO the trading
- take it seriously, don’t chalk up losses
- keep a log of your wins and losses, review it often so you know what worked and what didn’t
Jack says that this is a great business to be in, because you can do it at any age: when you are young, in middle age with a family, you can do it when you are older and retired.
All it takes is some time to learn some basic principles and the dedication to stick with it.
Jack talked about a young guy he knows. He has a full time job and a family with 2 kids.
The guy is selling covered calls, brings in cash. But he treats it like a business, not a hobby. He sticks with it.
Jack says one of the best ways to do income trading is with covered calls. He says it’s tough to mess it up. THe only way to mess it up is to stop doing it.
One key thing Jack mentioned about covered calls in a past show is that as long as you sell calls above your cost basis, you can never lose.
Then you can sell naked puts to get back in, which brings in income. And when you get assigned, you sell covered calls again.
Norman told us that you don’t have to change your life right away.
Start small and think about just paying for your lunch or your dinner with your first few trades. When you gain confidence then you can set a higher target, pick out a fancy bottle of wine you always wanted and trade a littel bigger to afford that. The point is to start small and scale up as your confidence grows.
Jack told us that a good, low-priced stock to covered calls with is PLTR.
Jack owns it because it’s great for covered calls or selling other options on.
It has a beta (which is a measure of volatility) greater than 2, meaning that it’s twice as volatile as the broad market. The higher the beta, the higher the options premium you can get for that stock.
He urged us to go look at an options chain and realize that all the prices listed there are the prices people are willing to pay you to sell them that option. It completely changes your mindset when you think of it that way.
Once you see the consistency of how these strategies work, the only thing you want to do is spread the word.
Jack gave us a Kobe Bryant quote: “the biggest lie we tell ourselves is that we have enough time”
You don’t have time. You have to start right now.
And finally — here is this week’s FREE options play:
This week, Jack chose a speculative play, which is very rare for him. But he sees GOOG trending strongly over the next 6 weeks or so.
Here’s the play:
GOOG Oct 27 140 call @ $4.30
Jack believes GOOG is going a lot higher. Jack rarely does directional trades (i.e. buying options), but when he does he does it with a stock that has a new 52 week high.
He says a finding a stock that has hit a new 52 week high is the best starting point to find a trending stock that is great for doing income plays.
He said he doesn’t buy into the saying “buy low and sell high”, he prefers to “Buy high and sell higher!”
Another key lesson Jack gave us:
Make your plan BEFORE a trade goes sideways. And on the rare occasion it starts to go sideways, execute your plan and ignore your emotions.
IMPORTANT: Put Us On Your Calendar!
Spread the word and remember to join us next week! Click here to register for a reminder.
Out us on your calendar: Instant Income Ideas — Every Thursday at 3pm Eastern.
— The Jack Carter Trading Team
