Hey traders,
Most people only think about buying stocks.
You know the drill: Buy low, hope it goes higher, cross your fingers.
That’s not how I play the game.
One of my favorite strategies is selling puts on strong names when they’re sitting near highs.
Now that might sound dumb to a lot of folks. Common wisdom, after all says if a stock is already at new highs, how much higher can it go?
Well, in my experience, “buy low, sell high” the worst way to trade.
I prefer “buy high, sell higher“…
Let me give you a real example: Urban Outfitters (URBN).
The stock’s been pressing up around 52-week highs. Instead of chasing it higher, I went ahead and sold the 62.5 puts.
That paid me about 80¢ per contract yesterday. Today they’re worth 75¢ — already moving my way.
Why I Like This Trade
- If URBN stays strong, those puts expire worthless and I keep the full premium.
- If the stock pulls back and I get assigned, my effective cost basis is lower — about $61.70 a share.
- Either way, I’m getting paid up front to take on a position I wouldn’t mind owning.
The Wheel Strategy
This is part of what’s called the “wheel.” You sell puts until you get shares. Once you own them, you turn around and sell covered calls against that stock.
It’s simple. It’s repeatable. And when you do it on strong names that are making highs, it can be a steady source of income.
The Big Picture
Options don’t have to be complicated. You don’t need to chase lotto tickets.
For me, one of the bread and butter ways to grow my account is to find a stock that’s already showing strength — then using puts and calls to collect rent while the market does its thing.
That’s why I’ll take trades like URBN all day long.
Jeffry Turnmire and I talked about this recently on Market Masters. Catch the full replay here.
And if you’re not joining us every Wednesday and Friday at 11:30am Eastern, why not? It’s completely FREE and you’ll see the market in a whole new way. Register your spot here.
Trade well,
Jack Carter
P.S. August’s hottest stocks — with a 10 year track record of success — are right here. Get them now!
