Hey traders,
It’s Thursday, and the market is doing something interesting. Like I mentioned Tuesday, we’re seeing this slow, steady creep higher — no big news, no Fed meetings, no earnings reports… just a quiet climb.
In fact, the Dow Jones hit a new 52-week high yesterday and again today.
So, what do you do in this kind of environment?
Here’s a strategy that’s absolutely perfect for times like these: Selling naked puts.
Why? Because when the market is at or near 52-week highs, as we’re seeing with a lot of stocks right now, selling naked puts becomes a great way to collect premium. You’ve got several built-in advantages.
First, when you sell a naked put, the margin requirement is only 20%. That’s way lower than the 50% margin requirement for buying a stock outright. Even better, if you’re selling the naked put in a cash-secured account like an IRA, you’re still in a great position.
Second, here’s a stat that works in your favor: Up to 95% of all options buyers lose 100% of their money at expiration. That means when you’re selling puts, you already have a built-in advantage.
To make sure you’re even more successful, I recommend applying this strategy to a stock that’s already trending higher. That way, it’s less likely that the stock will drop and get assigned to you — unless, of course, that’s what you want.
Personally, I sell a lot of naked puts on stocks I’d love to own. And sometimes I don’t get to own them because they keep moving higher, but that’s fine by me because I still collect the premium.
Bottom line: Selling naked puts is perfect for this market. You can either acquire the stock through assignment or just pocket the premium month after month. Now is the time to make this move.
Trade well,
Jack Carter
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