In the late 17th century, English historian Thomas Fuller wrote, “It is always darkest just before the dawneth.”
Now, he meant that the sky is the darkest right before the sun begins to rise. But the phrase has transformed into an everyday cliché that essentially means things get worse before they get better.
And it’s a cliché for a reason – it’s true. Especially when you take a look at this market.
The beginning of March marked a fast 30%-plus hammering across all three major indices. Investors everywhere lost money, and as businesses across the globe shut down, the world had never appeared darker.
But this downturn won’t last forever. And just like the sun, the falling market is pointing to a much brighter future.
Massive profits await – now is the time to prepare to take them. And with the strategy I’m going to show you today, you’ll be able to get paid now to potentially buy stocks later – at bargain basement prices. I’m talking even cheaper than they are right now.
In fact, I was able to collect $14,288 in seconds using this strategy. All the details are right here.
I’ve never seen an opportunity quite like this. But it won’t last long.
Here’s how to start banking cash right now for a bright – and lucrative – future…
How to Sell Puts on the Market’s Top Blue-Chip Stocks
Over the past two months, “too-big-to-fail” stocks like Facebook Inc. (NASDAQ: FB), Apple Inc. (NASDAQ: AAPL), and Alphabet Inc. (NASDAQ: GOOGL) have received some pretty bad haircuts.
But just like my accidental 7th grade bull cut, it will grow back. What sounds like bad news now won’t last for the long-term. In fact, this blue-chip stock pummel spells huge opportunity.
You see, these companies – Microsoft Inc. (NASDAQ: MSFT), American Airlines Group Inc. (NASDAQ: AAL), Tesla Inc. (NASDAQ: TSLA) – are among the most successful companies in the world. They are at the heart of American commerce, and although they’ve been beaten up badly, they will recover to normal levels in due time.
But we don’t have to wait until then to profit. By selling put options on one of these stocks – a stock that you want to own – you can get paid big today to buy these stocks at bargain prices lower than where they sit today.
See, buying a put option is like buying insurance. A put gives you the right to sell a stock at a particular price. For example, if XYZ is trading at $50, you could buy a $50 put that gives you the right to sell XYZ at $50. Should XYZ drop to $40, you could exercise your right to sell XYZ at $50 – just like an insurance policy.
Of course, buying an insurance policy costs money. And so does a put option. The cost of a put option is called the premium.
And remember – if someone has the right sell, then there has to be someone else who has the obligation to buy.
Think about it. If you buy an auto insurance policy, you effectively have the right to force the insurance company to buy your car from you in the event of a total loss. The insurance company has the obligation to do so.
In the options world, you can take the role of the insurance company by selling puts. This leaves you with the obligation to buy stock.
Now, you don’t have to worry about being obligated to sell the stock. As long as you sell puts on stocks you want to own, you’re set. By selling a put, you’re obligating yourself to buy it at a price that’s even lower than it is today… and get paid to do it!
Take a look at this example on FB…
FB is the top social media company in the world. It has dropped from an all-time high of $224.20 to a recent low of $137.20. That’s a 39% haircut! Although it’s risen since the recent bottom along with the rest of the market, it’s still likely that it will drop again as poor earnings across the board are announced this month.
The first thing to do is take a look at what I call a payday chart.
A payday chart illustrates how expensive options on the stock are. Similar to buying hurricane insurance as a hurricane approaches, put options (insurance policies) currently carry a higher premium with all of the recent FB volatility.
As you can see, option premium normally hangs out around 24. Currently, it’s all the way in the 40 range, a lot higher than normal. As you can also see, premium was even more expensive when FB bounced off its recent lows last month.
Next, we can use statistics to see how low FB may go over the next few months.
The following probability band chart illustrates that FB will drop no lower than $140 with a 95% statistical probability. It also corresponds to the recent low, which is also strong support. This is an excellent place to sell a put, obligating oneself to buy FB at the perfect bargain basement price of $140.
Then, there’s just one thing left to do. Sell the puts and get paid.
As I’m writing, the FB June 19, 2020 $140 puts are going for $2.60. With each put controlling 100 shares, selling 10 of them would put $2,600 into your account instantly.
This money is yours to keep. Yes, that’s right – you get paid $2,600 to obligate yourself to buy FB on June 19, 2020. You don’t even have to buy the stock today.
If FB drops to $140 or lower on June 19, 2020, you will end up purchasing the stock at $140. 10 contracts will obligate you to buy 1,000 shares for a total $140,000 investment. Remember – that’s on a stock that will likely return to its recent all-time high once the coronavirus is contained, and life returns to normal.
Now, if FB stays above $140 by June 19, 2020, your put will expire worthless – and you’ve netted $2,600 on your trade.
To make it even better, managing this trade is simple. You don’t have to do anything.
If FB stays above $140, your put expires worthless. If FB drops to $140 or below, you end up owning the stock at a bargain basement price of $140.
When FB returns to recent highs, you’ll make another $84,200 on your shares. That, coupled with your put premium of $2,600, will net you $86,800 on your $140,000 investment… an impressive 62% return!
See, this strategy isn’t like any other trading strategy I’ve shown you before. Not only does selling puts have the potential to hand you a fast-cash payment – it can also help you build generational wealth that can never be taken from you.
And here’s the best part…
You don’t even have to do the work to find these stocks.
I have isolated 100 blue-chip stocks for you – each one perfectly set up to deliver big, instant cash payouts. And you can receive detailed instructions on exactly how to take advantage every single week. Click here for all the details.
Good trading,
Tom Gentile
America’s #1 Pattern Trader
