| Several months ago, I revealed a unique technique self-directed investors use to safely generate 8%-12% income streams on their retirement savings annually. In a yield-starved environment, this strategy has been a blessing. The strategy is called "selling covered calls." If you aren't using this strategy you're missing out on THE most compelling and low-risk income investing strategy. Over the past year alone, this income secret could have doubled your dividend payouts from some of America's biggest and safest blue chip stocks.  Even after these big payouts, you can still use this strategy today. In fact, this simple strategy can literally double the investment income from stocks you already own. Today, I want to show you just how powerful this strategy works. One of my favorite tech giants is also an outstanding income investment. And it's a great example of how you can start earning more income immediately. The company is the biggest microprocessor and chip company in the world: Intel (Nasdaq: INTC). Intel is a well-respected, shareholder-friendly company that dominates its industry. The company has reliable cash flows and pays consistently rising dividends. That makes it one of the steadiest performers. And that's exactly the type of stock I like to own. That's because the world's safest and most reliable blue-chip stocks are also the best investments for a covered call strategy. I can't emphasize this point enough: when it comes to selling covered calls, I only use stocks that are well-respected, shareholder-friendly and with a history of paying consistently rising dividends. Why should you consider this strategy? The reason is simple: you'll earn 2x - 3x the income. Right now, Intel pays a healthy 4% dividend. Using this simple covered call strategy, you can collect an extra 2% in income every quarter. All you have to do is own the stock, and execute a simple transaction once every three months. Add up that additional income, and you could earn a "bonus dividend" of 8% a year. Plus of course you'll keep getting the 4% regular dividend. Combined, you could be earning a total yield of more than 12% - essentially tripling your dividend payout. Let me show you exactly how this works. I'll assume that you own 100 shares of Intel, which is currently trading for $22.50. You can sell a call option that gives the buyer the right to purchase your shares for $24 at any time over the next 93 days. For this privilege, you collect $0.44 per share, or $44, for selling that right. This $0.44 payment represents an instant 2.0% yield on your investment. If Intel rallies above $24, you would be obligated to sell (for a 7% gain) your shares for $24, but you keep the $0.44 you got for selling the call. The $44 in income that you brought in at the onset is yours to keep. You never have to give it back. Now if Intel isn't trading above $24 by the time the option expires in November, you can do a similar trade all over again. And just think ...you can do this 2.0% transaction four times in one year for an extra 8.0% yield. Plus you'll continue collecting Intel's safe 4.2% regular dividend. That's triple the dividend for using this simple and reliable strategy. On a $10,000 stake, that would generate more than $1,213 each year. (My model portfolio has actually generated over half that in just four months using this strategy.) That's well above the yield for a typical blue-chip dividend stock. More importantly, it's the type of healthy income stream that you deserve. Of course, this strategy occasionally takes a few minutes of "work." But as many investors have discovered, it's simple to learn and easy to use once you get the hang of it. Many investors who take the time to learn about this opportunity love the results. After all, earning three times the yield is worth a little "work." If you're interested in learning more, please join me for a FREE investing seminar next week. Ian and I will be hosting a live teleconference titled, "60-Second Dividends: Instant Income from Blue-Chip Stocks" on Thursday, August 22nd at 2 PM. Just click here to reserve your seat today. The Most Overbought ETF One of the biggest mistakes I see new traders making is that they keep digging into the toolbox for a new widget every time they see something they like. I can't tell you how many traders that I know that want to follow bull flags, bear flags, candlestick patterns, channel retracements, Fibonacci retracements - the list goes on and on. They will try and teach you about their long list of indicators to make themselves look impressive, but in reality most are horrible traders over the long-term because they overwhelm themselves stream of the latest and greatest indicators only to move on to another indicator that happens to fit their current market perspective. I keep it super-simple when I trade. I pick one tool and I use it for its specifically intended purpose. For me as an options trader, I'm looking to make steady, reliable gains without too much of a holding period. So in order to make options trades I use a tool that helps me do a few things: 1) It alerts me that a profitable trade may be on the horizon - which gives me time to prepare. 2) It tells me when I should think about getting out. 3) It lets me adjust my time horizon to craft a trade that fits my needs. As I said before I keep it very simple. I use a few basic versions of ONE simple tool model to take advantage of sentiment and technical extremes on highly-liquid ETFs. So, with that being said, I would like to share with the most powerful technical indicator that I use in my proprietary model. The Relative Strength Index (RSI), developed by J. Welles Wilder, Jr. is an overbought/oversold oscillator that compares an entity's performance to itself over a period of time. It should not be confused with the term "relative strength" which is the comparison of one entity's performance to another.
RSI allows me to gauge the probability of a short to intermediate-term reversal. It does not tell me the exact entry or exit point, but it helps me to be aware that a reversal is on the horizon. Basically, my indicator allows me to gauge the probability of a short to intermediate-term reversal. It does not tell me the exact entry or exit point, but it helps me to be aware that a reversal is on the horizon. Knowing that a short-term top/bottom is near I am able to increase the probability of a potential trade. Conversely, knowing that a reversal is on the horizon I am able to lock in profits on a trade. For I am a contrarian at heart and I prefer to fade an index whether overbought or oversold when the underlying index reaches a "very overbought/very oversold" state. Fading, just means to place a short-term trade in the opposite direction of the current short-term trend. Of course, other factors must come into play before I decide to place a trade, but I do know that, in most cases, when an index reaches an extreme state a short-term reversal is imminent. The following is the baseline for my indicator: Very overbought - a reading of greater than or equal to 80.0 Overbought - greater than or equal to 70.0 Neutral - between 30.0 and 70.0 Oversold - less than or equal to 30.0 Very oversold - less than or equal to 20.0Keep it Since I'm looking for extreme conditions, I almost always focus on very overbought and very oversold conditions. When an asset hits more neutral levels, that's an indication to close the trade out. Silver Pushes Into an Extreme Overbought State The iShares Silver Trust (SLV), which tracks the price of silver, has an RSI reading of 99.9. That means it's in an extreme state. Typically when this type of reading occurs a short-term reprieve is right around the corner Silver prices have risen sharply in recent weeks. Since the first week of August, the price of silver has shot up 18% to $23 an ounce - its highest level since mid-May. That's still well off its $43 peak in late 2011. But given the metal's recent slide, $23 is a considerable bounce-back. According to the RSI, it's too much of a bounce-back. A short-term sell-off in silver is likely coming.  Now as most of you know I typically do not buy options. In most cases I am against the strategy. But, when we see extremes like the one that currently resides in SLV we have to take note and act accordingly. I will be taking a very small position-size in the Options Advantage service as this is more of an aggressive trade. Remember, the more aggressive, the more conservative you want to be with your position-size. This will be a fairly quick trade. Be nimble and stay small. Kindest,
Andy Crowder
Editor and Chief Options Strategist Options Advantage and The Strike Price Twitter: @optadvantage | 
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