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2014/03/31

Are You Leaving Thousands On The Table By Not Doing This?

Investors not taking advantage of this advantageous market are missing out on a $790 trillion investing universe.
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streetauthority daily March 31, 2014
Are You Leaving Thousands On The Table By Not Doing This?

By Michael Vodicka

If you've seen the H&R Block commercial on television recently, you know that it starts with a concession worker putting $500 on every seat in every stadium across every professional sport... that represents $1 billion dollars that went unclaimed by taxpayers last year.

Now imagine that instead of $500 on every seat, its $2 million on every single seat in every single stadium across all professional sports...

That adds up to $790 trillion dollars.

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To put that amount into perspective, that's more than 21 times larger than the total value of all the stocks in the world.

That's what many investors are leaving on the table by not venturing into the world of options.

If you've read my recent essay about how investors can earn a 24% annualized yield from Verizon (NYSE: VZ), then you know I'm talking specifically about put options.

Simply stated, put options are one of the safest ways investors can use options to generate income. We do this by targeting safe, reliable stocks -- many of which already pay healthy dividends -- to multiply our income.

This strategy allows us to earn much more income in much less time.

Let me explain...

I know from years of experience as a former bond trader and private wealth manager in Chicago that there are other, more lucrative ways to get income than simply waiting around for dividend checks to appear in the mailbox.

In fact, thanks to a little-known yet thoroughly proven strategy, there is a way to multiply the best yields in this dividend-friendly market, while simultaneously reducing our long-term exposure to holding the stock should the market tank.

I call it the "Income Multiplier" strategy.

Simply put, this strategy identifies stocks with the potential to multiply the income you'd receive from normal dividends. Then, you capture immediate income and reap the rewards.

My readers and I do this by selling put options. (Here's an example of how Warren Buffett uses this method.)

You see, when we write a put option on a stock, we are predicting that the value of that security will not fall to a specific "strike price" within a certain amount of time. For each put option we sell, we collect a premium up front.

That's immediate income... Cold, hard cash in our pockets.

Once we've collected the premiums, there are two possible outcomes, and they're both good.

First, the put option can "expire worthless." Don't be fooled by the term. That's the best possible result for us. This means that the stock did not fall to the "strike price," and that premium we collected becomes straight profit.

The other possible outcome is that the stock does fall to the strike price. In this situation, we are provided the opportunity to buy the security at a discount to recent prices -- usually lower than the stock has been trading in a while.

And since my strategy only selects put options on stocks that you'd be proud to own -- great companies like Microsoft (Nasdaq: MSFT), Verizon or Coke (NYSE: KO) -- this means that if we don't end up with pure profit in our wallets, then we own shares of America's most reliable stocks at a discount (and the large dividends they are providing right now).

So far, my readers and I have written six put options over a six-week period, and they've all expired worthless -- leaving us with yields much larger than simple dividends in much less time.

You can see the results in this table.


Sure, companies are offering tempting dividends right now. We'd be happy to own any of the stocks mentioned in the table above. Many of them, like Microsoft and Exxon, are great core holdings for income investors.

But my point is that while now is a great time to be an income investor, there's an even better way to earn income. If you want to start collecting more income from stocks like these, then I invite you to watch this special presentation. In it, I discuss exactly how we collect these yields of 36%... 47%... even 87% from America's favorite stocks. I've also included a special offer for this new service, including a step-by-step guide and a "look over my shoulder" tutorial. To access these materials, go here.

Good investing,

Michael Vodicka
Chief Investment Strategist
Income Multiplier Weekly

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