This profit and income strategies index presents an ongoing listing of all investing strategies from fullyinformed.com. This index is updated with each release of additional profit and income strategy articles.
Over the past 40 years of investing I have used and profited from all these profit and income strategies at various times and on a wide variety of stocks and ETFs.
Within this index are subindexes of other profit and income strategies which due to the number of strategies within some subindexes are better served by having their own index pages.
Consider subscribing either via email or through the RSS feed (link to the far right of your screen) to stay up to date with each new profit and income strategy article release.
My favorite profit and income strategy is Put Selling. Many investors refer to this as writing puts, or selling naked puts or cash secured puts. Whatever the descriptive title used, put selling has been the cornerstone of my profit and income strategies for decades.
There are too many Put Selling articles to include on this Profit And Income Strategies Index page. I have created a separate index for Put Selling articles. Select this Put Selling link to view the PUT SELLING index page or select this put selling link to browse the various put selling articles directly.
Many investors fail to understand the value of developing profit and income generating covered call strategies. In many ways covered calls are like renting out your stock for short to long periods of time. Over the years I have developed many covered calls strategies that not only have generated coumpounding profit and income returns, but have succeeded in not having my underlying stock shares exercised away from me.
There are literally dozens of covered calls strategies that investors have developed and applied. While many analysts look upon covered calls as giving up a rise in stock valuation in return for small gains of covered call premiums, this is far from true. I have used covered calls strategies to compound returns over a period of years and gained on the capital appreciation in the underlying stock at the same time.
Most analysts who comment negatively about covered calls have not taken the time to study the strategies available that provide profit and income and can assist in protecting against a partial decline in the underlying security.
There are many Covered Calls articles and as such they have their own index page, which you can reach by selecting this covered calls link. You can also browse all the Covered Calls articles directly through this link.
PROFIT AND INCOME STRATEGIES:
This section discusses a wide variety of investing articles designed to generate profit and income in different stock market conditions and within an assortment of investment assets. To read an article select the article title.
The Shark option trading strategy relies on the Fast Stochastic and Moving Averages combination of technical tools to pin point when to buy and sell both puts and calls. There are two versions of this strategy included in the article. The first looks at the Original The Shark strategy and the second studies The Shark Strategy with the adjustments I have made to it over the years in an endeavor to gain larger returns that the original. This strategy is a “for purchase” only article.
The Shark Option Trading Strategy does not listen to news events, worry about analysts recommendations or care about overall stock market direction. The Shark follows the price action in the underlying security to determine proper periods to buy calls or puts depending on the shares price action and when to sell them. The Shark Strategy enjoys larger returns with higher volatility and loves the whipsaw of Ultra ETFs. While designed for Ultra type ETFs this strategy can be used on other stocks and included is an example of Amazon Stock and Bank of Nova Scotia stock. There are distinct advantages to The Shark strategy including:
- Small amounts of capital required for The Shark Option Trading Strategy.
- No need to commit capital to stock shares.
- No need for large capital positions in the underlying security.
- Rarely get caught at the top of a rally and rarely caught in a plunge.
- No concern as to what direction the security is headed.
- Rarely miss a rally or a tumble in the stock.
- Often capital is not in the market while waiting for the next signal to invest again.
I have used the Shark Option Trading Strategy on a variety of stocks before turning to Ultra ETFs. Most of the time I use it only on Ultra ETFs because the volatility provides excellent option premiums, however throughout the year I find myself applying this strategy to stocks that fall within the guidelines of the Fast Stochastic. Once in a while a quick trade such as recently in Amazon stock and also in PepsiCo Stock can reap excellent returns for a few days of work. The Shark is an option trading strategy well worth learning even if an investor only used it once or twice a year. This article is for purchase only.
We have all been Cry Babies at one time or another. We have bought stock only to watch it plummet and then ended up saying “if I had more capital I would buy more right now!”. When a baby cries, parents often use a soother to calm the baby down. In this strategy Free Money is the soother. The Cry baby strategy shows how to find additional capital through selling covered calls that can be used to earn capital while waiting for the underlying security to recover. It shows how the Cry Baby strategy is used to continually benefit the investor and set up a strategy that can generate additional income, compound that income and keep some shares uncovered to take advantage of possible rises in the share value. There are a number of examples including a Bank of America stock example from the crash of 2008 where an investor down almost 90% in stock valuation used the Cry Baby strategy to end up with a 67.4% total return in 13 months. It is quite the strategy and among my favorites to employ. This article is for purchase only.
This strategy is for day trading within the IWM ETF following momentum within the stock, up or down. Trades are done daily primarily in the morning and late afternoon. The strategy uses 3 technical indicators to follow momentum within the IWM ETF (Russell 2000 small cap stocks ETF). This strategy was paper traded for several months and finally implemented to compliment the SPY PUT Hedge strategy to allow my portfolio to benefit from price movements up as well as down in the IWM ETF. The strategy requires very little capital and returns have been quite good. This strategy is in the members only section. The members section discusses this trade in detail, presents how to implement the strategy and shows the ongoing trades within the IWM ETF that are done daily.
LEARN FROM THE BEAR – Series of 3 Articles:
Stocks studied are: (select a stock to read the respective Learn From The Bear article)
This is a series of 3 articles which looks at stocks and the story behind their respective charts. By following chart patterns and studying charts in bear markets, investors can learn what strikes to consider selling puts against and what price to consider buying stocks at. Bear markets are scary but instead of fearing them investors need to learn to embrace the bear. By reading these articles, investors can understand and learn an easy method for applying simple chart patterns to pick strike levels and calculate whether or not a stock is worth buying during a bear market, a correction or even a stock market collapse. Investors learn that there is nothing to fear in a bear market except missing some great profit making potentials.
In this article I reply to a reader about how to use options for superior returns while protecting against losses in a bear market.
This article looks at what is a collar option or married put and how should it be applied to be consistently profitable while at the same time affording adequate protection.
In a bear market investors look to still profit but protect their stock positions from possible downside damage. This article looks at the collar strategy and discusses the pros of using the collar strategy and the cons. It then goes on to study different methods to apply the collar strategy using a real example with Apple Stock.
This article looks at the collar strategy I have used for more than two decades to earn a dividend and reduce my cost basis until it is zero in a stock. When I put in place a collar strategy my goal is to have protection for a cheaply as possible and have my original capital returned to me as fast as possible so I can put it back to use building another dividend position. This is how I built my dividend portfolio of stocks.
This Members Only article shows how by setting up the Ultimate Oscillator and Relative Strength Index (RSI) properly, any investor can achieve profits while also being aware of risk to their capital.
This Members Only article presents the Bollinger Bands Strategy Trade which I have used since the introduction of the Bollinger Bands from John Bollinger. This strategy uses the Bollinger Bands to time getting and out of trades for boosting profits from complimentary Put Selling trades.
This article discusses two important indicators to be watching when deciding on the entry point for the Bollinger Bands Strategy Trade. This assists in avoiding entering at the wrong time. using these two indicators properly will assist in maximizing return and help to avoid losses.
This PDF strategy article is 31 pages in length and studies a Covered Calls Strategy designed for investors who have long-term stock or ETF holdings in their portfolio and wish to sell covered calls against those holdings for profit, income and protection against corrections and bear markets. The strategy paper shows the kinds of results that can be achieved and how to rescue covered calls that are caught deep in the money when a stock rallies leaving the investor facing the possibility of losing his shares through exercise of his sold calls. Emphasis in the strategy paper includes how to protect long-term stocks from possible exercise and how to time when to sell covered calls and when to buy them back to close them. The Stocks studied include one low volatility stock, Johnson and Johnson and one high volatility stock Exxon Mobil. Time periods illustrated are 2001 to 2002, 2007 to 2008 and 2012. This strategy article is only available through purchase in the FullyInformed Shop for $25.00
In this article from a reader, he presents how he used the 10-20-30 Moving Averages Rule for Trading Cisco stock. It covers the period from 2006 to 2008.
A Long Straddle is a pretty simple trade. Almost always, call and put options at the same strike are purchased. The strike chosen is usually at the money. The strategy is that by holding puts and calls and going out a month or more, the investor will benefit from volatility in the stock. If the stock moves up or down wide enough, the straddle will be profitable. By going out at least a month or more, this affords time for the straddle to be profitable. In this article an investor friend presents his preferred long straddle investing method. He sent this straddle trade for me to put on the site to show how powerful options can and often are. He felt it may be of interest to other investors.
Bull put spread strategy is more conservative than put selling with defined losses established right at the outset. The bear put spread is popular among option investors and is in wide use. Yet it is often not understand by many option investors which is a shame since while it may not at times provide as high an income as put selling, the fact that maximum losses are known at the time of establishing the trade can make a very big impact on a portfolio. Like any option strategy there are many variations to the bull put spread that offer even more income and protection. This article looks at Cat Stock and demonstrates a bull put spread.
As investors, we are all aiming for profit and income. It is these two components that will grow and compound our capital as well as provide a base of income to live on. The whole purpose in saving money, for many investor,s is to build a nest egg that they can live off as they age. Learning how to spot support and resistance levels in stocks is a prime component to successful investing. The first part of this article on support and resistance looks at understanding what support and resistance is and the tools that can be used to assist in determining where support and resistance in an asset such as stocks, may lie. The article then goes on to look at PepsiCo Stock and Johnson and Johnson Stock as it explains the importance of support levels for put selling and stock purchasing as well as resistance levels for closing sold puts and selling stock.
In the second part the series on Support and Resistance I discuss how I use the volume indicator tool and combine it with the stock charting tool to pinpoint support and resistance levels. Without being able to determine support and resistance in stocks, investors are often trading blindly and often find themselves buying at over-valued prices and selling for losses. Knowing how to find support and resistance will go a long way to avoiding this pitfall. In the article I present how daily volume is a principal factor of finding support and resistance levels. While simple in concept, it is such a valuable tool that I use it everyday on every trade. It is a huge benefit for buying and selling stocks and for options including my favorite strategy of put selling.
Paper Trading is not used by a lot of investors. This 3 part article discusses the importance of paper trading, the benefits, how to set goals and offers a step by step method of how to use paper trading to increase the profit potential of a portfolio as well as protect a portfolio from market corrections.
Part 1 – The Value and Importance Of Paper Trading: Many investors shy away from paper trading as they feel it does not offer “real trades” and without these real trades they feel they cannot benefit from paper trading. This is a mistake. Part 1 of this series shows the value and importance to all investors and why paper trading is largely misunderstood.
Part 2 – Setting Goals In Paper Trading: The second part of this series looks at the 6 goals investors should follow when paper trading to become better investors and benefit from establishing goals that will increase profits as well as protect a portfolio.
Part 3 – How To Use Paper Trading For Profits and Protection: The third and final part of this series presents a step by step process for investors to consider following which shows how the use paper trading to develop winning investment strategies that can grow a portfolio quickly and protect it from market weakness, corrections and bear markets. The third article in this series is available in the members section only. You can join the member section here.
When Put Selling or selling covered calls, understanding how to find support levels in a stock is key. With this knowledge investors can develop a variety of strategies, not just selling options, to consistently earn profit and income.
This article studies a highly profitable strategy of timing when to buy call options on the VIX Index to profit from period of low to high volatility. Having used this strategy for profit and income for many years, this unique strategy is for those who are patient and can wait for the profits to come to them.
This article explains further the Shark Options Trading Strategy and how it can be applied to a variety of Ultra ETFs as well as highly volatile stocks.
A look at a strategy to take advantage of selling naked calls against a declining large cap stock.
Naked Calls have had a bad reputation for decades but is it warranted? For profit and income strategies are naked calls any riskier than naked puts?
To profit with a variety of strategies while avoiding losses means understand that almost all stocks trade within ranges. Understanding how to spot and define those ranges is key to earn big profits while protecting capital invested from any losses.
One of my favorite strategies is setting up what I call a Put Selling ladder against a stock. Once the ladder is established it becomes a matter of adjusting the trade to earn double-digit annual returns but also to protect capital from losses.
PROFIT AND INCOME ARTICLES:
These articles are designed to assist investors in becoming better investors. I hope these article may get investors thinking about their own style of investing and consider alternatives as well as develop their own styles and strategies. To read an article, select the article title.
This article looks at a trade on Microsoft stock. The purpose of writing this is to show the technicals tools used to determine price points and timing to get into the trade and out of the trade. The article explains the importance of setting up a plan prior to the trade, and the significance of having clear goals and objectives in order to be consistent in profiting from investing.
This article is designed to show the tools I use to try to avoid holding or selling puts on a stock that is on the verge of collapsing so hard that it leaves me with huge losses. These tools have saved my portfolio many times, particularly in bear markets.
When a stock collapsing 7% in a day I bring out the early warning tools and have a look at the stock. In this actual ongoing trade, YUM Stock fell 7% in a single day on Sept 29 2011. Here are the steps I take to examine the stock and determine if it is time to close the trade or whether it is an opportunity for a terrific gain when the stock bounces back.
In this article I discuss using the VIX Index to gauge market direction in order to profit from market volatility and swings.
I believe stocks have to perform based on earnings or at least the belief that earnings are improving. Once the Fed money taps dries up, the floor under this market may get a little “creaky”. (Read the article Dance Near The Exit) Remember that markets are driven by fear and big players with billions of dollars in the market – the so called “smart money”. A whiff of a trouble and they will bail like they are fleeing the Titanic. In my opinion “smart money” is really no smarter than the retail investor, but their sheer size of holdings can push a stock to extremes both up and down if they are fearful. I have always believed that it isn’t fear and greed that drives stocks, but FEAR alone. There is fear of missing out on the rally and fear of losing capital in a decline. My strategy of the cautious bull is designed to combat this volatility and the possibilities of declines.
The problem for most investors is not knowing when to sell their “winning” stocks. Therefore when a stock turns down most hold on hoping for a recovery and then they convince themselves they will “sell to get out” in any rally. I believe there is a better way, depending on the stock selected, to recover quicker, move back to a profit position and then decide whether to “get out” and seek a different stock. To do this I have learned to combine options – namely covered calls and selling puts to assist in averaging down in a losing stock in order to generate a positive return. But for this type of averaging down strategy to be successful I have developed 7 rules which I follow.
In this article using YUM Stock I look at the stock after a fall to show how through using the ultimate oscillator an investor can determine if the stock is a geat buying opportunity or just on its way lower.
A “Squeaker trade” is one of those trades where you have sold an option (or bought one) and the stock is hovering right at the Option Strike Price by expiry. So what’s the best thing to do.
The majority of retail investors are not stock traders but are are really more dividend investing or dividend stock investors. Their investments really are comprised of dividend stocks or dividend stock funds that make up a dividend stock portfolio. Dividend stock investing has been popular for decades. Many dividend investors seek high yield dividend stock and many others search for the highest paying dividend stock. But developing a dividend investment strategy often can result in disaster when their is a dividend cut. When this happens, many investors sell their dividend stock often incurring large losses and regretting their dividend investment strategy. I believe this is a mistake. I believe many investors need to rethink their dividend investment strategy. That is the goal of this 4 part article.
In this article, using YUM Stock I look at the steps to take and how to apply the Ultimate Oscillator in determining whether or not a stock is about to bottom and bounce back.
When markets are in a downturn I turn to the SPY Puts to hedge my portfolio. This 3 part series presents how I use the SPY Puts to protect my portfolio against large losses in market pullbacks.
What should a small investor do when it comes to defensive stock investing? What can the retail investor do to beat the smart money at their own game. As anyone who frequents my site knows, I believe in staying within large cap, blue chip dividend payers. This 3 part series looks at the strategies I use when I invest in defensive stocks.
The 10-20-30 Moving Average Trading Strategy uses moving averages cross-over points on a stock chart to try to pinpoint specific times to sell Calls, sell Puts, or buy back both sold Calls and/or Puts to lock in profit and avoid assignment or exercise. The objective of this type of trading strategy is to capture the majority of the value of the sold option. It uses the 10 day simple moving average and 20 and 30 day exponential moving averages to time entry and exit points. Microsoft stock is used for the example and there are two actual trades also available, RIM Stock and Cisco Stock to show the 10-20-30 Moving Averages Trading Strategy in action over a long period of time.
This article from April 2011 looks at the Federal Reserve’s Party in the guise of Quantitative Easing One and last year Two. In the article I discuss why it is best to folow the trend in such an instance but be fully aware that you want to dance near the exit and get out before the balloons burst and the lights turn off as the party ends.
In this article I describe the overall strategy I have used for the past 3 decades to build my portfolios.
The world is always fraut with problems and equity and bond markets always reflect them. Waiting for the perfect market environment in order to invest would mean never being invested. Investment portfolios need sound strategies which protect and provide growth despite the endless barrage of financial and political calamities. The problem for many investors though is what investment strategy to use. In this article I discuss how I approach a profit and income strategy and tweak it depending on the market environment. I explain how I view keeping a healthy mix of cash, bonds (fixed income) and equities in order to survive in any market environment.
This article looks at the checkered past of market timing and why so many investors believe it cannot assist them. Market timing is used daily and can provide investors with the ability to understand the market direction and how to implement different strategies for profit and income, based on what market timing indicators are telling them. It is important to set aside personal prejudices and arguments and instead focus on considering the possibility that by taking a few minutes each day to review market timing technical indicators, an investor could become better prepared for market changes. Market timing tools if used daily allow an investor to peer through the doomsayers, analysts, endless talking media personalities, ever worried economists, personal financial planners, and look at what the stock market is actually doing. The only way to growth wealth is to compound money over long periods of time and that requires an investor to stay invested in both bear and bull. It is through market timing that investors can develop strategies that allow them to accomplish just that. Market timing allows an investor to achieve profit and income in any market environment.
The Ultimate Oscillator is one of the prime technical timing tools I use every day on just about every trade to assist in providing profit and income as well as a daily outlook. This article looks at the settings I use for the Ultimate Oscillator as well as how I apply those settings to different times frames in order to establish overbought and oversold readings which are one of the most important signals for timing entry and exit positions. The Ultimate Oscillator can be used for stock trades as well as option trades including both put selling and selling covered calls. It is an excellent tools for doing spreads. The example in the article is the SPY PUT trades I do to hedge my portfolio against market declines.
The Rate Of Change Oscillator is not well known to a lot of investors. This interesting oscillator can be set up to signal when to get out of the market and when to get back in with amazing accuracy. This article explains the settings for the Rate Of Change technical indicator and how to use it to time both stock markets and stocks for profit and income.
When market direction is down have you ever considered the various Ultra Bear ETFs available or how about the HDGE Active Bear ETF. All of these ETFs can assist when the stock market gets in one of its “moods”. These can provide large profit and income returns. However hedging an entire portfolio with an Ultra Bear ETF is not quite as simple as many investors may think.
When a stock is rising it is difficult for investors to know when to sell their stock. They do not want to sell too early or too late. This article discusses a stop-loss strategy and how to apply it to time when a stock should be sold for profit and income.
When a stock within an industry group collapses, it can have far reaching implications to other members of the same group. Profit and income can quickly be wiped out when a stock falls precipitously. This article studies Intel Stock to see how pressures from its rival AMD Stock can hurt investors in Intel Stock and why having a plan is key to consistent profit and income in your portfolio.
Rolling options can be highly profitable and can be a strategic benefit to the investor. There are many reasons for rolling options and it is important to understand why you are rolling options before placing the trade. Rolling options improperly can take a profit and income trade and return big losses.
When it comes to profit and income strategies it is important to be in the market when it is moving up. When market direction is down it is important to preserve capital against market direction collapses while adding profit and income through owning those instruments that can grow in a market pullback. This profit and income article studies one of the oldest and most reliable indicators for timing market entry and exit for longer-term investors, the 200 day moving average strategy.
One of the best strategies I use combines the 50 day, 100 day and 200 day moving averages into a combination trade that allows me to know when to hold back capital from option selling and when to commit more capital to take advantage of market volatility and higher option premiums. This article explains what I look for in the 50 day, 100 day and 200 day moving averages which provides the signals for timing when to use more capital and when to use less.
This article looks at AGQ ProShares Ultra Silver ETF to explain why strategies fail for a lot of investors. Is it the strategy, the knowledge of how to apply the strategy, or the investor himself who contribute to a strategy failing to provide profit and income.
Investors constantly gamble when they bet against the market trend. Why do so many investors do this? This article looks at the importance and value of never betting against the market trend but instead using the trend to earn profit and income consistently in order to compound capital and grow a portfolio.
I know the majority of investors do not believe in stock technical analysis to earn profit and income from stocks. This article shows that stock technical analysis holds a lot of merit even for the skeptical investor. The article explains how to use stock technical analysis tools to earn consistent profit and income in a portfolio.
When a favorite stock plunges how do I handle rolling out my sold option positions to continue earning profit and income, yet wanting to protect against both assignment and loss of capital. Here is one rolling in the money option strategy I have used for years. It allows me to roll out in time, reduce the number of put contracts at risk of assignment, earn income and free up capital for selling more options to earn additional profit and income.
This article studies how to keep rolling naked puts down to avoid stock assignment in a collapsing stock and how to do it profitably.
In this article I look at using the Volume technical indicator in order to follow a plunging stock to determine if support levels will hold in a stock. The Volume Technical Indicator is an excellent tool which can tell investors whether selling is slowing or whether there is more downside ahead.
Bonds make up 30% of my entire portfolio. This article looks at bond investing strategies I have used to assist my overall bond portfolio.
One of the goals I have when investing is to pick a quality large cap dividend paying stock and then earn enough from my trades to eventually own the shares through the profit I have made. Basically I am using other people’s money to own shares, collect the dividend and compound my portfolio.
The Shark Option Trading Strategy can mushroom a portfolio quickly with limited capital exposed to the markets. It is a strong strategy which can produce superior returns if applied properly. This lengthy article looks at the problems of slippage within Ultra ETFs and discusses what guidelines to look for when selecting Ultra ETFs or stocks to apply the Shark Option Trading Strategy against.
One of the main keys to my success is the ability to plan a trade before it is ever implemented. This article presents a trade in Nucor Stock that provided a nice return but more important, was a success because of careful planning. The article discusses what is involved in planning including planning for the trade not to work out in my favor.
I am repeatedly asked how to know when to go long on stocks and when to not commit capital. This lengthy article (2500 words) looks at a strategy that follows the overall market direction to advise investors when it is “safe” to invest in stocks and when they should not be applying more capital but instead pull capital out of stocks.
When a stock collapses investors tend to flee and all too often they get out of the trade with losses. Retail investors in particular are notorious for losing their money in a collapsing stock. Why is it that institutional investors understand how to handle a collapsing stock better than retail investors. Here is how I handle a collapsing stock.
The term stock market bubble is often bantered about. Yet few investors understand how to spot one and how to handle one as well as profit from it.