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Take Charge of Your Financial Future

Take Charge of Your Financial Future

Alan Ellman

Author’s bio:

Professional Bio

Qualifications/Background Information:

1- Authored two books on Covered Call Writing.

2- Produced a 4-part DVD and CD Series based on the seminars presented on the same subject.

3- Presented 32 seminars during the past two years on the subject of stock options.

4- Filmed Speaker at the LIREIA Deal Panel Forum in 2006.

5- Featured Speaker (along with Than Merrill of A&E’s Flip This House) at the LIREIA December meeting.

6- Author over 200 journal articles published on my website (blog link) weekly on the subject of the economy and

stock investing in particular

7- 20 years of successful investing in the Stock Market (33% return in 2007).

8- Recently named Investor of the Month by David Lindahl, a world renowned RE Investor.

9- Speaker for The Learning Annex

10- Series 65- successful completion

11- Guest speaker on Danielle Hampson’s Mind Your Bizness radio program

12- Guest speaker on Jordan Kimmel’s Voice America Business Radio Program

Education:

1- Professional Level; General Dentist

2- Licensed Real Estate Salesperson

3- Licensed Certified Personal Trainer

4- A myriad of real estate and stock market classes and seminars

5- Series 65- Investment Advisor Rep

Book synopsis:

This book teaches average retail investors how to invest with stocks and stock options. For example, we buy a stock for $28 and agree to sell it for $30. We get paid to do this! Covered call writing is considered so safe by our government that we are allowed to use it in our self-directed IRA accounts. All investing is done online and cash premiums are generated into our accounts immediately upon sale of the option. The myth that blue collar investors are not capable of self-investing will be obliterated. Cashing in on Covered Calls will teach you how to master this strategy.

Why I wrote this book:

In 2006, I was invited to host a seminar for a real estate investment club. During that presentation I mentioned that I purchased my first investment property with the cash generated from selling stock options. The groundswell of interest regarding this strategy was shocking. I wrote several seminars to sellout audiences. This continued for a year when I decided to reach a much broader audience by writing this book.

Why should you buy this book and what will you get out of it:

This book will teach you a skill that took me years to develop. It is written for the “folks” not Wall Street insiders. It will take a few months to learn and master the strategy and then you will have years and decades to benefit from it. You will speak and understand a financial language most never dreamed possible. It could be the first step in taking control of your financial future and becoming CEO of your own money.

Take Charge of Your Financial Future

Take Charge of Your Financial Future This is a strategy for average retail investors. If you have never heard of covered call writing, shut the TV, put the kids to bed and enjoy the ride. We all have a basic idea as to how to buy and sell stocks. Many investors are scared to death to trade equities after the recession of 2008 decimated the stock market. Stock options are considered way too complicated and risky by most retail investors. So how are we going to convince hard-working blue collar investors to use a plan that incorporates both stocks and options? The answer is through education, motivation and due-diligence. The fact that you are reading this article demonstrates that you have an interest in putting your money to work for you so you won’t have to go to work yourself.

I was first attracted to this methodology when I was reading an article on self-directed IRAs. The article stated that you could sell options on stocks you owned in a self-directed IRA. Options in an IRA, I thought? How could that be? Why would the government allow us to trade options in our retirement accounts? The answer is simple. This is not a risky strategy. It is a low-risk (not a no-risk) system of combining stocks and options used to generate a monthly cash flow. Here’s how it works:

The first part is easy. You select a stock that is fundamentally sound. That means that the corporation is producing stellar earnings and revenues. We then make sure that the price chart is technically sound. We must learn how to read a stock chart. The average retail investor can learn to read a stock chart in an hour. Finally, we add a few common sense principles like proper diversification (don’t buy five stocks, all computer hardware securities), avoiding volatile risky stocks and a few others and part one is accomplished. All this information can be accessed for FREE on the web.

The second leg of this program is a little tricky but NOT rocket science. We sell an option on the stock we own. This means that we sell to the option buyer (holder) the right, but not the obligation, to purchase our shares from us at a price that WE determine, by a date that WE determine and in return we will receive a cash premium that the market determines. That cash is generated into our account immediately for us to do whatever we want with it. We can head to the mall but I don’t recommend it. Later in this article I will discuss the power of compounding.

Let’s make this all come alive with an example. We have $50k to invest. We allocate $10k each to 5 of the greatest performing stocks in the greatest performing industries. Each stock is in a different industry so we are properly diversified. One of these equities we will call Company XYZ and it is trading @ $33 per share. $10k will allow us to buy 300 shares. Our investment in this stock is therefore $9900 (300 x $33). We now sell a call option and decide on a sale (strike) price of $35 good for one month (options expire on the third Friday of the next month). Since each options contract consists of 100 shares, we sell 3 contracts. Our obligation is to allow the option holder to buy our shares for $35 at any time over the next month. In return for undertaking this obligation we receive a premium of $1 per share or $100 per contract. This is a reasonable return for such a hypothetical. Now sit back and enjoy the math:

Our initial return is $300 ($1 x 300 shares)

This is a 3%, 1-month return ($300/$9900) or 36% annualized

If the option is exercised (sold for $35) we make an additional $2 per share or $3 total

In this scenario our 1-month return is $900 ($3 x 300)

This is a 9.1%, 1-month return or 109% annualized

Let’s look at some of the scenarios:

  • The stock goes up more that $2…we earn 9.1%
  • The stock goes up but less than $2…we earn between 3% and 9%
  • The stock stays the same @ $33…we earn 3%
  • The stock goes down but less than 3%…we earn between 0% and 3%
  • The stock goes down more than 3%…we start to lose money but are prepared to act with our exit strategy arsenal

Take Charge of Your Financial FutureThis sounds too good to be true…are there any disadvantages? The answer is yes, the stock can go down in price despite all of our fundamental, technical and common sense analysis. If it depreciates more than the premium generated, we start to lose money. This is where our exit strategy plans kick in and that information is also included in my book.

The information found in my book provides many free sites to gather facts and is supported by a wealth of FREE information located on my website:

www.thebluecollarinvestor.com

Especially valuable are the weekly articles I write in my blog:

http://www.thebluecollarinvestor.com/blog/

Also located on my website are dozens of videos like this one:

httpv://www.youtube.com/watch?v=0YtkrOWmHZA&list=PLF95C00AC7E801D5E&index=1&feature=plpp

If you have a large group of investors and would like me to make a personal speaking appearance, contact me @:

[email protected]

One last thing… I mentioned compounding earlier in this article. Unlike most other strategies the cash generated form covered call writing is in our accounts in seconds. We can re-invest this income, purchase more stocks and immediately sell options on the newly-acquired securities thereby compounding our money in MINUTES! Using the Rule of 72, if we achieve a 2% monthly return, a $100k investment will become $1.6M in 12 years. There is no one strategy that is right for everyone but this may be the one for you. You can absolutely do this…don’t let anyone tell you differently! Now wake up the kids and put on the TV. Hope you enjoyed the ride.

 

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