 | Andy Snyder
Founder |
Let's be clear... Jay Powell and the Fed have lost their handle on the market. The White House says there's no recession in sight. And yet the Fed's own real-time GDP monitor says we're already in one. In the simplest of terms... there's no quick way out of this one. We can't print money and just stuff it into mailboxes. That's why it's critical investors use every tool available to them. Here's a good - and simple - one. It helps to ensure your income rises along with prices. [Yours Free! Top FIVE Dividend Stocks Right Now. Click Here.] You see, for more than a decade now, we've been living in an altered state of reality. Thanks to cheap money, the economy has been given one hit of adrenaline-spiking dope after another. But its veins have worn out. Things have ruptured. And because of that rupture, one of the most powerful correlations in the economic world has become one of the most potent moneymaking strategies in the market. The Ties That Bind UsOver the last three decades, there has been an obvious tie between stock market volatility and inflation. For example, in 2011, the annual rate of inflation spiked to 4%. At the same time, the VIX - the standard measure of market volatility - soared to more than 40. Prior to that, we saw a large spike in inflation in 2008, just before things melted down and the VIX soared to a high near 80 points. Going back even further, to 1990, when inflation peaked at nearly 6.4%, we see the VIX soared once again - right on cue. The ties are obvious. When prices rise... so does volatility. But here's the thing with that. It's what makes the idea so obvious: The VIX simply measures the price of S&P 500 option contracts. So of course when prices rise, the price of insuring ourselves against big stock market moves surges higher. And when prices surge... we don't want to be buyers. We want to be sellers. Inflation BusterThat's why a covered call strategy is an ideal way to play rising inflation. It creates an ideal income stream that should easily keep pace with rising prices. If you're unfamiliar with the idea, it's pretty simple. A covered call strategy involves simply selling call options on a stock that you already own. It generates income because you keep the proceeds derived from selling the option contract. And as volatility rises, that income stream can grow quite large since investors are willing to pay a premium for contracts because they expect prices to fluctuate wildly. Buying call options is a way for investors to hedge their positions. You can see it in this chart. As implied volatility rises, so do the prices of call options. The downside, of course, is that if the underlying stock rises above the strike price of the call option, you will likely have to sell it at that price. If that happens, you take the proceeds (often at a strong profit) and move on. That's a good problem to have right now. Critical Steps All Cash Investors Should Take by September 21 Things are out of control in America. And this could be the most dangerous move yet. Cash confiscation. A secretive meeting is scheduled in Washington on September 21. It could have devastating and long-lasting effects on your money... how you spend it... and how you invest it. But there could be a way to "opt out" of this growing crisis... if you know how. Get the full details here. | | |
Selling covered calls is a popular strategy amongst active investors in any market... but it's an ideal strategy when prices are rising. We're convinced Powell is in over his head. Prices are rising. And all signs say more trouble is on the way. As it comes, put this strategy to work. It will treat you well. Be well, Andy Want more content like this? | | | |
Andy Snyder | FounderAndy Snyder is the founder of Manward Press, the nation's premier source of unfiltered, unorthodox views on money and what it means for a free society. An American author, investor and serial entrepreneur, Andy cut his teeth at an esteemed financial firm with nearly $100 billion in assets under management. He's been a keynote speaker and panelist at events all over the world, from four-star ballrooms to Capitol hearing rooms. | | |
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