Editor's note: You can profit from market volatility... Basing your investment strategy solely on finding stocks that go up makes your margin for error extremely small. But Retirement Millionaire editor Dr. David "Doc" Eifrig says the unique strategy he uses helps him make money on stocks whether they rise, fall, or remain flat. In today's Masters Series, originally from the September 6 issue of our free DailyWealth e-letter, Doc explains how you can earn steady income amid heightened market uncertainty...
The Strategy That Made $215 in Just 35 Days By Dr. David Eifrig, editor, Retirement Millionaire I don't like to make predictions about what will happen in stocks... I don't claim to know whether we'll see an up market or a down market by the end of the year. But I am fairly certain we aren't done with higher volatility in 2024. And more volatility means investors will be willing to pay higher prices for portfolio protection... like the options we sell in my Retirement Trader newsletter. I consider selling options to be the best income-collecting strategy there is. It can even keep your portfolio safe from market drops – if you know what you're doing. But this strategy is incredibly misunderstood. The notion that trading options involves high-risk bets with massive downside potential causes most investors to remain skeptical about this technique. So today, I'm pulling back the curtain and revealing how we're able to earn 20% annualized gains year after year. We're going to look at a trade we closed in Retirement Trader last year. Hopefully, this will show how it's possible to collect safe, steady income... all while profiting from market volatility.
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Back in May 2023, we wrote about a company we love: Booz Allen Hamilton (BAH). If you've never heard of Booz Allen, to put it plainly, it does the work the government doesn't know how to do. Booz Allen hires whiz kids from top schools as analysts who have expertise in technology, cybersecurity, analytics, engineering, and more. Then it contracts those employees to complete projects that are too complicated or too expensive for the government to run itself. Here are just a few of the contracts that Booz Allen has been awarded in recent years... Booz Allen had a backlog of orders worth $30 billion. It's a company we would have loved to own. And for that reason, we decided to sell options on it. Here's what we did... We sold the June 2023 $90 puts for about $2.15 with the stock trading at $91.90. That may sound like a bunch of gibberish if you're not familiar with options. But please stay with me... Booz Allen was a terrific buy. We could have bought the stock and sat on it for many years. But in Retirement Trader, our goal is to collect income on world-class businesses... stocks like Booz Allen. And we do it over and over again. By selling June $90 puts, we agreed to buy shares of Booz Allen if it fell below $90 a share on June 16 (option-expiration day). Of course, if Booz Allen was trading below $90 a share on June 16, we'd have been ecstatic to buy shares for just $90. Again, the stock was trading for $91.90 at the time of our trade, and we'd have had no problem buying at that price. Because we agreed to this deal, we were paid a $2.15 premium. And because one option contract deals with 100 shares of stock, this meant we received $215 for every put we sold. Here's the thing... If Booz Allen closed above $90 by June 16, we wouldn't have had to buy shares. We instead would have just walked away with the $215 and been done with the trade. And that's exactly what happened... Booz Allen was trading for more than $90 a share at June expiration, so we didn't have to buy the stock. We just kept our $215 and then looked for the next moneymaking opportunity. In total, we earned 3.2% from this trade (based on the capital to buy 100 shares of Booz Allen) in just 35 days. If we could make this trade every 35 days, we'd earn 33.6% for the year. Options are often used to gamble. But we're not speculating and taking wild risks. Instead, our trade boils down to this... We're paid a few hundred dollars because we agree to buy shares of a world-class company sometime in the future. If the stock falls enough by our agreed-upon date, we'll buy the stock. Considering the cash we collected at the beginning of the trade, we're actually buying this blue-chip stock at a discount. (We also have ways to make sure we never buy the stock at all.) If the stock rises or stays flat, we don't buy the underlying stock. In this scenario, we just walk away with the few hundred dollars in premium and that's it. It's similar to selling insurance. If you're right that a stock won't fall by a given date, you can profit when markets are fearful. It's simple. And by now, I hope you can see why I consider selling options to be the best income-collecting strategy there is... especially in times of volatility like we're experiencing right now. Here's to our health, wealth, and a great retirement, Dr. David Eifrig
Editor's note: While the presidential election is finally over, we still have plenty of market volatility to work through moving forward. So Doc is letting you in on all the secrets to his income strategy that has delivered a 95% win rate since 2010... He recently hosted an online presentation to reveal how you can implement this unique technique to your investment strategy – helping you earn extra income no matter where the market goes as we enter 2025. Catch up on the full details here... | 
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