Option Income...Get paid today!

The US stock market is a momentum traders dream as it rises day by day. Today is a good time to collect option premium and have the potential to pick up cheap company shares on a market pullback.

Risk of stock market pullback Increase by the day.

The higher it goes the worse the potential pullback will be as the pressure is built up and needs to release. Buying long term positions on market pullbacks provides better long term returns with less risk. Good thing there are strategies to get paid to wait for the pullback. By selling put options and collect cash for agreeing to buy a stock if it falls. For the put seller it is a win win: if the stock falls we buy shares in the company we find attractive, if the stock doesn't fall we keep the cash and move on the the next idea.

Intel (INTC) is attractively prices right now but it is even better to be paid upfront to agree to buy the company at a 7% discount.

Intel is a world class business and business is good. Sales are at record levels with profit margin at a fantastic 29% and $18 billion in free cash flow. A strong business like this should be trading at a premium to the market... right now it trades for 7.6 EV/EBITDA which is half that of the overall S&P 500.

The stock price is also in an uptrend.

Trade details:

Sell to open, the July 17, $57.50 puts on Intel for no less than $1.25 using a limit order. Earn a 2.2% payment on your purchase obligation and agree to buying shares at a 7% discount.

At expiration if shares are above $57.50: put sellers will keep the $1.25 free and clear for an 18.5% annualized return.

At expiration if shares are below $57.50: put sellers adjusted cost basis for the premium received will be 9.2% below yesterday's closing price. You will be assigned 100 shares of stock for every put sold. You can now turn around and collect more income from covered call selling.

Intel is a wonderful company to hold long term, however, to protect yourself from a devastating bear market use a 25% trailing stop loss.

---

Disclosure: I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article. The information provided should NOT be considered advice. The topics discussed are risky and have the potential to lose a substantial amount. I am not an investment professional and therefore do not offer individual financial advice. Please do your own research before investing.

Need a Hive account? Sign up free here!

Posted Using LeoFinance