Freedom's Phoenix – "Uncovering the Secrets and Exposing the Lies"
 
Current Bitcoin
Price:
$489.6749

Provided by
BitPay.com
 
Contribute Bitcoin to
Freedom's Phoenix



Scan the QR Code above, or
double-click on the text in the
box, copy it, and paste it into your
Bitcoin payment application.
Contribute Funding by
PayPal or Credit Card

 
Log-In

See Complete Menu

Special Editions
Translate Page
RSS Feeds
 


Declare Your
Independence

with Ernest Hancock

 
Log-In
Front Page
Page Two
 
 

Freedom's Phoenix
Online Magazine

 
Freedom Forum
Letters to the Editor
Report The News
Newsletter Sign-Up
 

Anarchives:

 

 

Search by Keyword

    Contents by Subject
    Radio/TV Shows
    Feature Articles
    Opinion Columns
    News Stories
    Newsletters
 
 


 

 

 
   

FEATURE ARTICLE

Sign up to receive the Freedom's Phoenix Headlines by Email.

HELP FUND FREEDOM'S PHOENIX!
Make a one-time or periodic contribution.
Use your credit card or PayPal account.

Join us on our
Social Networks

Share this page with your friends
on your favorite social network:

     

Interview with Doc Eifrig, the guy 12-trade string of wins in our Retirement Trader service.

• •

Interview with Doc Eifrig, the guy 12-trade string of wins in our Retirement Trader service.


Written by
Sierra Hancock
Date: 01-06-2011
Subject: Economy - Economics USA

Goldsmith comment: Today, we're continuing editor in chief Brian Hunt's interview with Doc Eifrig, the guy behind an incredible 12-trade string of wins in our Retirement Trader service.

Yesterday, we showed you a few of Doc's successful trades. Below, you'll find details on exactly how he does it... and how to get started in your own account.


Brian Hunt: Can you highlight the strategies you and your subscribers are using to make faster, safer gains than outright stock purchases?

Dr. David Eifrig: Sure. We use one of the most powerful – and most misunderstood – investment tools in the world: We use stock options. But we don't use options the way most folks do. Most folks use options to increase their risk. We use them to reduce our risk.

I shake my head when I hear how most investors use options. They use them to make extremely low-probability bets on stocks and commodities.

You see, most traders are gamblers... which is good for those of us who prefer to act as the "house" in the markets. That's what we're doing in Retirement Trader.

One of my goals in Retirement Trader is to help folks generate large amounts of income without taking large amounts of risk. To do this, we combine the "great companies on sale" idea with selling puts or covered calls. We're essentially taking the other side of the trade from the market's gamblers.

BH: Can you walk us through how this works when you sell a covered call?

DE: When we put on a covered call trade, we buy shares of stock and then sell a call on those shares.

Selling that call simply gives someone else the right to buy our shares at a specific price (the "strike price") during some agreed-on period of time (up until the "expiration date"). In exchange for that right, the call buyer pays us a "premium" upfront.

A trade like this can work out a couple ways...

If the shares never trade for more than the specified strike price, we keep the premium and the shares.

If the share price exceeds the strike price on or before the agreed-on expiration date, we will sell the shares, book gains up to the strike price, and still keep the premium.

It might sound complicated. But once you get the hang of it, you'll see how much this strategy can reduce your risk and increase your income versus an ordinary stock trade.

A perfect example is our August Microsoft trade. We sold a covered call basically betting that shares of Microsoft would go up to at least $24 by option expiration. If the shares were selling for more than $24 on option expiration day, we'd sell our shares at $24 and keep the premium we collected from selling the call.

On expiration day in October, shares were trading for more than $25. Our shares were "called away," and we kept the premium. This gave my Retirement Trader readers a gain of 10% in just a couple months.

Our trades on Intel and Exelon worked out pretty much the same way. Shares were trading for more than the strike price on expiration day, so we sold them and kept the premium.

BH: You mentioned another strategy your readers use – selling puts. Can you give us a brief explanation of how that works?

DE: Selling a covered call is mathematically identical to selling a put. It's just a different way to put on the same trade. The only major difference is a put requires less "margin," or the amount you're required to have in your account, to execute the trade.

With a covered call, you have to buy shares in the stock. When you sell a "naked" put, your only initial requirement is the margin, which is usually about 20% of the amount you'd pay if you bought the stock outright. You'll see a difference in gains between puts and calls, but this only reflects the initial capital outlay.

Let me use our August Intel trade as an example...

We sold a put for around $0.47. The stock was trading for $19.33. The strike price was $19.

What that means is we were agreeing to buy the stock for a net cost basis of $18.55 per share ($19.33 minus $0.47) if the stock dropped below $19.

For readers who don't or can't sell puts, I provided an alternative covered call position. In that case, we bought the stock for $19.47 and sold a call for $0.98. The strike price was still $19.

So in both cases, we were betting Intel would trade for more than $19 by option expiration in September.

The covered call position required an initial outlay of $1,849 – the cost of 100 shares of stock minus the premium we received for selling the call.

In the put trade, the initial capital outlay was $380 – a margin requirement of 20% of what we would have to pay to buy 100 shares at $19 apiece. But if we were forced to buy the stock, our capital outlay would jump to $1,855... virtually the same as our call strategy.

Again – it's just a different way to put on the same trade. And in both cases, you're collecting more income and taking on less risk than you would with an outright stock purchase.

BH: Has the fear in the market, resulting from the European bailouts and the Fed's easy-money policy, changed the way you trade?

DE: Nope, not at all. The strategies we use in Retirement Trader actually capitalize on the fear in the markets. We're taking advantage of investor fear to trade great companies that have fallen out of favor.

The companies I recommend will make money no matter what. They'll thrive through another recession, a slog through a slow recovery, or even runaway inflation (as many of the pundits fear). These businesses have pricing power and broad, diversified businesses that will thrive under all conditions. I just happen to find these companies when they are temporarily out of favor and cheap... which shows up as that chart pattern we talked about. Then, we safely juice the returns with options.

Most people believe options increase your risk in the marketplace. And for many people, they do. In Retirement Trader, we're actually improving our risk-reward ratio. We use options to reduce risk.

We're getting a chance to buy some of the world's safest companies at discounts to current market prices. And my readers are reaping the profits.

BH: Thanks, Doc.

DE: My pleasure.


Brian's note: Retirement Trader subscribers are pulling thousands of dollars out of the markets with techniques like the one Doc just described... in ways that are safer than they ever thought possible. If you're interested in doing the same, click here


Send Letter to Editor
• •
Additional related items you might find interesting:
News Link  •  Economy - Economics USA
The Squeeze Continues... "Most Shorted" Stocks Are Screaming Higher
04-22-2014  •  http://www.zerohedge.com, by Tyler Durden 
News Link  •  Economy - Economics USA
Mortgage Standards Are Plunging – It’s Muppet Fleecing Time All Over Again
04-22-2014  •  http://www.zerohedge.com, by Mike Krieger  
News Link  •  Economy - Economics USA
Number Of Middle Age Californians Living With Their Parents Soars
04-22-2014  •  http://www.zerohedge.com, by Tyler Durden 
       
 
  Magazine / Newspaper
   Magazine Subscription Info
   Online Magazine List
   Newspaper Subscription Info
   Newspaper Issue List
 
RSS Feeds
   Articles RSS Feed
   Opinions RSS Feed
   Media RSS Feed
   Newsletter RSS Feed
   Smartphone Feed
   Podcast Feed
Radio / TV
   Decleare Your Independence
      with Ernest Hancock
   Radio / TV Program List

 
Anarchives
   Search by Keyword
   Contents Listed by Subject
   Radio / TV Show Archives
   Newsletter Archives
   News Links
   Feature Articles
   Opinion Columns
   Reference Links

 
Letters to the Editor
   List of Letters
   Write a Letter

 
Join Us
   Subscribe to Magazine
   Membership Sign-Up
   Be a Writer
   Be a Reporter
   Link to Us

 
Marketplace
   Buy Stuff – Sell Stuff

   Store on CafePress.com
More News
   Page Two
   Current News
 
Discussions
   Freedom Forum
 
Advertise
   Intro to Advertising with Us
   Magazine Advertising Rates
   Radio Advertising Rates
   Website Advertising Rates
 
Funding Center
   Support or Promote a Project
About Freedom's Phoenix
   About Us
   Contact Us
   Terms of Use
   Privacy Policy
   Writers List

 
Tutorials – Using This Site
   List of Tutorials
 
Media Resources
   News References
   Blog References
   Government References
 
  FreedomsPhoenix.com
The domain and name of this website are servicemarks of Ernest Hancock.
Website is Copyright © 2014 by Ernest Hancock.  All rights reserved worldwide.
Feature articles, columns, illustrations, and photographs are copyrighted and may not be
reproduced without the expressed permission of the credited writer, artist, or photographer.
No portion of this website, text, images, or source code may be framed on another website,
copied, reproduced, or distributed, by any means, without the written permission of
Ernest Hancock, 4886 W Port Au Prince Ln, Glendale, AZ 85306 USA.
Website Designed by
USA Web
Advertising

Phoenix, Arizona
 
Time to display page: 0.495 Seconds -- Dynamic Page

Page Views:

free web stats

Stats by StatCounter