Building Wealth Doc's note: Today, I want to share a special edition of Health & Wealth Bulletin with you...
Twice a month, in my Retirement Trader advisory, I show subscribers how to pocket thousands of dollars in what I call "instant income" through my options-trading strategy. It's a strategy I've used myself for decades, but too many folks are hesitant to try it.
So today's issue of Health & Wealth Bulletin is an excerpt from last Friday's Retirement Trader (slightly edited for clarity) where I explain how my strategy pays safe and steady income even when markets don't rise...
For six years, Nathan Most heard "no" from just about everyone who mattered in the investing community.
When someone finally listened to him, his idea revolutionized the investing world...
Nate Most worked for the American Stock Exchange in 1987. At the time, the AMEX was in bad financial shape. It was the underdog. It was losing trading volume to the New York Stock Exchange and the Nasdaq. As the head of new product development at AMEX, Most's job was to solve the problem.
He saw innovating as the only solution. Companies weren't bringing their stocks to AMEX. As Most told Institutional Investor in 2004, "There had to be a better way than entertaining company executives only to see them list on Nasdaq anyway."
Most's idea was simple... He looked at the booming industry of mutual funds and noticed those funds couldn't be traded on the public market. And he knew of no reason why they couldn't.
Most started tinkering with his concept in 1987. But he faced resistance with every step he took. One of his biggest critics was Jack Bogle, founder of Vanguard and creator of the first index fund.
Given that index funds could make good use of Most's idea, it's surprising that Bogle would oppose Most so fiercely. But Bogle argued that frequent trading would increase costs too much.
The Securities and Exchange Commission ("SEC") was another roadblock. AMEX attorneys told Most he'd never get his idea past the SEC. And his early experience was that they were right.
Jim Ross, the ex-chairman of Global SPDR who worked on Most's project, recalls...
We were told no by the SEC multiple times, "that's not going to work." But Nate kept driving the team. "We gotta make this work," he kept saying. He wasn't taking no for an answer.
Most's persistence paid off.
In 1993, he launched the first U.S. exchange-traded fund ("ETF"): the Standard & Poor's Depository Receipts, dubbed the SPDR S&P 500 Fund (SPY).
Today, SPY is the most popular ETF, with nearly $400 billion in assets. Just about every hedge fund and asset manager owns SPY.
And ETFs are wildly popular. These days, you can find an ETF for just about everything... You can buy a health care ETF, a technology ETF, a dividend-paying ETF, and even an ETF focusing on stocks that should appeal to Generation Z.
ETFs are great for investors because they are so diversified. A single company's bad news creates a smaller hit in a fund that holds dozens of companies, which negates a lot of risk.
On the other hand, for that same reason, ETFs usually aren't so great for option sellers like us. Less risk tends to reduce the premium we can collect.
Given their safety, we would love to sell options on ETFs each and every issue... but in most markets, we aren't able to do it.
Sometimes, however, it does make sense. And when we get that opportunity... we almost never lose money.
You see, you want to sell options on ETFs when we experience what we call an "income surge." And that's exactly what we're seeing today...
ETFs are great for investors because they diversify and reduce risk. By holding a basket of stocks, you're not subject to wild price swings that may come from owning one individual stock. With a basket of stocks, some will rise and some will fall. But no single company will wipe you out on a bad earnings report or CEO retirement.
With less risk and more predictability, fewer investors need to buy put options as insurance on ETFs. Thus, option premiums are usually low. You'll make a fraction of what you could earn by selling options on single stocks.
If you sell options on many popular ETFs during times when fear is low, the best you will earn is about 10% to 13% annualized. And that's not bad. If you're making 10% a year, you're doing better than the vast majority of investors.
In Retirement Trader, we can do better.
We shoot for annualized gains of around 20% or more for our trades. Just take a look at our recent results... The last three trades we closed had an average annualized gain of 25.7%.
It's hard to earn 25.7% annualized by selling ultra-safe ETFs.
This past Friday, I showed Retirement Trader subscribers how, thanks to the abundance of fear today, we can get close to that by selling options on an ETF that we would love to own for the next year or so.
It holds a group of stocks that are benefiting from today's record inflation. The ETF is trading near highs today as profits are at record levels as well. We expect these stocks to remain near their highs over the next few months...
If you're not already a Retirement Trader subscriber, you're missing out on what I believe is by far the safest and most profitable way for you to make money in the market right now.
I recently released a video where I explain how my strategy has led to nearly 600 winning positions – with a current streak of 116 winners in a row.
The chance to watch my presentation – and learn how to start collecting regular income – ends tomorrow night at midnight.
Click here to get all the details before it's too late.
Here's to our health, wealth, and a great retirement,
Dr. David Eifrig and the Health & Wealth Bulletin Research Team
April 25, 2022