An Opportunity to Collect a 7.7% "Instant Dividend"... Right Now
StreetAuthority Daily
GlobalDividends.com | Subscribe | Archives | About Us | Premium Content | Research Reports

An Opportunity to Collect a 7.7% "Instant Dividend"... Right Now

By Amber Hestla
February 25, 2013

Last Wednesday, I told you about one of the best strategies in the world for beating an overvalued market. I use it to generate thousands of dollars in "Instant Income" from the best companies in the world.

For example, we made $2,700 in "Instant Income" from a $6,400 "down payment" on MasterCard (NYSE: MA). That's an immediate return of 42.2%. Last September, I collected $710 from Amazon (Nasdaq: AMZN), a company that's never paid a single dividend. And this week, I collected $95 in "Instant Income" from Phillips 66 (NYSE: PSX) for every $1,200 I set aside.

If you haven't guessed it already, my "Instant Income" strategy involves selling options. And right now, we have a huge opportunity...

You see, option prices are determined by several factors, including the underlying stock's price, the exercise price of the option and the amount of time until the options contract expires. These can all be easily determined.

But one factor that is more difficult to assess is volatility.


Sponsor

Dominate the Market -- And Earn a Second Income -- With These 10 Stocks

Using a simple method, we've found 10 high-yield, dividend paying stocks that can hand you a "second income" as much as 14 times what you get with CDs, and 7 times higher than bonds.

Go here for everything you need to know.



We can get a general idea of whether volatility is high or low by looking at the CBOE Volatility Index (VIX), also known as the "fear index." The VIX tends to rise as the market falls and traders become more anxious. On the other hand, when market prices rise, the VIX tends to decline.

The chart below shows that the VIX itself is a volatile indicator.



Here's why it matters
: Options prices, in general, move in the same direction as the VIX. That means options are expensive when the VIX is high and cheap when the VIX is low.

That's great news for followers of my "Instant Income" strategy, because we are sellers of options, not buyers. We want them to be more expensive. That's makes it easier to find options that deliver a lot of income. And I'm taking advantage of the spike in the VIX to collect even more income while I can.

Let's look at an example using one of the most undervalued stocks in the market?

Joy Global (NYSE: JOY) makes equipment used for mining coal, copper, iron ore, oil sands, gold and other mineral resources. This equipment includes electric shovels that can scoop as much as 135 tons of dirt at one time and machines that can carve out underground tunnels in coal and gold mines. It's a "pick and shovel" way to invest in worldwide commodity demand.

I'm not the only one who thinks this is a good stock. Goldman Sachs identified JOY as one of the top 10 stocks with the greatest upside potential in 2013. Goldman thinks the price of JOY should rise to $83, about 32% higher than it is today, noting that "tightening commodity supply-demand balances over the course of 2013" will drive a recovery in the share price of JOY.

I think shares are a steal right now. But instead of buying shares outright, we can use my "Instant Income" strategy to take advantage.

Shares are currently trading at about $63, and we could sell JOY April $55 Puts for $0.85. To initiate this trade, your broker might require a small "down payment" of about $1,100.

Selling these puts will generate an "Instant Dividend" of $85 (each contract controls 100 shares) per contract. This put will obligate you to buy Joy Global at $55 a share if the stock trades for less than that by April 19 (the last day these options can be traded). That is a key support level and a price I believe represents a bargain for these shares.

Assuming JOY trades for $55 or more on April 19, we keep the "Instant Income" and make a profit of $85 on $1,100 "down payment", or 7.76%, in 53 days. If we can repeat a similar trade every 53 days, we'd earn a 53% return on our capital in 12 months.

If JOY trades for less than $55 on April 19, we'll keep the $85 per contract and buy JOY at $55 per share. In this case, you'll own JOY at a cost basis of $54.15 (the $55 strike minus the $0.85 premium, which you keep). At $54.15, we'd own shares at 9 times this year's estimated earnings, a great price for a stock expected to grow earnings at about 11% a year.

My "Instant Income" strategy can be used on thousands of stocks. In fact, it can even be used to boost income on stocks you already own. I explain all this and more in a special presentation I put together. In it, I'll tell you more about the "glitch" in the financial markets that's allowing me to generate thousands of dollars from some the best companies in the world. Click here to learn how to get started now.

Good Investing!

Note from Editor: Amber's new weekly advisory, Income Trader, has been available less than a month, but the subscriber feedback is already positive. L. Smith said he collected $1,000 from selling puts on Phillips 66 (NYSE: PSX), $700 from selling puts on PetSmart (Nasdaq: PETM) and $1,800 on the aforementioned Joy Global (NYSE: JOY). Smith said he's found Amber to be "detailed and conservative," not to mention successful. You have until Wednesday to take advantage of a special charter subscription rate for Income Trader. For the details, click here.


PDF Version PDF Version
PDF Version Web Version
PDF Version Whitelist Us

In a note to clients, UBS said oilfield service companies and drillers will focus on paying more dividends to shareholders. So far in 2013 the two biggest oilfield service companies, Halliburton CO. (NYSE: HAL) and  Schlumberger Ltd.(NYSE: SLB), have increased their payouts 39% and 15%, respectively. 

-- MarketWatch

Investors Should Prepare for a Correction
We've seen the warning signs for months. And according to one of our top analysts, now is the time to prepare... Read more
How to Take Advantage of Huge Real Estate Dividend Payoffs
By purchasing shares of these companies, investors can lock in rising dividends, healthy yields and great prospects for capital gains. Read more
You Can Thank My Daughter -- and Maybe Your Kids, too -- for the Big Yields in This Surging Sector
Until recently, household formation hovered at historically low levels. But that's changing in a big way. Read more
Generate "Instant Income" Like a Wall Street Guru
One of the most notable investors in the United States is using this strategy to beat the market during the next several years. Read more
How Can 'Dividend Aristocrat' Stocks Help You Beat The Market?
These stocks have tripled the S&P 500's returns for the past five years. Here's why that should continue. Read more

  Sponsor
How to Make up to $208,250 a Year Trading Only "Payday" Trading Days!
Using this same strategy, he's bought three houses and supported his family for 15 years using this secret income trading secret. This same strategy has averaged 143.56% a year for the past seven years.

Click Here to See.
What I Learned from a Stock That's Up 1,300%
By Andy Obermueller

Here's what I've learned about finding and bagging game-changing stocks, thanks to one of the market's most popular equities.
This "Retirement Savings Stock" Has Raised Its Dividend For 34 Consecutive Quarters
By Carla Pasternak

This company has one of the best dividend track records around... And it's still growing fast enough to keep it up...
This Company is Harnessing the Cheapest Energy on Earth
By Nathan Slaughter

Some of the best investments out there are found in the utilities sector. But so much of their profits go toward fossil fuels that their growth can move slowly. I've found a company with a nearly free energy source and huge growth potential.
The Most Shareholder-Friendly Company on Earth
By Paul Tracy

People love to hate it, but what they don't know is that it's raised its dividend an astonishing 85% in just a few years.
Don't Make the Same Devastating Investing Mistake as Apple
By Amy Calistri

Most people will think Apple's problem is a great one to have... but it's actually a serious one that the heads of the company will have to deal with sooner or later. Here's why...

GlobalDividends.com | Subscribe | Archives | About Us | Premium Content | Research Reports

To ensure that you receive these emails, please add Research@DividendOpportunities.com to your address book.

Disclosure: StreetAuthority does not own shares of securities mentioned in this article. In accordance with company policies, StreetAuthority always provides readers with at least 48 hours advance notice before buying or selling any securities in any "real money" model portfolio. Members of our staff are restricted from buying or selling any securities for two weeks after being featured in our advisories or on our website, as monitored by our compliance officer.

StreetAuthority, LLC is a publisher of financial news and opinions. StreetAuthority, LLC is not a securities broker/dealer or an investment advisor and we do not recommend or endorse any brokers, dealers or investment advisors. This work is based on SEC filings, current events, interviews, corporate press releases and publicly available information which may contain errors. All information contained in our newsletters and/or on our website(s) should be independently verified with the companies or sources mentioned. You are responsible for your own investment decisions and should always conduct your own research and due diligence and consider obtaining professional advice before making any investment decision.

In accordance with StreetAuthority policies, our staff is restricted from buying or selling any securities for two weeks after being featured in our advisories or on our websites, as monitored by our compliance officer. we always provide readers with at least 48 hours advance notice before buying or selling any securities in any of our "real money" model portfolios.

StreetAuthority welcomes your comments, feedback or suggestions. Please email us at: feedback@streetauthority.com. For questions about your subscriptions or to speak with a customer service representative, please call 888-560-4728 between 9 AM to 5 PM Eastern Standard Time Monday-Friday, or via email at: customerservice@streetauthority.com. Please note that we are prohibited by law from providing any individual or personalized investment advice. As such, we cannot respond to any emails or phone calls requesting this type of information.

To unsubscribe from this publication please click here.

Published by: StreetAuthority, 4601 Spicewood Springs Road, Austin, TX 78759. Copyright (c) 2013 StreetAuthority. All rights reserved. Any reproduction or redistribution in whole or in part without StreetAuthority approval is prohibited.

StreetAuthority.com
InvestingAnswers.com
ProfitableTrading.com
TopStockAnalysts.com

Subscribe for FREE

Subscribe to Dividend Opportunities today and you'll receive a FREE newsletter three times a week, plus a FREE in-depth research report that identifies some of today's highest-yielding securities.

There's absolutely nothing to purchase, we'll keep your email address private, and you can cancel at any time. You truly have nothing to lose, so take advantage of this no-hassle, risk-free offer today!

Click here to subscribe now.