Michael Shulman, Expert Trader, Analyst and Educator

Michael Shulman, Expert Trader, Analyst and Educator

The market is up due to China, Europe, and oil.

Does that mean it will stay up?

No, but it does mean this: If you have a stock or stocks that are in a less-than-bullish pattern, then it’s time to sell a call…

The most popular stocks are the FANG stocks: Facebook (NASDAQ:FB), Amazon (NASDAQ:AMZN), Netflix (NASDAQ:NFLX) and Alphabet (GOOG).

Sell a weekly call on the first trading day of the week (or five minutes before the close on the previous Friday), and the returns can be outstanding.

Which call? The next call at the next strike. If the stock rises, roll it forward or let yourself be called out and buy it back.

Here’s what you can get if you use this tactic:

Facebook: The stock price is $102.01. Sell the February 102 call for $1.95. If you are called out, your potential gain is slightly less than 2% (or 100% per year if you made this trade every week).

Amazon: The stock price is $507.08. Sell the February 507.50 call for $9.65. If you are called out, your potential gain is slightly less than 2% (or 100% per year if you made this trade every week).

Netflix: The stock price is $87.40. Sell the February 88 call for $2.20. If you are called out, your potential gain is 3.2% (or 165% per year if you made this trade every week).

Alphabet: The stock price is $682.40. Sell the February 682.50 call for $11.35. If you are called out, your potential gain is 1.67% (or 86% per year if you made this trade every week).

And, of course, you can always day trade these calls if the stock moves down.

In my Covered Call Blueprint service, where we trade the FANGs, a one-day trade in NFLX calls produced a one percent return…

Just one percent, eh?

Do that twice a week, every week, and your cash pile is double the asset value of the shares—a 100% gain.

Think about it…

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