The Bull Hunters Guide

I wasn’t going to post another article in the Bullhunter Blog until I got back home from Hong Kong. However, I put a post in the Planet Wealth Blog about my trading with Collars when Renting Shares. In here, I can easily call it Writing Covered Calls with a Collar.

I have done quite well from this very strategy myself, so here’s a quick mention of it here in the Bullhunter Blog. Many of my readers have enquired about my trading so it is relevant enough to mention here.

Covered Call With A Collar

With the market being so volatile at the moment and especially dropping very fast on occasions, I decided to slightly change my trading strategy. Basically what I do is this:

1. I buy shares
2. I write covered calls on those shares (renting shares) and receive a monthly premium for that.
3. At the same time I buy a Put (insurance) at around 80 - 90% of the share value depending on the cost at the time.
4. I personally like to buy a Call option slightly out of the money, approximately 10 - 20% above the price I’m renting them at (the covered calls).
5. If the share price drops, I buy back the covered call at a discount (I make a profit) and cash in the Put option (the insurance) at a premium (another profit).
6. If the share price goes up, I cash in the bought Call option ( a profit) and if I get exercized on the Covered Call (renting shares), I actually make a profit because I rented them at more than I bought them for.

Before you get put off by the above steps, there is a much easier (and simpler) way to do this. I have covered that further on.

Keep in mind, I have complicated the process a bit here. I have a reasonable understanding of trading on the stock market. There are a few more things I do to increase my profitability, such as doubling up the Put options and working them in favour when the market drops. I also borrow 100% of the share price from the bank, hence I am using no money of my own and profit nicely from it.

Simplify It All For Me Please!

I learned these strategies from Andrew Dimitri at Planet Wealth. If you’d like to attend one of his FREE Webinar Sessions where he explains this startegy ( the much easier version of what I wrote above ), then you can go online and book your spot at Andrew’s Webinar Here For FREE.

FREE Intro Session To Covered Calls With Collars

Andrew Dimitri has offered to put these sessions on the teach you How To Trade Covered Calls With Collars - and it is Free. He shows the simple way of doing it and it can be seen online - at home on your own PC.

I learned strategies like this one from Andrew back in 2004. I’m really grateful I made the effort to do this. Now, this is much easier to learn as he does it for you online. If you would like to check it out, go and book your spot at the next available session:

Book your FREE spot at the webinar here >>

There is only room for 50 people at each session. First in - best dressed.

Last month alone, Planet Wealth made a 12.9% profit on a $70,000 investment bank. In that month the ASX dropped by 11.4% - and they made a profit using this strategy! I use that same strategy and I know it works.

Enjoy the webinar. It is good value.

I’ll see you back here next week for the next installment of the Bullhunters Guide.

Sean Rasmussen
The Bullhunters Guide
Universal Wealth Creation © 2004 - 2008

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I released the original version of The Bullhunters Guide To The US Stock Market in December 2006. There were 1600 downloads within a matter of weeks. As of today, there have been 3770 downloads. The Bullhunters Guide has officially made Bronze status in the best seller stakes (just kidding. I’ve got no clue what that means)

I am officially over halfway through the new version of The Bullhunters Guide. This time it will include more indepth trading information about options, covered calls and more advanced strategies. Increasing your monthly cashflow by renting shares is one topic. I’m hoping this will shed more light on the US stock market for everyday people. Of course the strategies apply to most stock markets around the world. The bigger markets are just more suitable due to the liquidity of the stocks.

2007 has been kind to me. The Bulls have had a Run on the market and I haven’t needed to focus too much on Bearish Strategies. I will talk more about those strategies in the next book. Stay posted and I will keep you updated about the release date for the bigger and better version of The Bullhunters Guide To The US Stock Market – Due for release December 2007. Oh Yeah! It’s free too. Of course!

Go the Bulls!

Sean Rasmussen
The Bullhunters Guide
Universal Wealth Creation © 2004 - 2007

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I am going straight into another excerpt from The Bullhunters Guide to the US Stock Market today discussing the renting shares or more commonly known as the Covered Calls strategy.


Covered Calls - Renting Shares

Say your Grandma left you 10,000 shares of Microsoft. You held it for a few years and the stock basically did nothing. Microsoft doesn’t pay a very good dividend so you consider selling some of the stock to get some cash. But instead your broker recommends that you write covered calls. You say… What…

By writing a call you are selling an option on your stock. An option gives its owner the right, but not the obligation, to take action. In the case of calls, it gives the holder of an option contract the right to buy 100 shares of Microsoft at $30.00 per share any time between now and November.

Just as with stocks, you don’t really sell an option contract directly to another investor, but instead to a market or specialist. He then sells the contracts to individual investors who want them. Of course there is a spread between the bid and ask of an options contract as well.

Keeping with the Microsoft example, you could sell the contract mentioned above with a strike price of $30, expiration in November for $0.05 a share. Since each contract is for 100 shares, this would equal $5. That’s not a lot of money so you decide to sell 100 contracts, which covers all $10,000 of your shares (100 contracts*100 shares each). In this case you get $500 no matter what. Microsoft’s current stock price is $28.37 but if it reaches $30 or more, your contracts will probably be exercised. This means that you will be obligated to sell all 10,000 shares for $30 each - even if they reach $35, $50 or $100 per share. If instead the stock stays around $28.37, goes down or goes up but not to $30, the options you sold will go unexercised. In this case, you will keep the $500 and all of your shares.

When you write calls for which you own the underlying stock, they are said to be covered calls. In this example you owned 10,000 shares of Microsoft so you could write 100 covered call contracts. If the contracts were exercised, you had the stock to sell.

A more aggressive (and very dangerous) strategy is writing naked calls which is when you sell contracts for the stocks that you don’t have. If the contracts get exercised, it’s up to you to go out in the open market and buy the stock.


Trading for Cashflow

In the above excerpt, remember that Sean wrote the eBook last year so the prices and months that he mentions is because of this reason. This is only a brief summary of the renting shares strategy and it is a great one to use when you are trading for cashflow. Remember that with any new strategy that you take on , it is wise to paper trade for a minimum of three months until you get the hang of how it all works.

Many of you requested that Sean put some real live renting share trades in his next eBook as you are eager to learn the strategy. This Sharelord® strategy will be discussed in more detail in the next installment to the Bullhunters Guide. I trust that the articles here are of use for you in your endeavour to master the US stock market.

To Your Success

Angela Recchia
Graduate Support
Universal Wealth Creation © 2004 - 2007

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Sean has asked me to join him in writing something here for the Bull Hunters Guide to the US Stock Market blog. So I would like it if you could help me out a bit and let me know what kind of areas I should cover for you.
Obviously we are on the topic of the US Stock Market and trading options, so I want to do my best to bring you relevant information and make it worth your while.

For instance, would you like to have some general thoughts on how to go about choosing stock to buy that would be suitable for the renting shares strategy or writing covered calls as we know them?

I am not a Financial Advisor so I cannot give you specific stocks. These ideas will just be some of the things to look out for on how to choose stocks.

Or perhaps some more talk on mindset and how we can teach ourselves to be emotionally detached from trading on the market? Knowing this is the biggest challenge you will have to overcome.
You may have a specific area that you would like me to cover for you.

Kindly leave your comments for me and I will gladly get back to you with some real juicy info.

Until then…

Angela Recchia
Graduate Support
Universal Wealth Creation © 2004 - 2007

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Universal Wealth Creation is proud to welcome Angela Recchia to the team. She will be helping me provide you with more Articles and improve your Stock Market Research whilst visiting The Bull Hunters Blog.

Angela is a Wealth Graduate of the 21st Century Academy Homestudy Program. She has attended several wealth seminars and is doing one of the key points of getting somewhere in life: Taking Action. Getting involved in blogs and forums makes you active in your learning and it jolts the brain into action.

Angela is also an administrator of the Universal Wealth Creation Forum. Her valuable help allows me to spend more time on research for the next edition of The Bull Hunters Guide to the US Stock Market where I will be going into depth about Renting Shares, better known as Writing Covered Calls.

Just like me, Angela is not licensed to give financial advice. We will both help you as much as we can, however some details we will not be able to disclose due to legal constraints.

Please welcome Angela by posting a warm welcome in the comments section below. Let her know that you appreciate her help.

Regards
Sean Rasmussen
Universal Wealth Creation © 2004 - 2007

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