Premium Collection: Produce Monthly Income

Who the Service is For

This service is for the slightly more aggressive investor who wants to learn about the value of premium collection. This corner is a logical step up from the Conservative Corner and will expand your knowledge about premium collection strategies beyond the use of covered calls. The covered call is but one of the premium collection strategies. This service will teach and walk you through all the others. For those who are looking to generate monthly income by taking advantage of consolidation patterns in stocks.

Which Strategies Will be Used

The strategies used will primarily be the time spread, the straddle, the strangle, and on occasion, the butterfly or the condor.

The Time Spread (also called a Calendar Spread) allows an investor the ability to take advantage of the passage of time in a hedged manner. Your potential loss is limited to only what you spent in purchasing the spread.

Straddles and Strangles are very aggressive premium collection strategies due to the fact that they involve the selling of a naked call and a naked put simultaneously. This double exposure allows for the most aggressive premium collection but also carries higher risk. Although highly profitable, you must be aware of both the size and circumstance of the inherent risk of these two strategies.

Butterflies and Condors are strategies that involve multiple option positions. They are aggressive premium collection strategies but have an additional hedging component which provides for a limited loss. This limited loss comes at the expense of profit, which means butterflies and condors are not as risky or as profitable as straddles and strangles. Investors use butterflies and condors when they are not as confident about the consolidating pattern and feel they need a little extra protection to adjust for risks of premium collection strategies.

Reasons For Joining

A stock’s natural state is stagnant. Studies have shown that a stock’s yearly movement can be accounted for in only two to three months of the year. That means that nine to ten months of the year the stock is moving very little to none at all. If this is true, then a smartly managed premium collection strategy should prove to be consistently profitable. Further, with the last few years showing an overall market stagnation with a potential for more, the strategies featured here will become increasingly popular and more valuable.

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