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Tim's Corner: Boosting Income Returns

Dec. 21, 2020 8:40 AM ETF1 Comment
Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Specializing in biotech stocks, Small Caps, managing optimized portfolios

Seeking Alpha Analyst Since 2009

Finding tomorrow's big winners in the lucrative biotech sector, The Biotech Forum focuses on proprietary, breaking research on promising biotech and biopharma stocks with significant potential for outsized alpha. It is the fourth most subscribed to investment service offered through the Marketplace on SeekingAlpha.com. Our service offers a model-20 stock portfolio as well as the most active Live Chat on the Marketplace. This is where scores of seasoned biotech investors trade news and investment ideas back and forth throughout the trading day.

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Specializing in profiling high beta sectors, Bret Jensen founded and also manages The Biotech Forum, The Insiders Forum, and the Busted IPO Forum model portfolios. Finding “gems” in the biotech and small-cap stock sectors, these highly volatile spaces proven hugely successful have empowered Bret Jensen's own investing portfolio.

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Learn more about Bret Jensen's Marketplace Offerings:

The Insiders Forum | The Biotech Forum | Busted IPO Forum

Yet each man kills the thing he loves

By each let this be heard

Some do it with a bitter look

Some with a flattering word

The coward does it with a kiss

The brave man with a sword”

― Oscar Wilde

Image result for 50% offThis instablog post is sponsored by Tim Plaehn, expert on income investing and a friend & colleague of mine at Investors Alley as well as a contributor here on Seeking Alpha. Tim runs the Dividend Hunter newsletter which offers a solid & diverse selection of attractive high yield plays. The service now nearly 10,000 active subscribers and can be had HERE for the rock bottom price of $49 (It usually is $99) for the first year. Tim provides a solid selection of lower beta, high yield recommendations for these challenging times.

But sorry is the Kool-Aid of human emotions. [...] True sorrow is as rare as true love.”― Stephen King, Carrie


By Tim Plaehn,

My goal with my different income-focused services is to help my subscribers earn more money than they would by following the old-school types of investment advice. I recommend higher yields in my Dividend Hunter service.

For my dividend growth newsletter – Monthly Dividend Multiplier, I do not settle for the 2.5% to 3% yields that you will find on most dividend growth stock lists. I see no reason not to earn 4% to 5% and still have above-average dividend growth. I follow a similar path with covered call recommendations in Weekly Income Accelerator.

I see promoted covered call trades cross my desk with return projections not much better than the 8% to 10% you could earn with my high yield Dividend Hunter picks. Why do more work to make the same money?

A couple of years ago, I launched my first covered call trading service. With covered calls, call options, you sell calls backed by owned stock shares. The call premiums and any earned dividends are yours to keep.

I’ll share a personal story but first, here is a quick and dirty on how covered calls work.

Options contracts have specified strike or exercise prices and designated expiration dates. If the stock price is above the strike price when a call option expires, the option will be exercised, and the shares called away, replaced by cash at the per-share strike price.

Income for Life? How to Get $6,851 Per Month Before Social Security, Pension or Any Other Retirement Source

The returns from a covered call trade will be the value of the option premium plus the amount the strike price is above the current share price if the option expires “in-the-money.” If the stock is below the strike price (out of the money) at expiration, you retain the shares in your account, and more calls can be sold in the following weeks.

I hope you picked up a bit on how covered calls work. The strategy is not hard to use, but the learning curve can feel steep. Now I’ll get back to my personal story.

When I first started making covered call trade recommendations, my target return was 1.5% per month. So for a 60-day trade, I wanted to make 3%. One-and-a-half percent per month works out to 18% per year. I think that is an attractive target for a trading strategy where the returns primarily consist of cash from selling calls that is yours to keep.

A funny thing has happened as we close out 2020.

The market prices of options are high, very high. If you are an option seller, placing covered call trades, this is a very good thing. In the current stock and options market, it is possible to earn 2% to 3% or more per month, just from the option premium earned.

For example, I just recommended to my subscribers a covered call trade on Ford Motor Company (F). The calls expire in 39 days, and the cash return from the option premium is 5.1%. It seems a little crazy to earn 5% in just over a month on the shares of a solid company like Ford. I am not complaining.

My point is that if you do not trade options, but have heard about covered call trading, now is the time to learn how it works and start making some trades and earning real cash in your brokerage account.

Never apologize, mister, it’s a sign of weakness.”― John Wayne

Tim Plaehn of The Dividend Hunter has developed a monthly dividend calendar. It is yours free when you click here.

Thank You & Happy Hunting,

Bret Jensen

Founder, The Biotech Forum, The Busted IPO Forum & The Insiders Forum

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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