How a Wildly Successful January Added $4731 Cash in our Pockets Last Month
January 29th, 2021
For those who were hoping 2021 would be a bit calmer than 2020, January has likely dashed their hopes.
The month that started with crazed Trump supporters storming the U.S. Capitol ended with a retail trading army storming Wall Street. But a lot happened in between.
Democrats gained control of both houses of Congress and we inaugurated a new president.
The United States reported a record number of COVID-19 deaths as new strains popped up. And it became clear that the vaccine rollout was going to be anything but smooth.
Earnings were largely better than expected, with more than three-quarters of the S&P 500 companies that have reported so far beating estimates.
The major indices made a series of record highs in January, but this week stocks fell sharply, with the S&P 500 dropping 3.3%. This was the worst week for the broader market since October.
The CBOE Volatility Index (VIX) also hit its highest point since late October.
What I want traders to keep in mind as we head into February is that a sell-off is not a correction. A true correction is a drop of at least 10%. What’s more, a correction is not a bear market.
The additional volatility in the market is actually something traders can benefit from if they use the right strategy.
Selling options on high-quality stocks is the best way I know to capitalize on elevated volatility levels. When volatility rises, so does the premium we get for selling options.
This week, Options Income Blueprint members closed three winners — two put-selling trades and one covered call. Traders who sold just one contract of each trade could have earned $419 in income.
Those trades capped off a wildly successful January, in which we closed 13 winning trades. Here’s a quick rundown:
Traders who sold just one contract of each could have earned $1,577 in income.
We actually closed 14 successful positions this month if you count our recovery trade on Intel (INTC). After 11 months of selling puts and calls, we walked away with a $10 profit. When you consider that, at one point, we were down more than 25% on the share position, this was a big win for us.
There are a lot of unknowns as we look to the month ahead. We are still watching the Reddit army versus hedge funds drama play out. The nascent economic recovery is being threatened by renewed lockdowns and a clumsy vaccine rollout. And the government still has a way to go to negotiate a new stimulus package.
But what I do know about February is that it is ripe for our options-selling strategy and that I’m excited about the prospect of earning more income from stocks in the weeks ahead.