In this video, Kurt Frankenberg (founder of RadioActive Trading)discusses a method he developed a few years ago to take premium out of the options market like you can with a covered call, but without the two biggest problems that usually go along with selling covered calls.
C’mon, you know what those problems are…
1) the riskiness of sitting on a stock that’s kinda volatile (the SEXIEST
premiums come from the more volatile stocks)… and
2) almost as frustrating… the fact that if you DO pick a runaway winner of
a stock, that selling covered calls puts a CAP on what you can make.
That’s kind of BACKWARDS from the old trader’s maxim: cut your losers short
and let your winners run. Selling covered calls generally makes for a structure
that goes against that simple idea.
Imagine if you could reverse that situation and truly cut your losers short
and let your winners run. Imagine if it were possible for you to have very
little AT RISK, in case you are wrong about a stock… then STILL take income from
selling calls against it… and if the stock takes off to the moon, you get
to take the ride with it! This video shows the coveted “Money Net”… a spread
trade that takes in premium but poses ZERO RISK.