What if I told you that Wall Street will pay you to buy the stocks you were going to purchase anyway.
Sounds too good to be true, right?
Well it’s not.
By using a very simple strategy – one that is available to anyone with a brokerage account – you can receive immediate cash for buying stocks.
Warren Buffett uses this strategy regularly.
He used it to pocket gains of over $3 billion in 2009.
Hedge fund titan Carl Icahn used it to get paid millions on Herbalife…right before crushing Bill Ackman’s short position in the stock.
This strategy is deployed regularly by the Wall Street elite, and it is a staple in the wealth-building systems of the top 1%.
It involves the use of stock options, but not in the way most people use them.
You see, most people use options entirely wrong. The majority of investors use them for speculation…hoping to turn their $300 “bet” into several thousand dollars.
But that is a long shot. And over time – a losing formula.
Big banks, brokerage houses and Wall Street market makers know this. That’s why they are almost always on the other side of the trade.
When a company reports weak earnings and its stock is falling, amateur traders rush to buy put options – hoping to profit from the stock’s decline. But who do you think is selling those options?
It’s the market makers. And they’re not doing it out of the goodness of their heart.
These Wall Street veterans know the statistics. They know that the real money is made as the seller in these trades. It’s how they make a living… and a good one at that.
I’ve worked with thousands of traders over the years, and I can count on one hand the ones who consistently make money buying stock options.
Option sellers, on the other hand, are a widely profitable group.
They don’t operate on hopes and dreams… crossing their fingers that this trade will finally be the home run they’ve been after.
They hit singles and doubles–but lots of them. And over time it adds up to big gains.
So how can you use this information to your advantage? How can you turn the tables and make Wall Street pay you to buy stocks?
Easy… join them on the other side of the trade.
Let me give you an analogy.
Pretend that you have found your dream house. It has the square footage you need, a great location, an updated kitchen, a huge backyard… it’s perfect.
But there’s a problem. It’s out of your price range.
The house is listed for $500,000. You tell the homeowner that although you love the house, the most you could afford is $400,000.
Surprisingly, the seller makes you a unique proposition.
While he cannot accept your $400,000 offer today, he is willing to pay you $10,000 to keep your offer on the table for 60 days. If he does not receive a higher bid by then, he will accept your $400,000 offer.
For you it’s a win-win.
If the house is purchased for a higher price within 60 days, you get to keep the 10 grand – no strings attached.
If not, you can buy your dream house for $400,000… AND keep the $10,000.
This type of deal is fairly uncommon in the real estate market. In fact, I’m not sure it’s ever been done.
But it happens every day in the stock market.
The trick? Selling put options.
Let’s take Apple for example. The stock currently trades for around $100 per share.
You like Apple. You’re bullish on the stock. But you want to pay an even lower price. You’re looking for a real bargain.
So instead of buying shares at the current market price of $100, you sell a $95 put option for $3.00 that expires in 3 months. As the seller of this option, you receive an immediate credit of $300 into your account ($3/share x 100 shares).
At the end of 90 days, one of two things will happen. Either:
- Apple stock will remain above $95 and you will simply keep the $300 and move on with no further obligations.
- The stock will fall below $95 and you will be required to buy the shares at that price. You still get to keep the $300 so your cost basis will be $92 per share ($95 – $3 option premium). This is a full 8% cheaper than the $100 price Apple was trading at when you initially wanted to buy.
The graphic above demonstrates your final cost in the event you end up buying the shares.
As you can see, this is a far more profitable method for buying stocks. Best case, you get free money without ever owning a single share. Worst case, you buy the stock you wanted at an even lower price AND get paid for making your low ball offer.
There are a few things you’ll want to keep in mind when using this strategy.
First, only use it on stocks that you are ready and willing to buy. The power of this approach will be lost if you end up holding a basket of crappy stocks.
I recommend focusing on large cap, blue chip stocks. They offer the greatest safety and are generally a welcomed addition to any long-term portfolio.
Second, you’ll want to understand volatility and its effect on option prices. Certain events will cause the value of these put options to skyrocket – creating opportunities to make up to 40% returns over a few short months.
Experts know which events create low risk/high reward opportunities and which ones are best to leave alone.
In the full report (coming soon), we will cover this in greater detail – highlighting the key times for option sellers to earn outsized returns.
We will also cover part two of this strategy which can be used to collect income on the stocks you already own. Because once you have Wall Street paying you to buy stocks… why not make them pay you to sell them as well?