GRIP Monthly Cash Machine Strategy

pThe emGRIP Monthly Cash Machine Strategy/em is a variation of the GRIP Covered Call Strategy presented in Chapter 7 of the GRIP book and the Bullish Debit Spread Strategy presented in Chapter 8. The emCash Machine Strategy/em is initiated by buying stock and selling monthly call options for income. This creates a covered call spread between the stock and short call option. The stock profits if the stock moves up in price and the short call option profits if the stock moves down in price.nbsp; The Chuck Hughes GPS, the Chuck Hughes Advisory, the Chuck Hughes MVP and the Chuck Hughes Wealth Creation Alliance also offers information on covered calls and on Chuck Hughes options./p
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pThe short call option is lsquo;coveredrsquo; by the ownership of the stock making this a limited risk strategy. Selling a call option results in cash being credited to your brokerage account. My brokerage confirmations show monthly options I recently sold options that resulted in $42,895.05 in cash being credited to my brokerage account. In the first example I sold 5 MA (MasterCard) Mar 185-Strike calls at 8.65 points or $865 per contract. After commissions and fees of $7.79 this resulted in $4,317.21 cash being credited to my brokerage account.nbsp; This is real income, it is not a Chuck Hughes scam! nbsp;/p
pThe emnet/em profit I receive from the sale of $42,895.05 in option premium will depend upon the time value of the call options sold and the price of the underlying stock at option expiration. Letrsquo;s learn how to calculate the time value of a call option and then look at several emCash Machine Strategy/em covered call trade examples so we can understand the profit potential and risks of this strategy. NOTE: Past results are not necessarily indicative of future performance. There is a risk of loss in all trading.nbsp;/p
pstrongChuck Hughes Option Pricing/strong/p
pOption premiums consist of intrinsic value and time value. At option expiration, options lose all time value and consist of only intrinsic value. Intrinsic value is the difference between the option strike price and the current price of the underlying stock. The intrinsic value of a call option is calculated by subtracting the strike price of the option from the current stock price. When you think options, think a href=http://chuckhughesinvest.com/ target=_blankChuck Hughes/a option strategies for success!nbsp;/p
pstrongOption Expiration/strong/p
pAt option expiration there are two possible outcomes for covered call trades: nbsp;/p
ol type=1
liIf the underlying stock price is above the strike price of the short call then the stock will be called and sold at the strike price of the short call. For example, letrsquo;s assume you purchased 100 shares of AK Steel stock at 54.00 and sold the April 55-Strike call option. At April option expiration if AK Steel stock is trading at 56.00 then the stock will be lsquo;calledrsquo;. This will automatically result in the sale of the 100 shares of AK Steel in your brokerage account at 55.00. /li
/ol
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pstrongIn-the-Money Covered Call Trade Example/strong/p
pAn in-the-money covered call would be initiated by buying stock and selling an in-the-money call. In this example buying CALM stock at 34.43 and selling the April 30-Strike call which is trading at 6.15 points would result in an in-the-money covered call. Letrsquo;s take a look at the profit/loss analysis for an in-the-money trade. In the money option trades are used with the Chuck Hughes GPS, the Chuck Hughes Advisory, the Chuck Hughes MVP and the Chuck Hughes Wealth Creation Alliance.nbsp; The Chuck Hughes Advisory also offers information on covered calls and on Chuck Hughes options.nbsp;/p
pstrongReal Trading Results/strongnbsp;/p
pThe Chuck Hughes Trading Profit Results Demonstrate That This Is Not a Chuck Hughes Scam!/p
pChuck Hughes began his career as a full-time commercial pilot, which gave him 15 to 17 days off each month. As much as he enjoyed running and playing tennis, they certainly couldnrsquo;t fill all his time. So, he got interested in the stock market; and opened his first trading account in 1984 with $4,600. Success came quickly to Chuck Hughes trading. Trading real money using the Chuck Hughes option program, he finished 10th in the 1985 United States Trading Championship and 3rd in the 1986 competition, with a whopping 260% return! With the world looking on, Chuck Hughes trading has become a leading authority in high-profit, risk-controlled investing. Using real money, in a live account, Chuck is a seven time National Trading Champion. strongemChuck Hughes has won more awards than any other trader in National Trading Championship history. /em/strongThis real time performance during difficult market conditions proves that this is not a Chuck Hughes fraud.nbsp; NOTE: Past results are not necessarily indicative of future performance. There is a risk of loss in all trading./p