Dividends4Life: Pay Yourself First With This Clever Income Strategy

Pay Yourself First With This Clever Income Strategy

Posted by D4L | Wednesday, September 24, 2014 | | 0 comments »

If you’re like me, your main goal is to keep the income rolling in with a solid set of yield plays — but that doesn’t mean getting complacent once you’ve got your dividend portfolio in place. Rather than ignoring the short-term swings in the broad market, a smart investor pays attention and looks for opportunities to boost his income stream, which sometimes means thinking outside the box. In addition to your typical buy-and-hold positions, I recommend you always stay on the lookout for new strategies that can complement the dividend payers you may already own.

Today I’d like to show you how you can manufacture an instant “dividend” for yourself by trading an up-and-coming Internet stock. Let’s get started. TrueCar (TRUE) is a hot, newly listed Internet company that has permanently changed the car-buying experience for consumers with its negotiation-free car buying and selling platform. But what I’ve got in mind for TRUE is more of a short-term trade in which we create income for ourselves in the form of option premium, by executing a “buy-write” on the stock. In other words, we’ll purchase (buy to open) the shares and “write” (sell to open) calls against them. Here’s the trade: For every 100 shares of TrueCar (TRUE) you own or purchase at market, “sell to open” 1 TRUE Sept. $25 call for a net debit of $22.50 or less.

Source: InvestorPlace

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