Take a look at the chart below.
If you had purchased shares and held them over the two-month period below, you would not have seen much in the way of gains.
But what if I told you there was a way to generate double-digit returns from this same company over that same period of time?
Well, there is. Thanks to one of my favorite Wall Street strategies.
During my time as a trader for a well known hedge fund, I saw the biggest and most successful financial firms use this strategy frequently to juice their returns. I started using it in my own trading as well.
And today, I’m going to share that strategy with you.
Our Strategy in Action
Recently, we used this strategy with one of our favorite insurance companies, Prudential Financial (PRU).
We like this company because it has a solid management team, dividend yield, and track record.
PRU has raised its dividend for 15 straight years and now pays a 6.2% dividend yield.
Now that dividend yield is attractive, but it’s not the double-digit income most investors are looking for.
And dividend stocks are a proven way to generate durable income, but that’s not the strategy’s main focus.
Our strategy is more like a hidden dividend that you can claim using a regular brokerage account.
As you can see from the same chart below, PRU sold off quite a bit during the banking crisis in March even though it is not a bank.
And we used our Wall Street strategy to capitalize on this volatility in Intelligent Options Advisor.
Now, the latest quarterly dividend payment for PRU was $1.25 per share on May 22. So, if you owned the common stock, that’s what you’d receive every quarter.
And over the past few months, that would be most of your return.
It’s not bad. But we did better than $1.25 with our Prudential trade at Intelligent Options Advisor.
A lot better.
Our strategy gave us $3.50 per share, or $350 per contract, in instant cash. In less than the same amount of time.
Our contract lasted 65 days in comparison to an entire 3-month business quarter.
And that means we can repeat this play many times a year.
So where do these rich premiums come from?
Simple.
We harness the power of options trading to exponentially grow our return on investment.
Now when most people might think of options trading, they think: complicated and risky.
But at Wide Moat Research, safety is one of the core tenets behind everything we do. And we believe that if a strategy can’t be broken down into simple terms, it’s not effective.
Our Intelligent Options Advisor strategy limits the downside of owning a stock.
And while other option traders are willing to pay hefty premiums for insurance, we are happy to sell that insurance because we know Prudential like the back of our hand.
And those “insurance premiums” add up. Big time.
Annually, that real-life premium equals $19.70 per share in option premium.
This reminds me of something every car and homeowner knows.
It’s better to be the seller of insurance than the buyer. The insurance companies always win.
That’s the core of why selling options is so lucrative. And reliable.
Now, I know what you are thinking. “Wait a second, those option premiums are 4 times more income than Prudential’s annual dividend yield. That’s too good to be true.”
For once, it’s not.
With the magic of options, you can boost your income dramatically. And the best part? You never have to bet on the riskiest stocks.
That level of annual income is the same as a 24% dividend yield on Prudential.
But like any advanced trading strategy, there are things to consider.
The Set Up is Everything
The premiums connected to Prudential’s options will change.
They will not always be as lucrative as they are when we first put the trade on your radar.
Entering too early or too late could make the true annual income level higher or lower than 24%. And it’s one reason we teach our Intelligent Options Advisor subscribers the key parts of options trading.
It’s also why we scan a huge set of high-quality stocks to sell options on.
This way, we invest in only the best setups in each of our publications.
At Intelligent Options Advisor we’re focused on guiding you to safe, reliable income-producing plays that are simple and effective. By incorporating options into your dividend stock strategy, you can supercharge your income stream without taking unnecessary risk.
And you can achieve this by selling put or call options.
But it must be done intelligently. With a good plan, you can gain extra income without giving anything up. It’s among the best ways to achieve a high level of income with below-average risk.
In our Intelligent Options Advisor service, we recommend trades just like this twice a month. So if you’d like to triple or more your income without higher risk, click here to learn more.
Happy Investing,
Stephen Hester
Analyst, Intelligent Income Daily