Stock market miracles 0910019711

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New, Innovative, and Powerful Ways to Make Your Money Work Wonders!

I

Best-Selling Author of Wall Street Money

k

Machine

—

'OCK 'vRKET MIRACLES

D.

cOOK

'7 want to thank you for exposing to

such an exciting way

to

me

make money.

had a $21,000 day and a $23,900

I've

day

(after

commissions), I average about

$3,000 a day.

My family andfriends have

knowledge and are also very appreciative. I can 't thank you

shared in

this

enough. "

—Robert J. If

you want information that can life forever, buy this book.

change your

When

used correctly, the following

in-

formation will give you the tools to secure real wealth

—not through

get-rich-

quick schemes, pyramids, or any other tried-and-failed method, but through

from the stock marknowledge is required,

large cash returns ket.

no

No

special

strings are attached. The information

in this

book

will give

make money,

you the

ability to

using real techniques

the tried-and-true kind.

Who is Wade Cook, and how can you what he says truly can help you achieve a cash-flow money machine with no strings and no gimmicks? believe that

(Continued on back flap)

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Digitized by tlie Internet Arcliive in

2011

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Stock Market Miracles

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their stock.

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of nine months,

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then they split

their stock. ASC EMD cor MUMICATIONS o»

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Company (HBOC) took

a

up to the $130 range. After its split in June went down a little, but is recovering nicely.

of

nice steady run 1996,

19b

.

On Stock Splits

Option Exit Strategies

Ascend

UARMER-LAMBERT CO

^

Communica-

it^ K

(ASND):

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tions

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79 99 \

look

at

this 65 76

chart. This

stock has played out

time

it

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mirror image of

itself

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(MHP), and Chubb (CB)

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CHUBB CP

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are

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typical of high

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07 01

priced stocks. ic 68 53 57 17

t

They show very stable 1

J'»Vj

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^,

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-«,

trends and pre-

dic tabili ty These will probably continue to rise at aslow, steady pace. This

shows stability charts like

and strength

in a

company.

I

CAflBRIDGE TECH PARTME o«

these.

Pia

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bridge Tech-

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.ill-

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C

like to see

-7


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/* 1

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n o

f'r^ 1

o g y

y*ffwir"

(CATP)ranup on the split an1 !

Aug

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Feb

l

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May


_j,^^

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again, a typical

lukf'mirvxj

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J

climb to the top.

' '

Kr / AJ Jv

w fcL_rf

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Stocks as pre-

^

dictable as these

hr VihT

^^i/' >!/ 1

1

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r^

M

O

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1

1

Golf (ELY):

No.

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Jon

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Jul

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can be very profitable.

Northern Telecom (NT) W

Ho JTHERH TELEO

n-

LIH

V A J/ ,

ft

l

rV '

i,;^

Y

^Vv J^ ^\^y

>

c^

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f

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climbed

If

$35 to $55 in nine

/ \

Lr yy

;r;:ii

1

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fl

1

0:,'

1

NOV

months. chart

^ A.9

1

O.C

IgS

from

/

Nj/^ I

r

has gradually

o/


Falls

1^

Put

going to

is

and

sell a call

when you would buy J J

think the stock a put (you \J r

The difference and the key point is that when you sell somethmg you generate mcome.

will

fall).

111-

,

.

'^

dottedjine

means

that

would

also "sort

9f'

you

'"^^ money

the stock

as

pice falls,

in that the

So,

if

you think a stock is going up, you can

sell premium

111a put rather than buymg a call to put dollars mto t

^

^

.

,1

received

would lower i^^sis

the

paid for the

stock.

189

Stock Market Miracles

your account instead of spending rather than buying. a

lower price, or

rate of return.

By

If

you

2) let the

1)

it.

That's cash flow: seUing

buy back

the option

you sold

option expire, you get an infinite

selling options,

two out

of the three possible

scenarios (stock rises, stock stays steady, or stock profitable.

When you buy

at

options the stock must

way. Only one profitable scenario

exists.

Look

falls)

are

move one

at the follow-

ing examples:

Naked

Calls

The stock is, say $9, and you write the $10 call and receive $1.50 premium. If the stock rises above the strike price and you are called out, you keep the premium, but you have to deliver the stock.

the stock stays steady at $9 or falls

If

below

$9,

you can

buy back the call at a lower price when the time value decays, or you could wait for the option to expire. In either case, you would receive an infinite rate of return. either

Naked Puts The stock

is,

say $11, and you write the $10 put and a

premium. If the stock stays the same or rises, you keep the premium and you can either buy back the put at a lower premium or wait for the option to expire. Either way, you get $1.50

an

infinite rate of return. If

the stock falls

stock put to you.

below the

strike price of $10,

You would have

you have

the

to accept the stock at $10.

Covered Calls

you purchased the stock at $9 and wrote the $10 call for $1.50, you would receive a $1.50 premium. If the stock rises above the strike price ($10), you would be called out, and you would keep $1.50 premium plus make $1 on the sale of the If

stock.

190

Tandem Plays

you would not be called out. You would keep your $1.50 premium and you could write more calls the next month. If

the stock stays steady,

you keep the $1.50 premium which can offset the loss on your stock. Then you have to make a choice, do you wait for expiration or buy back the call at a reduced price? You can find more information in the Next Step and the Wall Street Money Machine. If

the stock

falls,

Covered Puts

Covered puts are an odd concept covered option to

call,

is

you own the

stock, so

to explain. In a

you can

deliver

exercised against you. In a covered put,

it if

the

you have

have a place in your portfolio prepared and ready

accept stock

if it is

put to you,

sale position in that stock. This

that

we

i.e.

is

a

you must have

to

a short

very advanced strategy

cover in detail at the Next Step Wall Street Work-

shop. I like selling

own

in a

turmoil.

puts on a stock that

would

I

long-term position even through market

By

selling a pricey put,

you can take

advantage of the speed of options and, well,

you can buy

it

go as planned and

own

like to

a stock

if it all

hack at a profit. If it doesn't

it

(after

adjusting for the

stock

when

premium

start

you paid

collected) for the

the stock has regained strength before

a dip. Then,

Continue

all

gets put to you, you will just

you wanted anyway. You can

selling covered calls at the strike price

calls until

goes

when

it

dips,

to sell these

you get

you buy

the call back.

perhaps deep-in-the-money

called out.

191

Stock Market Miracles

/

tions

have been doing

(ASND).

It

with Ascend Communica-

this

seems

such a great stock for

to

work well because

this strategy.

could be disaster for someone

Micron Technology (MU)

a

who

it

is

This strategy

tried this

with

while back. Perhaps

buying some cheap puts at the same time may work as a safety hedge. Options can be risky this year. I

when

find that buying options lator

is

in

the

McClellan Oscil-

an oversold condition can help me not get

stung by a correction or market rotation. Keeping track of future event dates like jobs reports can be helpful, too.

The bad thing

is

that one can wait a long

A

time between these safer trading periods.

strong,

long-term, up-trending stock can make a big difference.

A.L.

— LaMirada,

California

— Going Up

Stock Low Sell Put— Buy

Call

you sold the put for $2.50 ($2,500) and bought the call 25^ ($250), you would have a net in of $2,250. Now, as

If

for

the stock increases,

you can Stock Price

Put Price

Call Price

($15.00)

($15.00)

let it

192

$13.00

$2.50

$0.25

13.50

1.75

.50

14.00

1.25

1.00

14.50

0.50

1.25

14.75

0.25

1.50

15.50

0.125

1.75

either

buy

back the put or just expire (in most

cases).

The

now be

call

could

sold for $1.50

or $1.75, generating

more income.

Tandem Plays

You get

rich (cash

flow

rich)

by selling

—

get better at getting out than at getting

If

you have

If

to get in,

you have

Stock High

in.

do so at wholesale prices.

to get out,

do so at

retail prices.

—

Coming Down Sell

Stock Price

Call—Buy Put

Call Price

Put Price $0.25

Sell the call for

$15.75

$1.50

you

15.00

1.00

.75

14.50

.75

1.00

14.00

.50

1.25

$1.50 ($1,500

if

purchased ten contracts)

buy

the put

for 15