also This trade of 2 contracts required me to put up $1,290 in margin to cover the trade. You should alert your new users of the margin requirement. I may be able to spend the $80 less commission, but I have $1290 tied up than I can not use. This system looks a lot like OFI with out the down side protection.

Mike

Hi Mike,

Thank you for the details of the fill and the limitations of your IRA.

By the way, you should be able to sell puts in an IRA as long as you have the appropriate authorization (which it sounds like you would have already if you’re doing spreads) and, most important, the money set aside to buy the stock if it gets put to you.

Best regards,
Ari

Hi Michael:
I have a Fidelity IRA, and did not need to enter a spread.
Mike

Hi Mike,

Thanks for checking it out!

As a Wealth Society member, you have full access to this service with no additional fee.

You can sell puts in an IRA account, but they must be cash-secured puts, with the money set aside to purchase the stock if it gets put to you.

Best regards,
Ari

Michael, as a WS member you are already covered. In fidelity I can do these trades if I switch the type of trade from margin to Cash. Not sure about Schwab. Just be aware of the margin required to cover the trade. Do not get a margin call in an IIRA
Mike D.

Congratulations on joining the Wealth Society, Michael. That’s a smart long-term decision to help build your wealth..

For anyone reading this who would like to learn more about joining, feel free to setup a quick call with me at http://www.calendly.com/philash.

In short, you get all of our current and future advisory services, including all of Jim Finks’ options trading services and next month’s launch of the Radical Wealth Alliance. Plus, you get numerous other services that help you prosper in any market conditions.

You pay a one-time initiation fee now and a very small ongoing annual maintenance fee thereafter. And anything you’ve paid us already would be credited towards your initiation fee.

If you’ve joined Income Millionaire and perhaps one more service of ours, the Wealth Society usually pays for itself in less than two years. After that, it’s just free money.

It’s the choice our most successful long-term subscribers have made.

So just pick a time to quickly chat if you want more info: https://calendly.com/philash . Thanks

Hi Mike,

Thanks for joining!

I’ll need to include instructions for adjusting limits in future alerts. In general, we advise waiting 30 minutes, then adjusting the limit lower in small increments, while keeping in mind the minimum income you’d want to generate.

Best regards,
Ari

Hi David,

In addition to generating upfront income, we’re also using put-selling as an alternate way of setting a stingy limit order for a high-yielding stock.

So in general, we’re fine if the stock gets put to us at that price because it allows us to collect a high dividend, and then later sell covered calls against the stock as it gets closer to full value.

That means most of the time we’ll keep the position open through expiration.

Best regards,
Ari

Hi Cyan,

Yes, that’s fine.

Best regards,
Ari

Hi Mark,

Thanks for joining us!

We’ll have an online portfolio table just for options that we’ll use to help monitor the trades and track performance. It should be up and running by the middle of next week.

Best regards,
Ari

Hi Andrew,

Thanks for joining us!

We do mention the amount of cash needed to get going in our start-up guide:
https://www.investingdaily.com/income-millionaire/reports/41272/the-income-millionaire-start-up-guide

But I’ll mention your point to our marketers.

Best regards,
Ari

Hi Vincent,

There’s no set schedule. We’ll be issuing about three or four new trades per month via email alert.

Best regards,
Ari

Hi Victor,

Welcome–and thank you for posting your fills!

Best regards,
Ari

Hi Asjad,

Thanks for joining us! And as I mentioned above, feel free to go slow at first while you build confidence.

When selling a put option, you want to set a minimum credit that you’d like to be paid for the trade. So the order type should be “limit.” Then you’ll input the limit amount specified in the trade instructions.

We talk about the amount of cash needed to get going in our start-up guide:
https://www.investingdaily.com/income-millionaire/reports/41272/the-income-millionaire-start-up-guide

Best regards,
Ari

Hi George,

Welcome–and thanks for posting your fills!

Best regards,
Ari

Hi,

Glad to have you!

Yeah, the Wealth Society definitely makes sense if you’re already subscribed to the others.

Best regards,
Ari

Hi Ashok,

Thank you for joining us!

That portfolio table is a legacy portfolio of equity positions opened by a former editor for which we’ve been providing ongoing coverage. However, I see at least one piece of total-return data that’s clearly wrong–Daimler is actually up 17.8% since recommendation, not down–so I spot-checked a few others, and they’re off a bit as well. As such, I’ve asked our tech guy to take a closer look at the total-return data populating that table.

Anyway, to answer your question, that table does not reflect our new options-oriented equity-income strategy. We’ll have a new table dedicated to options up and running by the middle of next week.

Best regards,
Ari

Hi Jeffrey,

Welcome–and thanks for posting your fills!

Best regards,
Ari

Also, BPL filled @ $0.45 at Tradestation. Thanks, Ari.

Hi Dmann,

Welcome–and thanks for posting your fills!

Best regards,
Ari

Hi Allen,

We’ll be issuing three to four trade alerts per month with contracts generally expiring within three to four months.

Best regards,
Ari

Hi Maria,

Duke is a corporation so you would receive a 1099, not a K-1. I wanted to make sure that the opening trades had at least one corporation because I know some folks don’t like to deal with K-1s.

Best regards,
Ari

Hi Michael,

Thank you for posting your fills!

Best regards,
Ari

Thanks for posting your fill.

Ari

Hi Mike,

We’re selling puts as another way to set buy targets to purchase stocks we’d want to own anyway, while also generating upfront income.

If the put expires worthless, we keep the cash and sell another put. If the stock gets put to us, we get a stock we wanted to own anyway, at a discount, while locking in a higher yield. Then we collect the dividend, while waiting for the stock to approach full value again. As that happens, we would then sell covered calls against it to generate more income.

Stock prices will obviously fluctuate between now and expiration. But the strikes were selected to be out of the money to accommodate that. BPL had a bad day on no real news pertaining to it, but it hasn’t traded at the $40 strike in years. Same with SEP and its respective strike, as well as DUK.

We discuss the math further in the start-up guide:
https://www.investingdaily.com/income-millionaire/reports/41272/the-income-millionaire-start-up-guide

Ari

Hi Ian,

Welcome! The three trades were just to get going.

Under normal circumstances, we will have about three to four trades a month–so about one per week, depending on the situation.

Some trades will offer higher upfront cash. And share-price appreciation plus dividends and covered calls will also be in the income plus total-return mix.

Ari

I meant June 14th and June 15th, sorry

Hi Walter,

I can’t offer personalized investment advice by recommending an options trade for a stock you already own. But in general, when deciding whether to sell a covered call, you’d want to look at a call that has a strike at a premium to the stock’s fair value and assess whether the potential short-term income that’s generated is worth the risk of the stock getting called away.

Yes, $1,995 is the net price for a lifetime subscription.

Although I’ve chatted with investors who hold MLPs in tax-advantaged accounts such as an IRA, they can create tax wrinkles, particularly when selling. Therefore, we typically recommend that investors hold MLPs in taxable accounts.

Ari

Hi Bruce,

We set the strikes at least 10% out of the money and try to keep the time to expiration around three months. So most of the time, the puts expire worthless.

But unlike other options services, we’re not averse to stock ownership–this is an options plus equity-income strategy. So we generally recommend setting aside the cash necessary to buy the stock in case it gets put to you. But whether you sell cash-secure puts or use margin is ultimately up to you.

The upfront cost of the service is a lifetime fee, with a significantly smaller annual maintenance fee thereafter.

With $25,000, you would probably be able to participate in around five to seven trades per quarter (assuming one contract sold per trade and depending on the underlying stock’s share price) if you were keeping cash in reserve in case the stock gets put to you.

Ari

The objective of the strategy is to create a virtuous cycle of income:

First, we collect the upfront cash from selling the put. Then, if the stock gets put to us, we collect the dividend. And finally as the stock approaches full value, we sell covered calls against it with a strike set at a premium price.

If the stocks never get put to us that’s fine too, of course. After the option expires worthless, we’ll sell another put with a strike that functions as a stingy limit.

Wash, rinse, repeat.

The specific puts are still valid, but options prices have changed since the trade was published.

Consequently, our general guideline is to set the limit based on the midpoint of the bid/ask spread, which you should be able to see when entering the trade. Just make sure the potential credit for each is equal to or greater than the credits specified in the original instructions.

Ari

Hi Jeffrey,

Yes, that sounds like a reasonable approach to those trades.

Ari

Hi Juan,

Welcome–and thanks for posting your fills.

It’s up to you to determine whether you’ve maxed out your buying power. While we’re comfortable taking ownership of these stocks if they get put to us (we wouldn’t sell puts on stocks we wouldn’t want to own anyway), we do try to greatly reduce that possibility by setting the strikes far out of the money when initiating these trades. Nevertheless, one obvious limit on buying power would be your ability to purchase the stocks if put to you at the strike price. Alternatively, depending on the situation, I will consider rolling puts for certain trades to avoid stock ownership.

Ari

Hi,

Similar to utilities, FERC- and state-regulated pipeline assets include taxes as part of the costs they pass along to customers. But they’re not allowed to earn a return on those costs.

Some of these tax liabilities are deferred. So in the near to medium term, regulated outfits might collect the full tax liability through their rates, but actually pay a lower amount in cash taxes. So SEP took a non-cash charge during the fourth quarter to account for the possibility that future rates could be adjusted lower and entail the refund of some taxes that were collected for a potential liability that will now be lower due to tax reform.

Unlike utilities, which are expected to pass along tax savings to ratepayers as soon as possible, most regulated pipeline assets are protected by existing contracts. So rates would only be adjusted lower when contracts come up for renewal or for future projects.

Any resulting refunds would be amortized over the life of the assets. Meanwhile, SEP plans to file for higher rates for the expansions and upgrades it’s made to existing assets. So the net result of accounting for tax reform would appear to be largely neutral to future cash-flow generation.

Ari

Hi Padman,

New recommendations are sent out via email alert as well as posted to this website.

Ari

Hi Michael,

While assignment could theoretically happen at any time when the stock trades below the strike price, the option still has time value in addition to intrinsic value.

Consequently, assignment may not happen until we get closer to expiration (assuming the stock still trades below the strike price at that point).

Ari

Hi Steve,

These trades are from a month ago. Trades are generally valid for a week or so. Further, given the fact that the FERC ruling has caused one put to be in the money, while nearly eliminating the discount of the other, these trades are no longer suitable for new money.

Ari

Hi Cyan,

No, trades are generally valid for a week, and this was published a month ago. Further, the potential discount between the strike price and the unit price has since narrowed significantly, especially following the FERC’s reversal last week of a long-standing policy. In fact, the option has been in the money at varying times since then.

Ari

Hi Dora,

Welcome!

The trades in the post to which you appended your comment are from a month ago and, therefore, no longer valid.

Trades are generally valid for about a week. Sometimes they fill right away–other times it takes a bit longer.

We generally do three or four trades per month. Our next trade will go out sometime over the next week.

Ari

Hi Dora,

Cash can be a limiting factor, but it’s important to have if the stock gets put to you. If that happens we’ll then sell covered calls against the stock while collecting the dividend until the stock gets called away.

Ari

Hi Michael,

That’s fine–and I totally understand.

Ari

Hi Vincent,

I’m looking at calls with the $35 strike. But right now, the potential June, July, and September premiums, at $0.10, $0.20, and $0.38, respectively, aren’t offering all that much given the underlying stock’s current discount to that strike.

So let’s see what the stock does for a week before making our next move.

Given Enbridge’s offer to acquire SEP, there are two potential catalysts that could help lift the unit price from current lows, thereby boosting the potential call premiums.

SEP currently trades at a 3% discount to the implied deal value, in part because disgusted unitholders probably threw in the towel after seeing Enbridge’s at-market offer last week. This action was likely also exacerbated by the stock trading ex-dividend the day after the announcement.

But the equity-for-equity transaction (SEP unitholders get 1.0123 shares of ENB for each unit of SEP) means that SEP should loosely track Enbridge’s share price.

I would expect that, after the initial shock wears off, the market will soon wake up to the fact that Enbridge’s sweeping consolidation of its subsidiaries is happening at bargain prices, even if the final deal terms moderately improve. If so, Enbridge’s share price could get a boost, and that, in turn, would help lift SEP.

The other potential catalyst is if the independent board committee tasked with evaluating the deal turns out to have a spine and successfully wrings greater value from this transaction than Enbridge’s stingy offer. That will probably take a bit more time than a week, however.

Ari

Hi Michael,

I’m looking at calls with the $35 strike. But right now, the potential June, July, and September premiums, at $0.10, $0.20, and $0.38, respectively, aren’t offering all that much given the underlying stock’s current discount to that strike.

So let’s see what the stock does for a week before making our next move.

Given Enbridge’s offer to acquire SEP, there are two potential catalysts that could help lift the unit price from current lows, thereby boosting the potential call premiums.

SEP currently trades at a 3% discount to the implied deal value, in part because disgusted unitholders probably threw in the towel after seeing Enbridge’s at-market offer last week. This action was likely also exacerbated by the stock trading ex-dividend the day after the announcement.

But the equity-for-equity transaction (SEP unitholders get 1.0123 shares of ENB for each unit of SEP) means that SEP should loosely track Enbridge’s share price.

I would expect that, after the initial shock wears off, the market will soon wake up to the fact that Enbridge’s sweeping consolidation of its subsidiaries is happening at bargain prices, even if the final deal terms moderately improve. If so, Enbridge’s share price could get a boost, and that, in turn, would help lift SEP.

The other potential catalyst is if the independent board committee tasked with evaluating the deal turns out to have a spine and successfully wrings greater value from this transaction than Enbridge’s stingy offer. That will probably take a bit more time than a week, however.

Ari

Hi Ken,

Though it’s possible that some folks may have sold the wrong put, it’s also possible that they were assigned early, given where the stock trades relative to the strike.

While I don’t have high hopes for the independent board committee’s review of Enbridge’s offer for SEP, I have seen sponsors come back with slightly higher offers in similar situations. Even a measly 10% premium would be welcome.

Regardless of the final deal terms, Enbridge is buying back these assets at bargain prices. Recognition of that should eventually push up its share price, thereby increasing the implied deal value along with it.

I’m confused by your reference to AGR, which is not held by this service but continues to be held in the portfolios of our sister services.

Ari

Hi George,

Thank you for letting me know. I am waiting for an opportunity to sell a covered call against the stock. To this end, I’m looking for a premium of $0.40 to $0.50, but the market has obviously not accommodated that yet, especially given the ugly action in oil this week.

If the oil market shakes off its OPEC fears–it seems like the cartel is comfortable with oil at $80 per barrel, just not $100–then that should help Enbridge move higher again, which in turn would help SEP move higher, since its value will be pegged, at least loosely, to the deal terms.

The other potential catalyst would be if SEP’s independent directors negotiate a better deal for unitholders–I don’t have high hopes for that, but I’ve seen it happen with other MLPs in the same situation. Any improvement probably wouldn’t be more than 10%, but that’s better than the alternative.

Even if that doesn’t happen, there may be as many as two more growing payouts from SEP before the deal closes. These would total $1.54. And I would expect Enbridge’s subsequent performance would offer the possibility of further share-price appreciation.

So, it’s a raw deal in the near term, but a better end is in sight thereafter.

Ari

Hi Victor,

I am waiting for an opportunity to sell a covered call against the stock. To this end, I’m looking for a premium of $0.40 to $0.50, but the market has obviously not accommodated that yet, especially given the ugly action over the past week.

If the market can shake off its fears, then that should help Enbridge move higher again, which in turn would help SEP move higher, since its value will be pegged, at least loosely, to the deal terms.

Enbridge has offered to acquire the outstanding units of SEP it doesn’t already own by exchanging 1.0123 shares of Enbridge for each share of SEP. Nevertheless, SEP has traded at a 3% to 4% discount to the implied deal value since the offer.

The other potential catalyst would be if SEP’s independent directors negotiate a better deal for unitholders–Enbridge’s at-market offer is an unfriendly attempt to acquire the remaining stake in these assets at bargain prices. I don’t have high hopes for that, but I’ve seen it happen with other MLPs in the same situation. Any improvement probably wouldn’t be more than 10%, but that’s better than the alternative.

Even if that doesn’t happen, there may be as many as two more growing payouts from SEP before the deal closes. These would total $1.54. And I would expect Enbridge’s subsequent performance would offer the possibility of further share-price appreciation.

So, Enbridge’s initial offer is a raw deal in the near term, but a better end is in sight thereafter.

Ari

Hi Mark,

I am waiting for an opportunity to sell a covered call against the stock. To this end, I’m looking for a premium of $0.40 to $0.50, but the market has obviously not accommodated that yet, especially given the ugly action over the past week.

If the market can shake off its fears, then that should help Enbridge move higher again, which in turn would help SEP move higher, since its value will be pegged, at least loosely, to the deal terms.

Enbridge has offered to acquire the outstanding units of SEP it doesn’t already own by exchanging 1.0123 shares of Enbridge for each share of SEP. Nevertheless, SEP has traded at a 3% to 4% discount to the implied deal value since the offer.

The other potential catalyst would be if SEP’s independent directors negotiate a better deal for unitholders–Enbridge’s at-market offer is an unfriendly attempt to acquire the remaining stake in these assets at bargain prices. I don’t have high hopes for a revised offer, but I’ve seen it happen with other MLPs in the same situation. Any improvement probably wouldn’t be more than 10%, but that’s better than the alternative.

Even if that doesn’t happen, there may be as many as two more growing payouts from SEP before the deal closes. These would total $1.54. And I would expect Enbridge’s subsequent performance would offer the possibility of further share-price appreciation.

So, Enbridge’s initial offer is a raw deal in the near term, but a better end is in sight thereafter.

Ari

Hi Ian. Great minds think alike! I will be issuing a covered call recommendation for SEP tomorrow morning at 10 a.m. after I see how the market opens.

Just wanted to be sure you saw this: https://www.investingdaily.com/income-millionaire/alerts/42625/independence-day-for-spectra-energy-partners-sep

Hi Ray. I am watching BPL and waiting for the premium on the $35 call option to improve before writing a covered call against this position. BPL is bumping along its lower Bollinger Band (at $34.53 yesterday), so it may bounce up towards its 50DMA of $36.15 next week. I’ll issue an Alert if/when I think its time to write a call on this position. Thanks.