How to Collect $1,200 TOMORROW MORNING

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Noah Underwood
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1 How to Collect $1,200 TOMORROW MORNING

2 How to Collect $1,200 Tomorrow Morning By Chad Shoop, Editor of Pure Income Please note: The trade I m about to lay out is an example of a recent one I sent to Pure Income subscribers. They were able to sell puts on this solid, blue-chip company and collect upward of $1,200 immediately. But the market can move fast particularly for options. And while this trade may not be viable at the moment, it s a great example of what you can expect from my trade alerts. And now as a Pure Income subscriber, you re able to join us in collecting this type of income nearly every week. THE markets have been extremely volatile so far this year. According to the CBOE Volatility S&P 500 Index (VIX), also known as the fear index, volatility has surged. It climbed 48% by the end of the first full week of the year and has continued higher since. Now, you may be wondering what this has to do with collecting income. How does fear in the market mean more money in our pockets? Well, while volatility isn t known to have a positive impact on the markets (in fact, more often than not it leads to the type of sell-off we ve seen in early 2016), it screams opportunity for income seekers like us. Because when investors get nervous, and volatility soars, it means great companies begin to trade at a discount and then investors are willing to pay us more for selling a put option. That s exactly why we re selling puts on iconic American brand Coca-Cola (NYSE: KO), which has been having some trouble recently. See, the volatility in the market has weighed on Coca-Cola, dragging the shares down 4% since December 29. It seems this chaotic market is making investors nervous, and they re anticipating a pullback in the company s share price. But that gives us the perfect opportunity to collect income from this steady, blue-chip company. At the moment, Coca-Cola pays out a modest annual dividend yield of 3.2%, but we can do better than that in just a few months by selling put options. Here s the PIN information to either read to your broker or to plug in yourself online. If you haven t set up your account yet, make sure to read my Unlocking Your Account report here. Action to take: Set a Good Til Canceled limit order to sell to open the KO May 2016 $40 put option (KO160520P ) at $1.20. Remember this is only an example trade. 1

3 How the Trade Works Since each contract covers 100 shares, you will collect $120 per contract sold. In a cash-secured put transaction, you will need to deposit $4,000 with your broker. This will give you a yield of 3% ($120 divided by $4,000) in about four months. If you use margin, you will just need to deposit about $800, a fifth of the full amount, with your broker. This will give you an impressive yield of 15% ($120 divided by $800) in about four months. Capital Requirements If You Sell One Contract: If You Sell Five Contracts: If You Sell Ten Contracts: You Collect Capital Required in a Cash-Secured Account Capital Required in a Margin Account $120 $4,000 $800 $600 $20,000 $4,000 $1,200 $40,000 $8,000 Make sure you are comfortable with the cash-secured account requirement. That is the amount that you will need in your account if we are put the stock. As you can see, if you sell 10 contracts, you ll be able to collect $1,200 immediately. Of course, the number of contracts you sell is up to you; it s up to how much capital you feel comfortable investing. If, for example, you were to sell 10 contracts, you would need to deposit $40,000 with your broker for a cash-secured transaction. If you were to use margin, you would need to deposit about $8,000. By selling puts, we risk holding shares of the company. However, I never sell puts on a company that I don t want to own. So if shares of Coca-Cola are below our $40 strike price by May 20, we ll have to buy 100 shares for each contract we sold at $40, regardless of market price. And that s perfectly fine with me. Here s why Dominant Market Position When it comes to carbonated soft drinks, you really only have two brand choices PepsiCo or the Coca- Cola Company. However, when you go out in the real world, your options quickly become limited to just one and it s overwhelmingly Coca-Cola. Whether I m dining at my favorite restaurant or spending the day at my family s favorite amusement park Disney World it doesn t matter which I prefer. They serve only Coca-Cola products. (And that includes soft-drink alternatives Powerade, Honest Tea, Vitamin Water and Dasani.) Each soda company fiercely competes to win these large contracts to be the sole provider of beverages, but Coca-Cola is clearly dominating, and will continue to, in this area of the market. In fact, Coca-Cola controls about 40% of the global nonalcoholic beverage industry a market share that isn t going to fade anytime soon. 2

Besides its dominant market position, the company also has a solid history of increasing shareholder wealth, and that s what I always look at when I m considering a company.

In just over two decades, this consumer giant has increased its dividend by more than tenfold.

4 Besides its dominant market position, the company also has a solid history of increasing shareholder wealth, and that s what I always look at when I m considering a company. Here s what I mean A Solid History A company dominant in its industry is one thing, but a company determined to return its cash flows to investors is ideal and Coca-Cola is that company. In just over two decades, this consumer giant has increased its dividend by more than tenfold. On top of that, the company has knocked off almost 20% of its shares outstanding since 1988, as you can see below. The red line denotes dividends per share, while the blue bars represent shares outstanding. I m sure you re aware of how important dividends can be to a total return, since this is a tangible payment you receive, but share buybacks can be just as helpful. When a company decides to buy back shares, that reduces the total amount of shares that earnings would be spread over. So as a company reduces shares, it s also increasing earnings per share, which is an important valuation metric. As earnings per share rise, investors will push up the share price. If we end up holding shares of Coca-Cola, that s fine. I m willing to buy them at their current price. We will simply begin collecting its 3.2% dividend yield, and I will look to sell calls to turn it into a profit machine I hope you found this report helpful in familiarizing yourself with my alerts and the type of income you can collect. Regards, Chad Shoop Editor, Pure Income 3

5 The Sovereign Society 55 NE 5th Avenue, Suite 200 Delray Beach, FL USA USA Toll Free Tel.: Website: Legal Notice: This work is based on what we ve learned as financial journalists. It may contain errors and you should not base investment decisions solely on what you read here. It s your money and your responsibility. Nothing herein should be considered personalized investment advice. Although our employees may answer general customer service questions, they are not licensed to address your particular investment situation. Our track record is based on hypothetical results and may not reflect the same results as actual trades. Likewise, past performance is no guarantee of future returns. Certain investments such as futures, options, and currency trading carry large potential rewards but also large potential risk. Don t trade in these markets with money you can t afford to lose. Sovereign Offshore Services LLC expressly forbids its writers from having a financial interest in their own securities or commodities recommendations to readers. Such recommendations may be traded, however, by other editors, Sovereign Offshore Services LLC, its affiliated entities, employees, and agents, but only after waiting 24 hours after an internet broadcast or 72 hours after a publication only circulated through the mail. Please note that due to our commercial relationship with EverBank, we may receive compensation if you choose to invest in any of their offerings. (c) 2016 Sovereign Offshore Services LLC. All Rights Reserved; protected by copyright laws of the United States and international treaties. This Report may only be used pursuant to the subscription agreement. Any reproduction, copying, or redistribution, (electronic or otherwise) in whole or in part, is strictly prohibited without the express written permission of Sovereign Offshore Services, LLC. 55 NE 5th Avenue, Suite 200, Delray Beach, FL

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