Covered Calls: Beat The Street by Cultivating Your Forest

Posted by Compound Stock Earnings in Dallas-Fort Worth-Arlington, TX on Jun 05, 2008

Compound Stock Earnings (CSE) is the leading provider of covered call investment education services. At CSE investors learn how to earn a 3 - 6% cash return per month investment regardless of the direction of the stock market. The covered calls strategy is based off the book Covered Calls and LEAPS- A Wealth Option+ DVD: A Guide for Generating Extraordinary Monthly Income, written by Joseph Hooper and Aaron Zalewski. In this article, the authors use an analogy to compare the accumulation of a stock portfolio through time to the cultivation of a forest full of trees.

Traditional "Street mentality" (i.e., Wall Street) encourages investors to plant trees throughout their working lives and rely on appreciating markets to grow the forest over the the long term. Once our working lives are finished and active income ceases, the Street then encourages us to begin cutting down the forest to provide income in retirement. The hope is that the forest has grown large enough over time to withstand the depletion in retirement. However, the authors assert that this level of growth is a rarity for the average American.

To learn more about CSE and their covered calls strategy click here.

What Compound Stock Earnings wants investors to realize is that simple and very conservative cultivation can transform the forest into an orchard of fruit-bearing trees. Fruit baring trees generate cash income on a monthly basis. If you're retired, for instance, you can "pick the fruit" as cash income to be used for living expenses- without liquidating stocks in your portfolio and destroying the forest that you depend on to live. If you don't want to eat the fruit each month, you can leave it to fall on fertile soils to grow more trees, thus to compound the growth of the forest through time.

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"American investors are relying solely on the hope of speculative appreciation to provide for their financial futures," says  Hooper. "In the forward to our book, Robert (Kiyosaki- Rich Dad, Poor Dad author) comments that he believes 'buying, hoping and praying is not an optimal financial strategy' and that 'more savvy investors invest for both capital gains and cash flow.' We couldn't agree more. Eighty percent of the American population owns stocks and is just hoping they go up. These very same investors categorically require both cash flow and appreciation from their other investments like real estate or business ventures. However, the Street has convinced us that it is acceptable to invest in stocks solely on the hope of speculative appreciation. There is a better way to invest in the stock market where investors benefit from both cash flow and capital appreciation. We achieve this through a proprietary application of about fifteen specific covered call management techniques that have been developed and practiced by us for around twenty-five years. In very simple terms, we sell options against our stocks to generate cash income regardless of market direction."

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"Options are misunderstood, misrepresented, and poorly implemented financial tools as they are viewed by most as just high-risk, high-return instruments," adds Zalewski. "That's how most brokers scare average investors into avoiding options all together. Labeling options as high-risk, high-return is only a half-truth. Options can be used for many purposes other than speculation including eliminating risk and generating cash flow. Here's the distinction: when a speculator buys an option, he or she is taking a high-risk, high-return gamble. However, when we sell an option, we are a zero-risk, cash flow generator. That's why the government allows investors to sell options in conservative vehicles like retirement accounts (401(k), IRA etc.) If you keep listening to mainstream brokers, who are notorious for protecting their own interests at the expense of their clients, you will be missing out on much better alternatives."

For more information on CSE and their proven covered calls strategy call 817-882-9153 or visit www.compundstockearnings.com



 



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