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I am going to show you an investing method that is very safe and makes high profits (up 143% last 34 months as I write this in November 2016). In order to make the high profits and keep the investing method we need to use two things: LEAPS & AIM. But the first thing you need to do is open a stock broker account. And when you open it you need to tell your broker you want to be able to buy and sell (trade) options. You only need low level option approval which is routinely granted after you read the booklet warning you of the dangers of trading options. Email me with any questions after you read this book – jeff@jjjinvesting.biz
LEAPS
LEAPS are long-term options that expire the 3rd Friday in any given January and have more than one year before they expire. LEAPS are issued every September, October & November for the next year. By the end of November all the new LEAPS that will expire on the third Friday of January 2019 will be issued. Every January I sell the old LEAPS and buy the new LEAPS for the Dogs of the Dow LEAPS portfolio.
So in January I will look at the Dogs of the Dow web page listed in my newsletter and see what the current 10 Dogs of the Dow are for 2017. Some of the previous years’ Dogs may change.
Then I will look up long-term options (LEAPS) prices for the January 2019 LEAPS. To find these prices on Yahoo.com go to Yahoo Finance and type the stocks symbol – for example Caterpillar has the symbol CAT. When the summary page comes up, click on the hot link for options. The options with the shortest expiration date will appear. We don’t want these options – click on the date button and you will see a drop-down menu of different dates – the options (LEAPS) we want are near or at the bottom. Now click on Jan 2019 and the LEAPS that expire in January 2019 will appear. Now we only want to look at the Call prices (Calls mean you are bullish on the stock and think it will go higher)
Now we have to choose a Strike Price. The Strike Price is the amount you could buy 100 shares at any time up till the LEAPS expire in January 2019. We are only trading the LEAPS contracts – we will never take delivery of the stock – that is for a different type of investor. I recommend picking a Strike Price at or near what the stock is selling at. For example, if Caterpillar is selling at 80, then pick a Strike Price of 80 or 85. You want to be able to buy around 10 contracts so you will be able to trade contracts and make money. The amount of money you will be starting with will determine what LEAP price you should buy.
For example – if you have $10,000 then you will buy $5,000 worth of LEAPS so you can buy 10 contracts at $500 each (Yahoo Finance shows price of one option is $5, so it costs $500 to buy one contract – all contracts have 100 options.
In another example if you have $3,000 then you will buy $1,500 worth of LEAPS so you can buy 10 contracts at $300 each. Option prices get lower the more Out of the Money the option is. So if the stock price is $50, the Strike 50 option might be $5, the Strike 60 option might be $3, the Strike 70 option might be $1.
This gets a little complicated for beginners so I invite you to hire me for 6 months of educational services to help you manage your portfolio after you get started and show you how to trade using my AIM system for 6 months. Then you will thoroughly understand this investing method and easily be able to do it yourself. Of course I am happy to continue helping you with your portfolio. Again I am trying to give you enough information so you know when you need to ask me a question. Everybody has a different level of investing knowledge. I don’t want investing novices to be scared – this is easy to learn with my help and will make you very high profits on very safe investments.
I ask new investors to focus more on the rest of my book and see just how high the profits are. Once you are convinced this is a good, safe way to invest, then I want you to come to me for help, have me help you get started and manage your account. You will see in Chapter 4 how to buy and sell using my investing system.
AIM
AIM stands for Automatic Investment Management. This is an investing method invented by Robert Lichello over 30 years ago. It’s a very simple investing method that tells exactly when to buy, when to sell, and when to do nothing. This is an investing method that guarantees you Buy Low and Sell High. I won’t go into more detail here because AIM is fully explained in Chapter 4 – The Mechanics of Buying and Selling.
Dogs of the Dow
The Dogs of the Dow are the 10 of the 30 Dow Jones Industrial Average Stocks that pay the highest dividends. I have the links to the Dogs of the Dow web site in my monthly newsletter – the main page is www.dogsofthedow.com. We want to buy LEAPS on these stocks because they are very safe AND will make up very high profits over the long haul – as of October 2016 the Dogs of the Dow LEAPS portfolio is up 143% in 34 months. See Chapter 7 for more information on Dogs of the Dow stocks.
