Questions & Answers

From time to time, I get questions about Stock Market Insurance Trader. I will answer them in blog posts like this. If you have questions, feel free to send in an email, or add a comment to this blog post. I’m always happy to help.

I’m new to your website and just looking around. Where can I find out more about your book and the Insurance Agent Trade?

Well, you could buy Stock Market Insurance Trader. It’s available on Amazon/Kindle. If you just want to read a summary of the book, I’ve prepared a free report that will give you the highlights. If you have some experience with trading stock and stock options, it may be all you need to start profiting right away.

Much of the book deals with selling Put spreads below the stock, counting on the stock to rise (or at least not fall too far). You also mention selling Call spreads above the stock, counting on the stock to fall. Can you do both at the same time, counting on the stock to stay in the range in between?

Yes. If the Put spread and the Call spread are done in the same month, it is called an Iron Condor. It’s a great trade that can boost your return, but trade carefully, and get out of one side quickly if the stock takes off.

I love the book, and I wondered if there was further training that expanded on what was in the book.

Yes. Absolutely. Look at the Courses page and you’ll find a recording of a SMIT Live! training session. Also, if you’d like Personal Coaching, that is available as well. Contact me if you are interested.

I noticed that your book is primarily about selling Put spreads underneath a stock betting that the stock will go up, or at least not go down much. Do you ever use Call spreads above the stock, betting that the stock will go down?

Yes, that’s a good strategy too, but I find that Call spreads need to be of a shorter duration and are a bit less likely to work out. If you see a stock falling, you can give it a try. But particularly in an uptrending market, I like Put spreads better.

Stock Market Insurance Trader focuses only on trading individual stocks. Do you ever use this strategy on ETFs?

Yes, absolutely. My favorite universe of ETFs is called the Sector Spiders. You can learn more about them at http://SectorSPDRS.com. Basically it divides the S&P500 stocks into 9 buckets and gives you an ETF on each of them. I like to find which part of the S&P500 is doing the best and open an Insurance Agent Trade on that fund.

Can you use the strategy from Stock Market Insurance Trader in a Roth IRA?

Yes. You can do Insurance Agent Trades in Roth or regular IRAs, as long as your broker allows it. Some do, some don’t. First, you’ll need a self-directed IRA, an account where you get to pick the investments. Second, you’ll need to be able to trade options. In order to trade option spreads, you need what is called Options Level 2. Not all brokers allow this for IRAs. But many do. Find one that will allow you to “trade Options Level 2 in self-directed IRA.” That’s the magic phrase.

What stock brokers do you recommend for trading Insurance Agent Trades?

I use Schwab and thinkorswim. I have also used TradeStation and OptionsXpress. All have their good points. Schwab does not allow spread trades in an IRA, so I have my IRA at thinkorswim. OptionsXpress and TradeStation do allow spread trades in IRAs. There are many other good brokerages that will work just fine. thinkorswim is my favorite.

Traders Bookshelf

People often ask me to name my favorite books on the stock market, trading, and investing. Here are some of them.

Stock Market Insurance Trader is my favorite stock options training book. Hey, of course I had to have it on this list :)
Rule#1 is my favorite fundamental analysis book. He trims down all of the gorp and focuses on the 5 key metrics for analyzing a stock and determining its real value.
I wrote Fiscal Cliff Investing at the end of 2012 when Congress was gearing up for the Fiscal Cliff. It discusses the ramifications and illustrates several methods for protecting your portfolio in the event of a downturn.
In this comprehensive book on options spread trading, Gareth Feighery, founder of MarketTamer, covers everything from bull put spreads to ratio backspreads to technical analysis and choosing a broker. Great stuff for beginner to intermediate traders.
Stikky Stock Charts has a bit of a feel of a child’s coloring book, but there is a deceptive amount of value here. I find myself grabbing it off the shelf from time to time just to immerse myself in charting and remind myself of what to look for in the stocks that I follow.
The Volatility Edge in Options Trading is an amazing analysis of option volatility. It will hurt your head, but it’s definitely worth it.
Free Report – If you want to learn more about the trading style discussed in Stock Market Insurance Trader, you can read this report.
Options Strategy – Risk/Return Ratios is another of my favorite head-hurting books. Brian is brilliant and takes the reader through a fascinating lesson in how to reduce risk with multilegged trading.
Although Trading for a Living was written over 20 years ago, it is largely timeless, and still the first book people choose when they want to trade for a living.
  Grab a Kindle reading app to make it easy to read any Kindle book on your computer, cell phone or tablet.

Disclosure: As an affiliate, I’ll get a few nickels from Amazon from time to time for hooking you up with good books.

Free Starbucks for 2014?

I like Starbucks. I don’t get coffee to go every day like some fanatics, free starbucksbut I enjoy meeting friends and associates for coffee. And it’s good to get out of the house sometimes for a change of scenery. But it can get expensive if I go several times a week.

I have two tips for getting free drinks at Starbucks. First, give yourself a gift card. If you do that, refills are free. Simply get a refill, use your gift card to pay, and it instantly turns into no charge. Refills of coffee and tea are normally 50c or so. But with a gift card they are free. You can also load your gift card onto your phone with a free Starbucks app. It’s pretty cool.

But what about the first cup? Or what if you want a latte or something more expensive? I have an idea for that too. Here’s what I did to get free Starbucks for the rest of the year

In mid-April, I noticed that SBUX stock fell to about 69 and bounced off of that level. This was the same spot where it turned around on February 1. Two weeks later, it got up to about 72 before falling to a low of about 70. Note that the low on May 7 was a “higher low”. And then May 15 was another “higher low”. On the chart, I drew an ascending trend line connecting the lows. I also drew a horizontal line across the high on April 25. This formed an “ascending triangle” – a pattern that typically resolves higher.

So I waited for a sign that it was going higher. I got the sign on May 23, and it was confirmed by another high on May 27. That’s when I opened an Insurance Agent Trade.

Earn an Extra Income with SBUXI sold the August 67.5 Put to receive income, and offloaded the risk by buying an August 62.5 Put. The net credit for this pair of options was $.53. This would give me about 4.5% per month return on my risk over the period from late May to mid-August. And the best part is that I will get that return if SBUX goes up, stays flat, or even falls a few percent. I liked the odds, so I sold 5 spreads, for a target maximum profit of $265.

So how has it done? Very well. UBS upgraded SBUX last week, and it popped up a bit to 77. My profit as of today is $175, which is about 67% of the maximum. So I can hold on a little longer and close out the trade for $212 or 80% of the maximum. That’s a good target to shoot for.

So what am I going to do with that $212 windfall? I’ll probably take my wife out for a nice dinner at Winston’s Grille. Then I’ll load the rest onto my phone and I’ll have free Starbucks for the rest of the year!

**UPDATE**

I had placed a Good Till Cancelled order to close the spread for $.08, and it was just sitting around. I finally got tired of waiting and when I spotted it trading for .085, I raised my price to .09 and got filled.

So the final results:
May 27: Opened the trade for a credit of $.53
July 3: Closed the trade for .09
Net profit on 5 spreads was $220 in 37 days.
Return on Margin: 11.9%

Mmmm…. that sure tastes good… :)

Get more info on how this trade works.

Insurance Agent Trade on COST

Costco (COST) is a big box membership warehouse store. They have pretty good deals, but you have to buy a earn extra income with COST tradebunch of stuff. It’s great if you’re buying for a party, but do you really need a 24-pack of toilet paper if you live alone? But the place is always crowded; they seem to do a good business, at least at the store I go to. I thought it was particularly fascinating to see the lunch crowd last month. I don’t think of the Costco as a go-to place for lunch, but a lot of people seem to. It was packed.

COST showed up in April as I was browsing Yahoo stock screener for stocks with good analyst recommendations. So I decided to take the plunge with an Insurance Agent Trade.

On April 15, with the price of COST at about 112, I entered a trade, selling the July 105 Put for income, and buying the July 100 Put to offload risk. That gave me with a $5 Put spread for a net credit of $.60. With about 90 days until expiration, that gave me a maximum return of about 4.5%/month. Good company, good recommendations, good profit. And I would get that profit if COST went up, sideways, or even down a little.

But the thing about the Insurance Agent Trade is that if the stock goes up a bit, you can get out of the trade early, capturing most of the profit in half the time. This is a good thing.

COST had some ups and downs, but in early June, it jumped up to 118. This was enough to push me over my target profit and I closed the trade, buying back the options for a net payment of $.05. I sold the pair of options, waited for the price to fall, and I bought them back to close the trade.

The profit? 12.5% in 50 days or about 7.5% per month. A good trade!

You Can Target 5% Per Month

Read my free report that explains this trading strategy

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Press Release – Stock Market Insurance Trader

For Immediate Release

Can We Live On Today’s Miserable Interest Rates?

New Book Shows How To Earn Extra Income from the Stock Market

Raleigh, NC – June 10, 2014. Rates down at the local bank stink. Can we really live with savings earning 1% per year? Couldn’t everyone use some extra cash each month?

In his new book, author and stock option guru, John Marsland reveals the specific strategies he uses to earn an extra income from the stock market. Stock Market Insurance Trader provides investors with a simple and clear methodology to earn money each month, selling insurance in the stock market.

That’s what Stock Market Insurance Trader is for. It presents an easy-to-understand system for making money selling stock options. Some people view options as complex and risky. But this book teaches a conservative strategy to let you take a small savings account and turn it into a cash-making machine.

The book helps the beginner by starting with an analogy of selling homeowners insurance, explaining how it is just like the strategy used selling options in the stock market. From that beginning it walks through the complete process of entering trades, managing them, and building an entire portfolio of insurance trades for monthly income.

“With such dismal interest rates available from their banks, most savers are not keeping up with inflation,” said Marsland. “Stock Market Insurance Trader shows one way to dramatically increase the return on their money.”

Of course there are no guarantees, and there is risk involved. But for people who want to learn how to generate a monthly income from their savings with a simple stock option strategy, this book is ideal.

In order to get this information to as many people as possible, the book is available for free, for a limited time from Amazon/Kindle – http://bit.ly/SMITrader.

 

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Stock Market Insurance Trader provides an easy-to-understand method for using stock options to earn a monthly income. Learn more at http://SMInsuranceTrader.com.

Press Contact:
John Marsland, Principal
Bradford Analytics, LLC
info@SMInsuranceTrader.com