Some of you may think this is a clickbait title. It’s not. I’m going to show you exactly how to lock in a 20% return over the next 20 months with about the same risk profile as a 10-yr T-Bill (which currently yields 2.83%, or about a quarter of this trade I’m telling you about).
Step 1 – Open an investment account if you don’t already have one.
Step 2 – Enable options trading level 1. If your broker doesn’t allow any options trading, find a broker that does, and give your old broker a lot of hell for not being relevant.
Step 3 – Place an order to buy the Facebook (FB) Jan 2020 covered call at the $5.00 strike using a LIMIT order (do not, I repeat, do NOT use a market order) with a price limit of $4.15. Just to be crystal clear, that’s buying 100 shares of Facebook and selling one $5.00 strike January 2020 call option for a total package price of $4.12 debit ($412 outlay due to the 100-multiplier on options).
Step 4 – Buy one contract of the Jan 2020 $5.00 put option for no more than $.03 ($3.00 outlay) for protection in case Facebook goes below $5.00 between now and then.
Step 5 – Wait until January 2020 and then tell your friends what a genius you are.
If you’re a little shaky on whether or not you can execute this properly or just don’t want to go to the trouble, let us do it for you! Drop a line to firstname.lastname@example.org (our sister asset management site) and we’ll help you get an account set up and manage everything for you.