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A monthly income by using Leaps !

How about learning how to make a monthly income without putting out all that money to buy the stocks.

How about paying 25% to 50% of the cost of the stock and controlling the stock for a year or more and making the same monthly income as if you own the stock right out.

We can do this by buying long term options or as they are refered to as " LEAPS " and then selling a put or a call each month against your Leap for income, you will collect the premium from the buyer and if there short term option expires worthless you keep the whole premium.

So if you see a long term trend in the making like in " oil " you would buy yourself a long term leap call lets say for a year and a half to January 2010 and each month you will sell one put, short term only a month to expiration against your long term Leap and if you are right in the direction your Leap call will increase each month because the price of OIL is going up and the short term put will expire worthless because its a put and OIL is going up not down.

It`s like a one two punch, you win on your long term Leap call and you win on your short term put you sold !

Sounds easy right ? well it is if you are good at catching the right side of the trends ! Especially the beginning of a new trend.

This strategy can make you alot of money if you are right about the trend and if you are wrong then you must liquidate your short term put quickly.

Let`s look at a stock group chart to find a good trend ! Here is a paper group that trends nicely, this chart is for demostration only, normally we would trade a better group and stocks.

Look at the red trend line and the yellow moving average line, those are what tells us to stay in or not. >>>>>>>>>> below <<<<<<<<<



You can see that we could have baught a long term Leap as the trend was confirmed going up and we could have sold shorter term puts each month all the way up and did exactly the opposite on the way down as the trend changed to down.

I will have monthly trades for those who join up for the Leaps trades, we will be looking for the next trends in the making.

Coming soon !



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