/biz/ - Business & Finance

If anyone wants to have a safe way to just make decent returns year in year out (20% to 40%), here's a cheat code I've been using since I was 18 with borrowed money.

>Buy really safe stocks like Proctor & Gamble, AT&T, Coca-Cola, ideally high dividend stocks that keep the stock low in voltiltiy
>Sell covered call options that are slightly out of the money (by 2 or 3%)
>These premiums are enough to generate between 30% or 50% alone
>If the options get called, you can earn even more on the capital gains
>If the options don't get called, you still collect the high dividend

The only way you can lose is if the stock goes down, but given the 20% MIN return on the premiums, the stock would literally have to drop 20% annually to offset your gains from this strategy before you start seeing a loss.

It's basically free money, small retail investors can do this because it's a small amount of money. Hedge funds would love to do with but they're market movers so if they tried they'd squeeze their profits.

>DISCLAMER:

I'm not a nocoiner, I have a lot in BTC, this is just what I use borrowed funds for since I won't take high risks on crypto with that. I borrowed 100K from my dad at 18 and use this to generate what I consider great returns for a very high degree of safety.

This unironically works, it's near guarenteed to make 30 - 60% annually. The only reason big funds don't do this is because they can't. A large investor would move the markets by even attempting this and it only works for retail investors. That's why not "everyone' does this.

>Buy safe bluechip stocks, I'm talking Apple, Starbucks, Proctor & Gamble, Raytheon, J.P Morgan Chase...
>Sell weekly Call options that are just 4% OTM for a premium worth about 1% of the stock value.

Three possibilities

>The stock stays the same price and you earn 1% weekly return, this is the equilevanet to 68% annual return when compounded

>The stock price rises and gets called from you
You earn the 1% weekly return plus a 4% capital gain, this is a 5% weekly return and if happened repeatedly would be a 1100% return annually if this happened everytime

>The stop declines
You lose money, its a risk. But unless the stock declines by more than 1% weekly on average... you gain money by doing this. The capital loses where the stock occasionally drops below 1%, enough to wipe out your premium and generate a capital loss, is why this doesn't yield like 100% returns.

I've done it for years and yield between 30% to 60% annually.

What does /smg/ think of theta gang?