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Jay Pestrichelli Talks Tactics Live On TDA’s Trader TV

High Probability Premium Selling for Income

Click to view the replay where Jay talks about volatility selling tactics and a dividend plus premium selling approach.

With the Fed continuing to raise rates, many investors still think it’s too early to put money to work in stocks or even bonds. Yet, they have income and growth goals to meet. So, we’re finding that alternative-based solutions are picking up in popularity.

During the show Jay illustrated an example of a HiPOS trade that takes advantage of heightened volatility.

Dividend Plus Strategy 

The second tactic is one is what we’ll call an evolution of a classic long-term investor strategy we’re calling Dividend Plus.

With stock prices being depressed, dividend yields are elevated. Take “A Dogs of the S&P” approach and there are plenty of stocks paying dividends of 4% or more right now. Tickers like MMM, VZ, IBM for example. Then sell calls out a quarter to capture the volatility in the market at levels 10-15% out of the money for another annualized 4%.

This approach does take stock risk but kicking off a targeted 8% in cash generation helps meet the immediate needs of investors.

Not to mention, they hold a portfolio of trusted names, so they have the patience to wait out the market volatility