Wall Street is full of get-rich-quick schemes. The promise to turn every dollar you own into $1,000 is something that will catch anyone’s attention. But too often it turns out to be too good to be true.

That’s why I want to tell you about a strategy that I have utilized over the years, and come clean that it is not a get-rich-quick scheme.

Instead, it’s a steady, stable and sometimes boring way to generate significant cash for your portfolio. And it’s so easy most of you could start collecting thousands by tomorrow morning…

Collecting significant amounts of cash, I’m talking $500, $1,000 or even $2,000 instantly, may sound too good to be true. But, with this simple strategy, you could be doing just that a few times a month.

I’ll cut to the chase today. The strategy is selling put options.

How it works is simple. When you are selling put options on a company, you are agreeing to buy that stock at a certain price on or before the option is set to expire.

Since you are making that agreement, you get paid.

Cash will immediately hit your account when your broker fills the trade. And the worst that could happen is you buy the shares of that company at a discount, because you will select a strike price (the price at which you buy the shares) below where the stock is currently trading. In other words, if, for example, Microsoft is trading at $52.20, you might select a strike price of $50, indicating that you would buy the shares at $50.

The bottom line is you earn income when you simply agree to buy a stock that you already like. And that really is key. You’re not selling put options against just any company. While the income might be nice, do you really want to risk getting stuck holding shares of a company that is struggling? It’s important you sell put options on a fundamentally strong company, with preferably a healthy dividend track record.

Of course, in most cases you never even have to buy the stock. You simply keep the money you collected and do it all over again.

In short, this is the best income strategy I have ever witnessed, and I think you’ll agree.

To bring this concept home, let’s walk through a recent trade alert.

A Case Study: Selling Put Options

Last week, an opportunity came up to collect a significant amount of cash from a leading American beverage company — Coca-Cola (NYSE: KO).

The company is best known for its carbonated soft drink, Coke, but it has vastly expanded its selections to Powerade, Honest Tea, Dasani and Minute Maid — to name a few. Coca-Cola has expanded its footprint, both across the beverage industry, but also globally.

Coca-Cola controls roughly 40% of the global nonalcoholic beverage industry. This dominant market position allows Coca-Cola to leverage costs, prices and its supply chain. It’s also the main reason I continue to look for opportunities to earn income to buy its stock.

Thanks to the recent volatility in the market, we have a chance to earn income to buy Coca-Cola at a discount.

Picking the Option

As you may have seen, 2016 is off to a rough start. Major blue-chip stocks have suffered, with the Dow Jones Industrial Average down more than 9% since the start of the year. Shares of Coca-Cola have dipped nearly 4% so far this month.

While I’m not going to go over the specific trade recommendation I made last week, simply because that wouldn’t be too fair to my paid subscribers, I’ll share some of the general details.

I only sell a put option at a strike price that is below where the stock is currently trading. I do this because I will only agree to buy shares if that means I am getting them at a discount.

The other important thing to notice is how much income you will collect. For it to be worth it to me, I have to collect at least 15% in yield over just a few months.

Once you know these parameters, you can simply log in to your brokerage account, find the put option that meets the criteria and sell to open the option. Your cash instantly hits your account. Now you just sit back and see if you get to buy shares of the already discounted blue-chip stock at an even greater discount.

And if you’re not forced to buy the stock, you still keep the income you collected and do it again to collect even more income.

It’s ultimately a win-win strategy — you either buy shares of a great company at a discount and get paid, or you don’t end up buying the stock, but still keep your income and get to sell another put option.

Chad Shoop
Editor, Pure Income