Dennis Eisen – Using Options to Buy Stocks. Build Wealth with Little Risk and No Capital
Price: $25
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Instructs you on how to generate thousands of dollars a month in premiums to add to stock positions without using your own money. Softcover. DLC: Stock options.
BARRON’S, page MW 14
Leap Year Poaching profits with LEAP puts
By Michael Santoli
Yes, it’s been a treacherous market the past week — all year in fact — full of choke lines and obscured quicksand pools to menace anyone who’s strayed off the narrow path that leads to the few favored stocks. Yet even in such a trying environment, money is left unattended for the poaching in some corners of the market. In one, the sales pitch is this: “I’ll pay you cash today and you can keep the money if, among a selection of high-quality stocks, no more than a few have fallen by 30% or more in a year or two.”
In brief, that’s the offer that certain disciplined sellers of long-term puts take up with relish. Dennis Eisen, a mathematician and consultant who has devised a system for selling LEAP puts with impressive success, is one such investor. LEAPs (short for Long-Term Equity Anticipation Securities) are options that expire in January of each year and mature two or three years from the time of their listing. By selling LEAP puts, one is taking in a cash premium in hopes that the underlying stock won’t fall below their strike price by expiration, in which case it’s necessary to buy the stock at that level.
Eisen crafted his methods after running a huge simulation of the results of having continually sold puts on each of the 300 or so available LEAP stocks over the past decade. Encouraged by his data, he’s been doing so for his own account for years with fine results and has written a new book, Using Options to Buy Stocks, that describes his approach.
Put selling has a partially justified reputation as a high-risk game, exposing the seller to unquantifiable losses should a stock plummet and force the seller to buy it at above-market rates