How Millionaires Manage Risk
You have to know that millionaires and deca-millionaires are extremely good at managing risk while knowing where to allocate their resources to maximize a return. They want to bend the risk/return curve to their advantage.
Well, let me show you how I do it.
But first, let’s review the big news that happened in the market this week.
Disney Finding that Magic Again
Walt Disney’s stock prices shot up this week because they reported excellent earnings for the first three months of the year and revealed some big new deals.
One of these deals is an exclusive show with Taylor Swift that you can only watch on Disney’s streaming service. Plus, Disney is putting $1.5 billion into Epic Games, the company behind Fortnite, to make games together.
The CEO of Disney, Bob Iger, said they’re excited to mix Disney stories into Fortnite. This means you might see Disney characters in the game!
Disney also said they’re finally going to launch a streaming service for sports called ESPN by the end of next year. In the first three months of this year, Disney made $1.22 for each share, which was more than what experts thought they would make. But they didn’t get as much money as expected overall, making about $23.5 billion instead of $23.8 billion.
Disney’s streaming service, Disney+, lost more customers than expected, with 1.3 million people leaving. They hope to get 5.5 to 6 million new customers next quarter.
Disney is planning to save $7.5 billion this year by spending less money. They expect to make about $4.60 for each share of Disney this year, which is 20% more than last year.
To make investors happy, Disney also said they’re going to spend $3 billion to buy back their own stock and give shareholders 50% more money in dividends. Since the beginning of the year, Disney’s stock prices have gone up by about 25%.
The Millionaire Portfolio
Millionaires who rely on trading to generate steady income and profits understand the importance of diversifying strategies to achieve optimal results. Incorporating a combination of option spreads, cash-secured puts, covered calls, and holding cash earning 4.5-5.0% interest can provide a multifaceted approach to maximizing profits, hedging risks, and generating income.
Harnessing the Power of Option Spreads
Option spreads, like vertical spreads or iron condors, offer structured risk management while still allowing investors to capitalize on market movements. By simultaneously buying and selling options contracts with varying strike prices or expiration dates, traders can define their risk and reward profiles, providing stability in volatile markets and the potential for consistent returns. We make extensive use of these strategies at CFU.
Generating Income with Cash-Secured Puts
Cash-secured puts are a reliable income-generating strategy where investors sell put options on stocks they’d be willing to own at a predetermined price. This approach offers an immediate premium as income, regardless of whether the option is exercised or expires worthless. It presents an opportunity to earn income while potentially acquiring stocks at a discount, bolstering portfolio growth. This is a great way to generate extra income from the cash you hold.
The Benefit of Holding Cash Earning 4.5-5.0% Interest
In addition to option strategies, holding cash earning 4.5-5.0% interest offers stability and liquidity. Cash reserves provide immediate access to funds for emergencies or investment opportunities. While the returns may seem modest compared to other investments, the predictability and safety of cash provide a valuable component to a diversified portfolio, acting as a buffer against market volatility and serving as dry powder for strategic investments.
Hedging Risks and Boosting Returns with Covered Calls
Covered calls involve selling call options on already-owned stocks, providing premiums that enhance overall returns. This strategy serves as a hedge against downside risk while potentially increasing returns on existing stock holdings. If the stock price remains below the strike price at expiration, the investor keeps the premium; if it exceeds the strike price, they may sell the stock at a predetermined price, still benefiting from the premium received.
Integrating Strategies for Maximum Impact
When combined, these strategies create a robust framework for generating steady cash flow and profits. Traders can then utilize option spreads to hedge and enhance returns, while the cash-secured puts generate income and offer potential entry points into desired stocks. Holding cash on the side further strengthens the portfolio’s resilience, providing liquidity and stability in uncertain times.
You can make incredible profits trading in this manner
CFU Trading Results from Last Week:
These are profits we locked up from the week ending February 9th:
27 trades, 26 winners, 1 loser.
- AAPL 88%
- AMD 94%
- AON 37%
- BABA -12% (LOSER)
- BKNG 100%
- CELH 75%
- CRWD 89%
- ELF 95%
- GOOGL 88%
- GOOGL 89%
- GOOGL 93%
- HUBS 38%
- NVDA 33%
- PLTR 96%
- PLTR 98% (<1 day)
- SMCI 94%
- SMH 90%
- SOXL 81%
- TQQQ 86%
- TSLA 100%
- TSLA 157%
- TSLA 76% (1 day)
- TSLA 77% (<1 day)
- TSLA 85%
- TSLA 95%
- WDAY 14%
- WYNN 104%
Member Results:
Results are just from this week alone:
CLOSED AND REALIZED PROFITS 💰
Our community is focused on booking profits.
We are currently not accepting new enrollments but be sure to keep an eye on joincfu.com for alerts when we open the doors for more members to join us.
Stephen
President, CFU
