Blue Chip Stocks
Blue Chip Stocks are financially solid firms with robust product lines and well-established positions in their lines of business. They form the core of many portfolio manager’s accounts. How would you like to have a portfolio of the solid stocks? Imagine, you are the part owner of some of the most stable and profitable companies in the world. Exxon, Du Pont, AT&T, Johnson & Johnson, Wal Mart, Coca-Cola to name a few. One way to slowly acquire such a portfolio is through the selective use of put selling. All stocks, even blue chips, vary in price through time. Many savvy investors are very patient and wait for years to buy quality companies at a low price. Why not get paid to do it? You can if you use cash-secured put selling as your strategy. Here’s how: Make up the list of companies you’d just love to own for the long haul. Then, determine at what “rock-bottom” price at which you would like to buy each of these companies. Make you list and monitor the market. Wait for your stocks take a big dip… this will be the time to sell cash-secured puts at the strike price you would like to pay. If you sell these puts a few months or more out, instead of the front-month, you may find the premium you receive to be very nice indeed. You may wish to employ this strategy in a tax-deferred account. Over the long term, you can build up a nice portfolio of blue chips. Then, of course, you can consider writing calls against these issues for even more income.
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