How will the perpetual income strategy in Income on Demand work in a “bad market”?
Zach has addressed how volatility in the market will affect our service in three great resources. First check out a full report by clicking here.
Next, Zach answered this question in a Mailbag alert:
“We are in a very volatile environment. Reasonable chance that you can be put the stock when prices are much lower. How do you protect yourself in this example?” ~ Stan from Sea Grit
Stan, this is one of the things that I like best about our Income on Demand strategy. While no investment strategy is “perfect” with no risk, our approach actually minimizes the risk that most investors face during a volatile market.
Let’s look at our SLW opportunity that we discussed on Wednesday. In a volatile market, we’re able to sell put contracts that have a much lower strike price — while still making plenty of income. So in the example of SLW, the stock was trading at $15 and we were paid to enter an agreement to sell shares at $13.
That means SLW could trade as much as 15% lower before we’re required to buy shares. That gives us more of a buffer in case shares trade lower. Plus, even if shares do trade lower, we’re collecting income from selling our put contracts, which helps to offset any further decline in the stock.
So in volatile markets, we’re still able to minimize our risk. That doesn’t mean that there is no risk. For any worthwhile income opportunity, there will be some amount of risk. But our current win rate of 98.03% is good evidence that this strategy helps minimize the amount of risk while boosting our income.”
You can read the full Mailbag alert here.
And Zach even explained why Income on Demand’s perpetual income strategy has a three-part bear market defense! Click out this full article here.
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