Investing

Cash Codes: An Investing Tool With Many Applications

By Lee Lowell  |  August 30, 2019

I was glad to know so many of you had the opportunity to watch my presentation on Tuesday during the Cash Codes Summit, where I spilled the beans on exactly what “cash codes” are and how to use them.

The event went on without a hitch!

Now, I know it can be a bit confusing, so send any questions you may have to richinvestor@dentresearch.com.

And if you weren’t there, you missed quite the opportunity. I shared how using cash codes leads to upfront cash in your pocket, and how they can help achieve wins on well over 95% on our trades.

Today I want to address a different aspect of the cash codes, one that will leave you shaking your head, wondering how you, too, can get onboard!

What Investors Really Think…

Investors think they know where a stock will be on a specific date in the future. After all, isn’t that what investing is all about? Isn’t that why investors buy stocks?

It’s partly true. But do you really believe that anyone knows the exact finishing price of a stock on any given day?

Of course not! No one is that good.

But that’s what investors are trying to do when they buy and hold an option contract until the expiration date.

All options contracts have an expiration date. And when an investor buys an option, they are making a prediction (bullish or bearish) that the stock will finish at a certain price by a certain day.

If the stock doesn’t make the move by that time, the option will expire worthless and the option buyer will lose 100% of their investment.

That’s the secret I’ve figured out — that most investors who buy options don’t know what they’re doing and end up losing 100% of their investment most of the time.

And if you joined the Cash Codes Summit, you would know of the Chicago Mercantile Exchange study I highlighted. Their stats showed how a majority of stock index put options expired worthless during a three-year timespan.

It’s that information I use to help guide my Instant Income Alert readers to high levels of success.

To prove the point, here are some real-world cash code examples…

A Simple Way to Collect Upfront Cash Payments

Cash codes are the symbols for put option contracts that investors buy when they think a stock is going to fall.

When buying the put option contract, they pay the entrance fee (the premium) to the put-option seller. That cash earned is deposited it into a trading account.

Now, it’s just a matter of  waiting to see what happens with the stock price.

And I’ll only enter into a put-sell contract on a stock in which I have genuine interest in possibly buying down the road at a much cheaper price than where it currently trades.

I recently gave an example of my desire to buy shares of Intel Corporation (Nasdaq: INTC).

Since I didn’t want to buy it at its current price of $47, I sold a put option — a cash code — at the $40 strike price level, which obligates me to buy Intel at $40 per share if its stock price fell to $40 by the expiration date.

At this point, I have no idea if Intel will fall that far. But in the meantime, I receive a nice upfront cash payment for my effort.

Another Way to Profit With Cash Codes

There are certain investors that think certain stocks will fall over the next few months to ridiculous prices. This kind of information can be found by looking at an option chain — which is a listing of all option prices for every expiration month.

Other investors buying a put option is a way to predict since they believe that particular stock will fall to the “strike price” level by the expiration day.

Take Amazon (Nasdaq: AMZN) for example. Its current price is $1,765 per share.

An investor is predicting that the stock will fall to $800 per share by January 17, 2020 and is willing to pay $50 to a put-option seller for their bet.

They think Amazon will lose 55% of its value in less than five months. Or they’re even willing to pay out $25 if Amazon falls to $700 per share by the same date.

Are you kidding me?

According to my trusty probability calculator, the chances of Amazon falling to $800 is less than 1%. And it falling to $700? Might as well forget about it…

Will you take that bet as the put-option seller?

If you did, there’s two things to know:

  1. You get paid an immediate $50 for every put option contract you sell;
  2. You’d get an opportunity to buy Amazon for $800 per share — a 55% discount to its current $1,765 price tag.

Now, you’d only be able to buy Amazon for $800 if it did, in fact, fall to that level by January 2020.

If it doesn’t, and it most likely won’t, you just get to keep the $50 and go on about your day.

Here’s My Point:

Someone believes Amazon — the biggest retailer on the planet — will cough up 55% of its value in that short span of time.

Sure, we could get a meltdown in that timeframe. But that’s not likely.

Knowing Amazon’s worth and capability as a profitable company, would you give up an opportunity to potentially buy it for $800? I don’t think I’d pass up that opportunity either.

How about Apple (Nasdaq: AAPL)? It’s currently trading near $205.50 per share.

Someone is also willing to pay you $25 for the opportunity to buy it at $100 per share — a 50% cut from its current price. I’d bet someone would jump at the chance to buy Apple at that level.

The probability of it falling to that price though is the same as Amazon’s — less than 1% chance.

Do you follow what I’m saying here? By betting on people’s wishful predictions, you can land a consistent, steady stream of extra income.

The cash codes are not only a way to increase your current income, but it’s also a way to make high probability trades that have almost a 100% chance of winning.

And that’s just what I look for in Instant Income Alert.

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Lee Lowell

Options Strategist Lee Lowell, is the editor behind our most recently launched service, Instant Income Alert.

Lee, a former Wall Street insider and floor trader, has worked in the market for nearly 30 years now. He began his option trading career in 1991on the floor of the New York Mercantile Exchange (NYMEX) in New York City.

He traded in the Crude Oil and Natural Gas options and futures pits for both a small firm and then his own company. But in 1998, fed up with the high-stress trading pit life, he moved to the beautiful island of Kaua’i, Hawai’i, where he combined his exchange floor knowledge with the new frontier of computerized internet trading.

Today Lee’s still involved in the markets–but this focus is on helping everyday people collect Instant Income windfalls of $40k a year or more. It’s his passion to show everyday folks that his strategy isn’t too complicated or too sophisticated to use…or profit from.

As the newest member of the Dent Research team, it’s Lee Lowell’s ambition is to show readers the incredible potential behind this Instant Income secret.MORE FROM AUTHOR