Freeport-McMoRan Copper & Gold Inc. (FCX), BHP Billiton Limited (ADR) (BHP): Collect 30% Income A Year As China Rebounds

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Since we have an obligation to buy 100 shares at $30, and we are receiving $1.25 per share, or $125 per contract, for accepting this obligation, we will need to set aside an additional $28.75 per share, or $2,875, in case we are called upon to buy the shares.

So, assuming our puts are not exercised, the $125 in income against the $2,875 represents a 4.3% yield in the next seven weeks. If you set up trades like this throughout the course of the year, you would be able to generate 30% per year.

Now, assume Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) trades back below $30 and we are obligated to buy the shares. I would still be happy with this trade. This is because we get to buy this already attractively valued stock at a 6% discount to recent prices. Additionally, FCX pays a quarterly dividend of 31 cents a share. Buying the stock at a net cost of $28.75, our dividend yield would be 4.3%, and we can also expect capital gains as the stock moves higher.

I’m excited about this trade because it allows us to generate a very attractive rate of return on our capital if the puts are not exercised, along with the opportunity to buy a quality dividend stock at a significant discount if the puts are exercised.

This article was originally published at ProfitableTrading.com
Traders Could Generate 30% a Year in Income With This Copper Miner

P.S. — Investors have been conflicted about whether they should continue to buy stocks. And recent global events have them scared about volatility and market crashes. A put selling strategy can be the perfect way to generate income and help protect your assets. My colleague, Amber Hestla, has helped her Income Trader subscribers earn between $1,808 and $150,000 this year alone with this strategy.Click here to learn more.

– Zachary Scheidt
The article Collect 30% Income A Year As China Rebounds originally appeared on StreetAuthority and is written by David Sterman.

 Zachary Scheidt does not personally hold positions in any securities mentioned in this article. 
StreetAuthority LLC owns shares of FCX in one or more of its “real money” portfolios.

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