Guaranteed

Automatic
Income
NOW
By Chuck Hughes
Copyright 2017 by Legacy Publishing LLC. All Rights Reserved.
Reproduction or translation of any part of this work beyond that permitted by Section 107 or 108 of the
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Information within this publication contains "forward looking statements" within the meaning of Section 27A
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objectives, assumptions or future events or performance are not statements of historical fact and may be
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could cause actual results or events to differ materially from those presently anticipated. Investing involves
the risk of loss as well as the possibility of profit. All investments involve risk, and all investment decisions of
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suitable for all investors. Past performance does not guarantee future results. No statement in this book
should be construed as a recommendation to buy or sell a security. The author and publisher of this book
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HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED
BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR
LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL
PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING
PROGRAM.

ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH
THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO
HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL
TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM
IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING
RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE
IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE
PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL
TRADING RESULTS

2
 Guaranteed Automatic Income Now

If you’re like most investors, the stock market has bounced your account up and down
so many times it makes your head spin.

If you’re looking for a safe, dependable income strategy that puts cash payments into
your pocket every week without taking big risks then please read this Report to get a
totally different perspective on income investing.

We are here to tell you about an elite group of investors who are collecting weekly cash
payments from a little-understood income source. Most investors know very little about
this income source.

These payouts are in cash and are deposited directly into your brokerage account. Once
the money hits your account, it’s yours to keep. You can spend the cash immediately on
anything you’d like.

These cash payouts do not involve dividends, bonds, Master Limited Partnerships, Real
Estate Investment Trusts, annuities, commodities or anything like these investments.

We call this the “Guaranteed Automatic Income Now (GAIN)” as cash payments are paid
out like clockwork every week.

It’s like having a part time job that only requires you to work about 20 minutes a week
to collect a weekly ‘paycheck’. It’s very easy to set up the GAIN program and begin
receiving regular payments.

You can start collecting weekly cash payments immediately, with a click of your mouse
button!

It’s one of the best-kept secrets of the mega-rich. Forbes Magazine says it’s “like finding
money in the street.”

Famous investors like Warren Buffett pocket rich payouts from this multi-billion-dollar
cash income source.

3
What sort of cash payouts are we currently collecting?

Last week we collected $16,978.31 in cash payouts from these ETFs:

TQQQ $3,584.95
ERX $101.23
TNA $3,184.20
XLP $4,191.08
XLU $3,025.63
FAS $72.22
QQQ $1,329.79
DVY $1,484.21
Totals 16,978.31

We get to keep these cash payouts regardless of what happens to the price movements
of these ETFs.

Unlike normal stock dividends that pay a 3 to 4% return over the course of a year, we
regularly collect a 100% or more cash payout annually. It only takes about 20 minutes a
week to collect this cash income using this simple strategy and the rest of the week we
get to enjoy life!

A Lot Can Go Wrong and We Still Profit

When you collect a 100% cash payout a lot can go wrong and you can still be a
successful investor:

● Your ETFs could decline sharply and you still profit

● You could have bad timing on entering trades and still profit

● You can profit if the ETF price goes up, down or is flat

● You can profit despite volatile price moves in the stock market

● You can quickly compound your returns be reinvesting your cash income

4
 $9.9 Million In Cash Payouts
Over the last 10 years we collected $9,948,623.61 in actual cash payouts utilizing this
income strategy. This resulted in receiving over $82,900 in cash payouts per month on
average. We included our account brokerage statements at the end of this Report
showing our $9.9 million in cash payouts.

In this Report the Hughes Optioneering Team will explore 5 GAIN ETFs to own now for
generating cash payouts and how you can start collecting these cash payouts
immediately.

We own these 5 ETFs and as you will see shortly, we are currently generating as much
as a 150% yearly cash payout with very low risk.

This low-risk cash income strategy is so safe that the IRS approves it for use in IRA
accounts and we utilize this cash payout strategy in our retirement accounts.

The Ideal, Low-Risk Strategy For The Small Investor

Another advantage to this strategy is that you can start out small. You only need a
$3,500 trading account to start collecting GAIN weekly cash payouts regardless of the
direction of the stock market.

This low risk income strategy actually incurs less risk than owning stocks or ETFs!

Profiting In Bear Markets

The strategy also works just as well in bear markets. We collected $598,521.20 in cash
payouts in 2008 during the ‘Financial Armageddon’ and worse bear market since the
Great Depression.

September 15th 2008 was one of the worst days of the financial crisis when the Dow
Jones Industrial Average plunged 508 points due to the Lehman Brothers and Fannie
Mae bankruptcies. The GAIN cash payout strategy contributed to our $33,250.17 profit
that infamous day.

Think of what earning steady cash payments every week could mean to you and your
future. You could live your dream life and have the time and money to do it. If you’re
retired like me, you could enjoy additional streams of cash income every week like I do.

If you’re not yet retired, you could retire earlier . . . possibly a lot earlier. You could start
living the good life immediately and be free of stress and worry right away. If you’re still
working, this program can supplement your regular income and can help relieve a lot of
financial stress.

5
 How to Start Collecting Cash Payouts
Let’s explore the GAIN income strategy that allows you to generate cash payouts from
your stocks and ETFs. This income strategy has generated consistent returns during
every type of market condition.

The GAIN cash payout strategy is a ‘covered call’ strategy that generates cash income
from selling call option premiums on your ETFs/stocks. The strategy produced reliable
income during the severe 2008 - 2009 bear market by investing in covered calls on
bearish ETFs that profit as the ETF declines in price. And it has produced consistent
returns during volatile and non-trending types of markets.

Most investors are not familiar with the concept of selling call option premium to
generate cash payouts. Selling option premium is a very simple but lucrative income
strategy. The option income strategy is known as a ‘buy write’ or ‘covered call’.

When you sell a call option, cash equal to the option price or premium is immediately
credited to your brokerage account. One option covers 100 shares of an ETF or stock. If
you sell a call option with a 2.00 point premium you will receive a $200 cash payout in
your account (2.00 points x 100 shares = $200).

For example, we own 1,000 shares of the Small Cap ETF symbol TNA. We sell 10 call
options weekly to generate income.

Our brokerage account Transaction Report below shows that on Aug 26 we sold 10 TNA
75-Strike call options at 3.20 points. This option sale generated a $3,200 cash payment
that was credited to our brokerage account minus the $15.80 commission (3.20 points x
1,000 shares = $3,200 minus $15.80 commission = $3,184.20).

Sold 10 TNA 75-Strike Calls @ 3.20 = $3,200 Cash Payout

The sale of the 10 TNA 75-Strike call options was “covered “by the ownership of 1,000
shares of TNA.

Unlike a traditional stock dividend, you don’t have to own the stock on the dividend date
to receive the quarterly dividend and you don’t have to wait a year to receive a 3% or
4% annual dividend yield. You can receive up to a 3% cash payout every week selling
call options on certain types of ETFs that we will cover shortly!

6
The GAIN cash payout strategy is easy to implement by purchasing 100 shares of an ETF
and then selling a call option. This can be done in a regular brokerage account and is
similar to buying shares in Amazon or Apple.

Implementing a GAIN Covered Call

1) Buy 100 shares of an ETF

2) Sell to open 1 call option

Let’s look at an example of an actual covered call trade we implemented.

Our brokerage confirmation below shows that we purchased 100 shares of the Energy
ETF symbol ERX on August 26th at 31.479 per share. The cost to purchase 100 shares of
ERX was $3,147.90 plus $7.99 commission (100 shares x 31.479 = $3,147.90 + $7.99
commission = $3,155.89 cost).

Bought 100 Shares of Energy ETF at 31.479 Points

Then at the same time we ‘sold to open’ the Energy ETF Sep 2 31-Strike call option at
1.10 points (see brokerage confirmation that follows). One call option covers 100 shares
of the ETF. This call option expired one week later on Sep 2 and is known as a “weekly”
option. Weekly options expire every Friday. There are 52weekly option expirations over
the course of one year.

When we sold the Sep 2 31-Strike call at 1.10 points, $110 in cash was credited to our
brokerage account minus the $8.77 commission (sold 31-Strike call at 1.10 x 100 shares
= $110 minus $8.77 commission = $101.23 cash payout.

Sold to Open Energy ETF Sep 2 31-Strike Call at 1.10

We get to keep the $110 cash payment regardless of the price movement of the ERX
ETF.

7
 Two Possible Outcomes
There are two possible outcomes with our ERX covered call trade at option expiration on
Sep 2:

1) If the ERX ETF is trading above 31.00 which is the strike price of the call option we
sold, then the ETF will be ‘called’ and the 100 shares of ERX in our account will be
sold at 31.00. This happens automatically at option expiration.

2) If the ERX ETF is trading below 31.00 then the ERX ETF will not be sold and we get
to keep the 100 shares in our account. If the 100 shares of the ERX ETF drop in
price over the one week period, any loss will be reduced by the $110 cash payout
received.

Rolling Over Weekly Covered Calls

We like to keep the ERX ETF shares in our account so we can collect a cash payout every
week. We do this by ‘rolling over’ the expiring call option at expiration to prevent being
‘called’.

In this example, we would rollover by closing out the expiring Sep 2 call option and
‘selling to open’ the Sep 9 call option which expires in one week. Then on Sep 9 we
would close out the expiring option and sell to open the Sep 16 option. This allows us to
collect a cash payout every week for a total of 52 payouts a year.

If you forget to rollover the expiring option at option expiration and the ETF shares are
called, you can simply buy 100 shares of the ETF and sell a weekly call option to re-
establish your covered call.

Our brokerage account Transaction Reports below shows that on Sep 2 we did rollover
the expiring Sep 2 option and sold to open the Sep 9 30-Strike call @ 1.65. Then on Sep
9 we rolled over the Sep 9 call to the Sep 16 32-Strike call @ 1.35.

Sold to Open ERX Sep 9 30-Strike Call at 1.65

Sold to Open ERX Sep 16 32-Strike Call at 1.35

8
 207% Cash Payout Potential
Our brokerage account Transaction Reports that follow show that we continued to
rollover the ERX covered call trade each week. Over this ten week period we collected
$1,264 in cash payouts. This averages out to $126 per week in cash payouts.

If we collected a similar payout each week, over the course of one year we have the
potential to collect $6,552 in cash payouts. This represents a 207% cash payout on our
initial $3,156 investment to purchase 100 shares of the ERX ETF.

This $6,552 potential cash payout would help reduce any losses if the ERX ETF dropped
in price. We could profit if the ERX ETF was up, down or flat over the course of a year or
if we had bad timing when we entered the trade. We like to compound our returns by
using our cash payouts to purchase additional ETF shares and sell additional call options.

Sep 23

Sep 30

Oct 07

Oct 14

9
Oct 21

Oct 28

Nov 04

Nov 11

10
 Rolling Over Weekly Covered Calls
We normally use what is known as an ‘option spread’ order to rollover weekly covered
calls. Option spread orders close out the expiring option and sell to open the new option
allowing you to keep the shares of the ETF in your brokerage account.

The online option spread order below was used to close out the Emerging Market ETF
symbol EEM Feb 24 44-Strike weekly call which was expiring and to sell to open the Mar
2 44-Strike weekly call which expired one week later.

Using option spread orders can help you reduce commission and bid/ask spread
transaction costs.

11
 Rolling Over Weekly Covered Calls
We owned 800 shares of the leveraged Small Cap ETF symbol TNA. We normally like to
keep the shares of the ETF in our account so we rolled over the expiring TNA weekly
calls.

The online option spread order below was used to close out the TNA Nov 23 52-Strike
weekly call which was expiring and to sell to open the Nov 30 54.5-Strike weekly call
which expired one week later.

Our brokerage account Transaction History shows that we were filled halfway between
the ‘bid’ price of 1.40 and the ‘ask’ price of 1.45 by using the spread order.

We sold eight Nov 30 54.5-Strike calls at 1.42 which resulted in a cash payout of
$1,125.85 after the $10.15 commission (8 x $142 = $1,136 -10.15 commission =
$1,125.85)

12
 Weekly Options Provide Up to Six Times More Premium Than Monthly Options

The option price chain below displays option prices for the Mastercard May 04 weekly
options and the MA July monthly options. Mastercard stock is trading at 457.58 and the
at-the-money 460-Strike weekly call is trading at 11.90. The July 460-Strike monthly
option is trading at 23.50 and expires in about 12 weeks.

Selling 12 of the MA weekly calls at 11.90 can provide up to 142 points ($14,280) of
premium versus the 23.50 points of premium available for the July option over the same
period of time. This demonstrates the substantial additional premium available from
selling weekly options versus monthly options.

12 Weeklys Could Provide 142.8 Points of Premium

versus 23.5 Points of Premium for Monthly

13
Below is another example of the substantial option premium available from selling
weekly options. The option chain below displays option prices for the AIG May 04 weekly
options and the AIG Aug monthly options. AIG stock is trading at 34.46 and the 35-
Strike weekly call is trading at .71. The Aug 35-Strike monthly option is trading at 2.39
and expires in about 16 weeks.

If you sold 16 weekly calls at .71 you would collect about 11.36 points of premium
versus the 2.39 points of premium available for the Aug option over the same period of
time. This again demonstrates the additional premium available from selling weekly
options versus monthly options.

16 Weeklys Provide 11.36 Points of Premium

versus 2.39 Points of Premium for Monthly

14
 Examples of Weekly Cash Payouts
Our brokerage account Transaction History Reports that follow show examples of weekly
cash payouts over different time periods demonstrating the ability of the strategy to
generate cash payouts during different types of market conditions.

The right hand column of the Report shows the amount of cash that was credited to our
brokerage account.

$17,749.79 Weekly Cash Payout

15
$16,053.53 Weekly Cash Payout

$10,735.36 Weekly Cash Payout

16
$19,530.67 Weekly Cash Payout

17
$28,454.92 Weekly Cash Payout

18
 $1,633 Stock Loss = $3,553 Covered Call Profit
Let’s take a look at an example of how a covered call trade can be profitable even if the
underlying stock declines in price. Our brokerage confirmation below shows that we
purchased 1,500 shares of Mosaic stock at an average price of 42.0 and sold to open 15
of the Mosaic 40-strike call options at an average price of 7.90 points. We received
$11,850 in cash income for this option sale which provides substantial downside
protection if Mosaic stock declines in price.

Buy MOS at 42.00, Sell 40-Strike call at 7.90

Mosaic stock price declined after we initiated this trade. Below is a snapshot of our
Mosaic covered call trade in our online brokerage account. Even though we had a $1,633
loss in Mosaic stock we had a $5,187 gain in the short Mosaic options giving us an
overall net profit of $3,553 for this covered call trade.

$3,553 Net Profit Even Though Stock Declined in Price

Covered Call Strategy Incurs

Less Risk than Owning a Stock or ETF

19
 Covered Calls Produce $1,048,701.89 In
Actual Profits With 98.8% Accuracy
Our brokerage account Profit/Loss Reports included at the end of this Report show
$1,048,701.89 in actual profits for covered call trades. The Reports list the ETF or stock
we owned with the corresponding call options.

$847,744.65 of the total profits were generated from weekly covered calls. There were
83 winning trades and 1 losing trade resulting in 98.8% accuracy.

20
 Selecting the Best ETFs for Cash Payouts
We use three criteria for selecting ETFs for cash payouts:

1) The ETF trades weekly options

2) The ETF’s option premium gives you at least a 1 to 2% weekly cash payout

3) The price of the ETF is trending up

1) The ETF Trades Weekly Options

We like to trade covered calls on ETFs that trade weekly options. This gives us the
opportunity to collect 52 cash payouts over the course of one year. Weekly options
expire every Friday. You can find a current list of ETFs that trade weekly options on the
‘available weeklys’ webpage on the www.cboe.com website.

Not all ETFs trade weekly options and some only trade monthly options. With monthly
options you can collect 12 cash payouts a year. Monthly option expiration is normally the
third Friday of the month.

Even though you collect fewer premiums with monthly options, We do trade monthly
covered calls on some ETFs that don’t trade weekly calls

2) The ETF’s Option Premium Pays You at Least a 1 to 2% Weekly

Cash Payout
Our goal with weekly covered calls is to collect at least a 1% to 2% weekly cash payout
from selling an ‘at-the-money’ call option. An at-the-money call has a strike price closest
to the current price of the ETF.

For example, the Energy ETF symbol ERX was trading at 39.91 on Friday Dec 30. The at-
the-money weekly call option that expires one week later on Jan 6 would be the 40-
Strike call as this is the strike price closest to the price of the ETF.

The ERX Jan 6 40-Strike call was trading at 1.10 points. A weekly covered call could be
initiated by purchasing 100 shares of ERX and ‘selling to open’ the 40-Strike call.

Selling the 40-Strike call would generate a $110 cash payout minus the commission into
your brokerage account ($1.10 x 100 = $110).

A $110 cash payout would result in a 2.75% weekly payout on the 39.91cost to purchase
the ERX ETF (1.10/39.91 = 2.75%) and meets our second criteria of a minimum weekly
payout of 1 to 2%.

The $110 cash payout reduces the cost basis of the ERX shares to 38.81 (39.91 – 1.10 =
38.81)

Let’s next look at the profit potential for covered call trades.
21
Profit Potential for Covered Call Trades

ETF Price Up at Option Expiration = Covered Call Profit

In this example, if the ERX price is up at the Jan 6 option expiration and closes above 40
which is the strike price of the call sold, then the ERX shares would be ‘called’ and we
would realize the full profit potential for this trade.

Let’s assume ERX closed at 41.00 at Jan 6 option expiration. The shares would be called
and sold at 40.00. We would realize a 1.19 point net profit on the trade. The profit is
calculated by subtracting the cost basis of the ERX shares of 38.81 from the sale price of
40 (40 – 38.81 = 1.19).

A 1.19 point profit would be a 3% weekly return on the 38.81 cost basis (1.19/38.81 =
3%). This is a good return for a one week trade.

Of course, we could rollover this option at expiration by closing out the 40 strike call and
keep the 100 shares of ERX in our account before it is called.

ETF Price Flat at Option Expiration = Covered Call Profit

If ERX is flat at 39.91 at expiration the ETF shares would not be called and we would
keep the $110 premium collected. This would result in a 2.75% profit on our 38.81 cost
basis for the trade (1.10/38.81 = 2.75%).

ETF Price Down Slightly at Option Expiration = Covered Call Profit

If ERX is down slightly at option expiration we could still profit. ERX was trading at 39.91
at the time we initiated the trade. At the same time we collected the $110 cash payout
(before commission) for the sale of the 40-Strike option which reduced the cost basis of
the 100 shares of ERX to 38.81 (39.91- 1.10 = 38.81).

As long as ERX closed above 38.81 at option expiration we would realize a profit on the
trade. We would not lose on this trade unless ERX closed below 38.81 at option
expiration. If ERX does close below 38.81 another option could be sold at expiration to
help mitigate the loss.

On Jan 6 the 40-Strike call could be rolled over by closing out the 40-Strike call and
selling to open the Jan 13 at-the-money strike call to collect another weekly cash
payout.

Rollover weekly covered call:

1) Buy to close Jan 6 40-Strike call

2) Sell to open Jan 13 ‘at-the-money’ call

Leveraged ETFs
The Energy ETF symbol ERX holds a basket of energy related stocks and is a 3X
‘leveraged’ ETF. The ERX ETF “seeks daily investment results, before fees and expenses,
of 300% of the performance of the Energy Select Sector Index”.

22
If the Energy Select Sector is up 1% for the day then ERX would be up 3% for the day if
ERX meets its investment goal. And if the Energy Select Sector is down 1% the ERX
would decline 3% if it meets its goal.

Because of the leverage, leveraged ETFs incur more risk than non-leveraged ETFs but
have very rich option premiums with bigger cash payouts. We have found that when
trading weekly covered calls, the bigger cash payouts outweigh the increased risk
associated with leveraged ETFs. We therefore utilize both leveraged and non-leveraged
ETFs when trading weekly covered calls.

3) The ETF Is in a Price Uptrend

The covered call strategy, in general, is a neutral to slightly bullish strategy. We only
trade ETFs that are in a price up trend and avoid ETFs that are in price down trend when
entering covered call trades.

The downward price movement of an ETF in a price downtrend can exceed the cash
payout received for selling a call option. We found it is better to simply focus on ETFs in
a price uptrend to reduce the risk of the price decline of the ETF exceeding the cash
payout received from selling call options.

We use a simple trend following system to determine the price trend of an ETF. We look
at the 1 Month price of an ETF in relation to its 10-Month Simple Moving Average (SMA).

Moving averages are a simple method for tracking the current price trend of an ETF and
allow us to ‘trade with the trend’ instead of trying to predict the future price movement
of an ETF.

If the 1-Month Price of an ETF is above its 10-Month SMA the ETF is in a price
uptrend.

And if the 1-Month Price of an ETF is below the 10-Month SMA the ETF is in a price
downtrend. This simple system has been very effective in correctly identifying the price
trend of an ETF.

Price Uptrend
● 1-Month Price is Above 10-Month SMA

Price Downtrend
● 1-Month Price is Below 10-Month SMA

23
For example, the price chart below depicts the monthly price movement for the NASDAQ
ETF symbol TQQQ along with its 10-Month Simple Moving Average (SMA). We can see
from the price chart that the TQQQ Monthly Price crossed above its 10-Month SMA in
July (circled) and at that point the ETF was in a price uptrend.

As long as the TQQQ Monthly Price is above its 10-Month SMA the TQQQ ETF is in a price
uptrend and we can initiate TQQQ covered calls.

TQQQ in Price Uptrend

TQQQ Monthly Price

Movement

Monthly Price Crosses

Above 10-Month SMA

10-Month Simple
Moving Average Line

24
 Downloading the 1-Month/10-Month SMA Charts
The 1-Month Price and 10-Month SMA charts can be downloaded from
www.stockcharts.com with the basic subscription. First type in the symbol for the stock
you want to examine. Then under the Periods drop down menu click “Monthly” to display
the monthly price.

In the Overlays section select Moving Avg (simple) and under Parameters select 10 to
display the 10-Month SMA.

25
Click “Update” to create the price graph.

Note: These settings can be saved as a favorite or book mark.

26
Collecting Cash Payouts in a Bear Market
One of the added advantages for ETFs over stocks in bear markets is that you can trade
weekly covered calls on bearish ETFs that increase in value as the underlying basket of
stocks decline in price. For example, the 3X Bearish Energy ETF symbol ERY “seeks daily
investment results, before fees and expenses, of 300% of the inverse of the performance
of the Energy Select Sector Index”.

In a bear market you could trade covered calls on the ERY ETF and other inverse ETFs
which would probably be in a price uptrend. You don’t have this flexibility with stock
covered calls.

During the severe 2008 bear market we collected cash payouts on bearish ETFs that
were in a price uptrend. The price chart below displays the Monthly Price and 10-Month
SMA for the Bearish S&P 500 Index. We can see this ETF was in a price uptrend during
the 2008 bear market as the S&P 500 Index declined in price. We collected a total of
$598,521.20 in cash payouts in 2008. Trades showing these cash payouts are
displayed shortly.

Added Dimension
Collecting cash payouts during bear markets allows you to profit in bear markets when
stocks and ETFs are declining in price. Bearish income trades not only reduce portfolio
risk but can dramatically increase profit opportunities and provide a whole new
dimension to income investing.

Inverse S&P 500 ETF in Price Uptrend During Bear Market

27
 Turning Wealth Destruction into Wealth Creation
On the following page we included a snapshot of our investing portfolio on September
15th 2008. That day will go down in history as the beginning of the worst financial crisis
in the United States since the Great Depression.

Due to the Lehman Brothers and Fannie Mae bankruptcy, the Merrill Lynch buyout and
the AIG insurance company insolvency, that day could be considered one of the worst
global financial storms in history. Some called it a Financial Armageddon. Over thirty
trillion dollars of highly leveraged mortgage securities that went bad caused a financial
meltdown that froze global credit. The loss of people’s dreams and financial security
became palpable.

Fortunately, we had covered calls on Bearish ETFs that profit as the stock market
declines. By the end of the day the Dow Jones Industrial Average had lost over 500
points in ONE day. But our trading accounts had a positive return for the day.

The copy of our brokerage account Profit/Loss Report that follows shows $14,987.22 in
closed trade profits and a 14.5% return from short positions on September 15th and our
open trades had $18,262.95 in profits. Our advisory service portfolios had similar
returns.

We locked in solid profits that day. Many investors consider short positions high risk
which they are if not done correctly. If you short a stock or ETF you incur unlimited risk
if the stock or ETF moves up in price.

Covered calls using bearish ETFs are limited risk short positions which means you can’t
lose more than you invest regardless of the price movement of the underlying ETF.
Covered calls on Inverse ETFs is a bearish strategy as the covered call profits as the
underlying ETF goes down in price.

The Number One Rule of Investing

The number one rule of investing is not to risk more than you invest. If you are short a
stock or ETF, it only takes one unforeseen event to create an adverse market move that
can wipe out your account and possibly cause a margin call which you would be legally
obligated to pay. This can and does happen as I know fellow traders who were wiped out
when they were on the wrong side of the 1987, 2001 and 2008 bear markets.

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14.5% Return in One Day While Dow Dropped 504 Points

Sept 15th Closed Trades

Open Trade Profit

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 5 GAIN ETFs to Own Now

Currently the ETFs below meet our criteria for collecting cash payouts and represent
good opportunities for collecting cash payouts.

All of these ETFs trade weekly options and provide at least a 1% to 2% weekly cash
payout when selling at-the-money call options. These ETFs are all in a price uptrend with
their 1 Month Price above their 10-Month SMA.

TQQQ --- NASDAQ 100 ETF

TNA ---- Small Cap ETF

FAS ---- Financial ETF

XBI ---- Biotech ETF

UPRO --- S&P 500 Index

The weekly covered call strategy offers very attractive returns with very low risk making
this one of the best overall strategies for the average investor.

Let’s face it. It’s a crazy world out there. Isn’t nice to know that having a steady income
is one thing you will not have to worry about? The GAIN Program has allowed us the
privilege to lead a care free retirement.

The strategy has allowed us the time and freedom to concentrate on the things that
really matter; family, their wellbeing, and of course our tennis game! You’ve got to love
it! This is the ultimate way to enjoy retirement or generate income!

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 $9.9 Million in Cash Payouts
Our brokerage account Transaction Reports that follow show that we collected
$9,948,623.61 in cash payouts over the past ten years which resulted in over $82,900 in
cash payments per month on average. Brokerage confirmations list the options we sold
and the amount of cash that was credited to our brokerage account for each option sale.
We collected a total of $598,521.20 in cash payouts in 2008 during the severe bear
market (the 2008 cash payouts are circled).

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2008

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2008

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Covered Call
Profits

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 Covered Calls Produce $1,048,701.89 In Real Time Profits
Our brokerage account Profit/Loss Reports that follow show $1,048,701.89 in actual
profits for covered call trades ($847,744.65 of this total was generated with weekly
covered calls). There were 83 winning trades and 1 losing trade resulting in 98.8%
accuracy.

Covered Calls Profits $116,935.13 8 Wins 0 Losses

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Covered Calls Profits $192,077.25 8 Wins 0 Losses

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Covered Calls Profits $323,069.44 10 Wins 0 Losses

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Covered Calls Profits $71,987.41 15 Wins 0 Losses

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Covered Calls Profits $215,662.83 9 Wins 0 Losses

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 Covered Calls Profits $62,431.83 21 Wins 0 Losses

Continued next page . . .

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Continued . . . Profits $62,431.83 21 Wins 0 Losses

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Covered Calls Profits $66,537.95 12 Wins 1 Loss

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