Show Me the Money: Covered Calls & Naked Puts for a Monthly Cash Income [Paperback]

Ronald Groenke (Author)

Book Description

Publication Date: January 2, 2009

Are you leaving Cash on the table?

As an investor you have stocks in your portfolio. Those stocks, individually, will go up, down or remain about the same. Nothing really you can do about that. Market forces and corporate actions beyond your control will cause fluctuations in the value of your holdings.

But......

There is one important action you can take that will put cash in your brokerage account, today and month after month as time rolls by.

Selling Covered Calls and Naked Puts is a stock market strategy favored by many savvy investors. Here s how it works. Take one of your stocks, Stock ABC, which has a market price of $29. If you will agree to sell that stock (a Call option) for $30 on the third Friday of next month the market will pay you X amount of dollars today (the option premium). That s the money that you are currently leaving on the table. The premium X varies by stock and typically is two to three percent of the stock price.

Think about what can happen when you sell the option. Only one of two things will happen. If the stock price of ABC is above $30 on the third Friday you sell it for $30. That will happen about 30% of the time. The other possibility is that ABC is selling for $30 or less on the third Friday. In that case the option expires and you can sell another Call.

Either way the option premium Real Cash Money is in your brokerage account ready to be spent or reinvested.

Continue the process month after month for a constant cash income from your portfolio.

The Naked Put strategy also gives you immediate cash. Using the same example with Stock ABC, which is in your portfolio and has a market price of $29, if you agree to buy additional shares at a discounted price of $27.50 on the third Friday of next month (a Put option) the market will pay you Y amount of dollars today (the option premium). If the stock price is above $27.50 on the third Friday the option expires and you can sell another Put, generating more cash income. If the price does dip below $27.50 then you buy the additional shares and can now sell more Covered Calls. The put premium Y varies by stock and typically is one to three percent of the stock price.

This book will give you the basic skills to master the art of selling Covered Calls and Naked Puts.

Ron Groenke has developed software based on the investment concepts in his books. A free 21-day trial is available at RonGroenke.com

Editorial Reviews

Review

Fifteen years ago a friend and I tried the options market and failed miserably. A year ago I read Ron's book and two comments hit me like a bolt of lightning:

1) You make money by selling, not buying; and,

2) With options, the goal is monthly cash flow, not long term increase in assets.

What simple concepts. I'm 72 and don t have time for the long-term. I use Ron's ideas and his VISIONS software and have steadily increased my monthly cash flow.

You can download a free 21 day trial of VISIONS at RonGroenke.com

Javin Taylor Las Cruces, NM 88007 --An Investor

My experience with Ron Groenke has been very positive:

I picked up Ron's book at Barnes & Noble a few months ago. It was well written and easy to read. Even though I consider myself an experienced investor as I was in the financial planning business for over 10 years, this was the first time I had heard of Ron's concept of using covered calls and naked puts. The concept immediately made sense to me and I have implemented it with a good deal of success. His Visions software - RonGroenke.com - is a great compliment to the strategy. Not only has Ron come up with a great investment strategy, he is a very nice, honest man who is obviously passionate about his system.

Mike Conlon Cary, NC 27511 --An Investor

My experience with Ron Groenke has been very positive:

I picked up Ron's book at Barnes & Noble a few months ago. It was well written and easy to read. Even though I consider myself an experienced investor as I was in the financial planning business for over 10 years, this was the first time I had heard of Ron's concept of using covered calls and naked puts. The concept immediately made sense to me and I have implemented it with a good deal of success. His Visions software - RonGroenke.com - is a great compliment to the strategy. Not only has Ron come up with a great investment strategy, he is a very nice, honest man who is obviously passionate about his system.

Mike Conlon Cary, NC 27511 --An Investor

Fifteen years ago a friend and I tried the options market and failed miserably. A year ago I read Ron s book and two comments hit me like a bolt of lightning:

1) You make money by selling, not buying; and,

2) With options, the goal is monthly cash flow, not long term increase in assets.

What simple concepts. I m 72 and don t have time for the long-term. I use Ron s ideas and his VISIONS software and have steadily increased my monthly cash flow.

Javin Taylor Las Cruces, NM 88007 --An Investor

About the Author

Ron Groenke moved from Minnesota to the sunny gulf coast community of Marco Island after twenty-five years in the communications systems and software development environment. He has been active in the stock options market for over twenty five years and developed the concepts and techniques provided in this book.

On Marco, he and wife, Jean, are active in their church and busy entertaining family and friends who visit from the north.

Besides options investing/advising, other activities include personal computing, walking, boating, and volunteer work.

Product Details

• Paperback: 200 pages
• Publisher: Keller Publishing (January 2, 2009)
• Language: English
• ISBN-10: 1934002089
• ISBN-13: 978-1934002087
• Product Dimensions: 8.9 x 6 x 0.7 inches
• Shipping Weight: 12 ounces (View shipping rates and policies)
• Average Customer Review: 4.3 out of 5 stars  See all reviews (43 customer reviews)
• Amazon Best Sellers Rank: #67,582 in Books (See Top 100 in Books)

More About the Author

A passion for life and a willingness to work hard were early traits for Ron Groenke, the youngest son of the late Anna and Robert Groenke, who lived on a farm outside of New Germany, Minnesota. Up early and busy with farm chores seven days a week instilled strong character and personal values.

His ninth grade algebra teacher told him, "Learn all you can about computers, it's the wave of the future."

That advice set him on a path, obtaining a degree in mathematics with distinction from the University of Minnesota, and specializing in data communications and software engineering.

That background enabled Groenke to work at General Mills as a computer programmer, and then at Sperry Univac, where he worked on communications software for NASA for the tracking of Apollo spacecraft. In 1968 Groenke took a risk and joined a start-up data communications company, Comten, in St. Paul, where he worked for 25 years, eventually becoming vice president of development and engineering.

It was on a business trip in 1986, that a colleague introduced Groenke to options trading.

"A colleague and I were on a plane going to a meeting, and I noticed how busy he was with the Wall Street Journal and his calculator. I asked what he was up to, and then it was revealed to me. He was looking at the premiums he could get by selling calls on his NCR stock. The next day, I investigated what was required to sell these calls, and found out how easy it was."

"A covered call is an option you sell which allows someone to buy your stock at a predetermined price until some future time. You get a premium up-front when you sell the call and have the cash immediately available," Groenke said.

In 1981, Comten was purchased by NCR, and in 1991, by AT&T. AT&T wanted to change the direction of the communications group, and basically dismantled Comten. In 1993, as part of the front end executive team, Groenke was offered a retirement and severance package at the age of 49. He researched the opportunities available and took the investment Series 62 and Series 7 exams in preparation to becoming a broker. His wife suggested that he could do it alone and need not work for anyone anymore. He took the early out package and started option trading, with less stress than that of corporate life, and hasn't looked back since.

Options trading allowed Groenke to retire to Marco Island in southwest Florida, where he and his wife moved in 1998.

After moving to Marco Island, Groenke joined a rotary club, where he gave a short "classification talk" on his background. The program chairman asked him to be the formal speaker at an upcoming Rotary meeting. After this presentation, Wade Keller owner of Keller Publishing, LLC, approached Groenke about writing a book on the material he had covered.

Keller and Groenke worked together and co-authored "The Money Tree: Risk Free Options Trading," which was published in 2002 and was very successful. That book was followed in 2004 with "Covered Calls and Naked Puts", and in 2006 with "Cash for Life". Now his latest book, "Show Me the Money" is available.

In addition to his books, Ron realized the need for a strong software program to facilitate an investors use of his highly successful investment strategy. His proprietary software programs have continued to improve with suggestions from users. The current version of VISIONS is available on an annual license fee for about 40 cents a day. With this powerful program investors can search the entire stock market for just those special stocks that fit their criteria for investing, selling calls and selling puts. A special feature of VISIONS is called Scout. This dynamic program uses the concepts in "Show Me the Money" to find the top ten stocks RIGHT NOW! A free 21-day trial allows any investor to prove for him or herself the profitability of using Ron's software programs. No credit card or payment is needed for the 21-day free trial.

Ron's books have been done in a novel format with one character, a retired professor named Rob Graham, teaching a former student how to write covered calls, naked puts, and perform good stock option selections. The story takes place on Marco Island in southwest Florida where Ron lives with his wife, Jean, also a character in the book.

"Stock market reading is dry material, and I wanted people to have some fun reading, but also to learn about performing stock and option selections in a more easily understood manner," Groenke said. Groenke has received e-mails and comments from numerous readers saying they have enjoyed reading the books. A real life finance professor - Frederick P. Scheduler, PhD., Associate Professor of finance, East Carolina University - made the following comment: "Show Me the Money is a book I can comfortably recommend to my friends who are average investors. They will understand the material and will discover a relatively low-risk way of making money in the stock market, and may even find that they have made some new imaginary friends through the characters used in telling the options story."

Ron says he wrote the books because he thought it would be fun, and he wanted to allow average investors to take advantage of something that could improve their investment returns and well being. He continues to give talks to civic and investment clubs throughout the country as well as on financial talk radio such as the nationally broadcast "Money Matters". He has been featured on NBC and CBS TV, as well as hosting a Fort Myers/Naples local news segment on investing. His one and two day seminars are in great demand.

In his spare time, Ron and Jean enjoy traveling to visit their three children and four grandchildren.

The Naples Daily News, Marco Island Sun Times, Marco Island Eagle, Sarasota Herald Tribune, Waconia Patriot, and Norwood Times have written articles about him and his financial experience and knowledge.

He has been the recipient of the NCR Laureate Award in recognition of major product development contributions and excellence in engineering.

Groenke would like to be known as a person who helps average investors earn income on their portfolios.

Through his books and other media coverage, he's trying to educate people on how to do something with their stock that will generate a very nice financial return.

"I try to teach people to go for the singles and doubles in investing, instead of the homeruns," Groenke said. "It's the singles and doubles that win ball games. My gratification is knowing that I have helped someone out there advance their financial well being."

FOR MEDIA INTERVIEWS CALL RON AT 888-GROENKE (476-3653)OR VISIT WEBSITE: RONGROENKE.COM

Customer Reviews

Most Helpful Customer Reviews

45 of 47 people found the following review helpful:

2.0 out of 5 stars Good for a Snooze and a Weak User Guide to the software, April 23, 2010

By 

Patrick "Czytanka" (Canton, MI, United States) - See all my reviews
(REAL NAME)   

Amazon Verified Purchase

This review is from: Show Me the Money: Covered Calls & Naked Puts for a Monthly Cash Income (Paperback)

Do you like corny stories of a master teaching a student? Do you like a book with little real content other than to support the author's software? Then this book is for you.

Groenke's book outlines the heart of his system, Buy Rank. Take a close look at the calculation and the simple version you can figure out in 2 seconds looking at a stock chart.

There are two parts: Buy Limit that feeds into the Buy Rank calculation. Look closely, really it is a laughable joke. A calculation made to justify software, a book, and make people think they have a magic formula.

Buy Limit = Low + .25 * (52 Week High / 52 Week Low)

Buy Rank = (10 * (Buy Limit - Close)) / (.25 * (52 Week High / 53 Week Low))

Buy Rank: Produces a number between +10 and -30. A +10 tells you the stock is at a 52 low. -30 tells you the stock is at a 52 week high. WOW-WEE! How about peaking at a 1 year stock chart for 2 seconds. The book recommends you buy a stock when Buy Rank moves down from 10, to 5, and the stock is over the 50 moving average.

Simple Version: Buy a stock when it is at a 52 week low, is now turning up, and crossed over the 50 day moving average. THAT IS IT, Buy Rank in 1 sentence. The Buy-Rank number is nothing more than a gimmick to sell a book and make investors think that it is some "magic formula" when it is NOTHING MORE than the old "buy low sell high." A 2 second peak at a stock chart will tell you a stock is at a 52 week low. Want to scan for stocks at 52 week lows, go to MSN or Yahoo, and put P/E > 0 and < 20 so you are looking at value.

Conclusion: You can buy any number of books that discuss naked puts and covered calls. This book has very,very little content, chapters of a lame story, basically it is a user guide (and a week one at that) for the software. As for the software, get your free trial and keep in mind what buy rank really is. You may then realize you do not need it. You should get the book for free if you bought the software.

One so-so tip from the book was "okay" you want to own 1000 shares of a stock, buy 500 shares, sell an ITM call, sell 5 OTM puts. There ya go, the best part of the book is now yours.

27 of 29 people found the following review helpful:

4.0 out of 5 stars An interesting method but it understates the risks involved, November 22, 2009

By 

Individual Investor - See all my reviews

Amazon Verified Purchase

This review is from: Show Me the Money: Covered Calls & Naked Puts for a Monthly Cash Income (Paperback)

Ronald Groenke rightfully stresses the importance of cash flow but he understates the risks involved. This is a book written for option beginners and, as such, a little more emphasis on the risk involved would be appropriate. The book is mostly about covered calls and while there is not much additional risk in selling covered calls there is an important trade-off that should be considered. When you sell covered calls you give up the possibility of a Peter Lynch style multi-bagger replacing it with an income stream.

There is not much discussion about selling naked puts but if they are suggested it should be made clear that they are a lot more risky than covered calls. The first caveat is that unless you are called Warren Buffett you have secure the puts. The puts are "naked" in that they are not covered by stock short sales but they are secured with cash or margin. On page 54 Groenke says: "And you get paid up front when you sell a Call or a Put. That money is yours no matter what." This not true for puts, the premium you get plus another amount is retained by the broker as a guarantee against being assigned. If assigned, that money goes to pay the shares you are buying.

Groenke also overstates the income you get from the puts. In effect he ignores the amount of money you put at risk when selling the naked put which is the strike price less the premium you receive. From page 43: Jake asks "With Career Education you sold numerous Puts and they expired. How would you computer your return on that?" to which Graham replies: "Perhaps with the potential investment of an assigned put." That is the correct answer but that is not how he computes the rates of return on the puts. On page 45 there is the case for Plexus which shows a gain of 9.96% based on $17.604.50 invested in 800 shares at $22.00. But the total amount of money put at risk is $17.604.50 for the shares and $19,462.02 for the puts, $20,000 strike less $537.98 premium received. Using $37,066.52 as your base, the return is only 4.84%. My calculation assumes that the stock goes to zero and while that is not likely, had you invested in Lehman Bros. or Enron, well...

I bought the book because I too like selling covered calls and cash (margin) secured naked puts. Frankly the story of Jake and his professor is a bit corny but don't let that put you off, it helps pace the real stuff. One reviewer complained that the book is really an infomercial, which it is. One of the big difficulties in investing is finding stocks to invest in, one should have an inventory of potential candidates. If the software Groenke has for sale, which I have not tested, lives up to what he claims for it, then it makes a lot of sense for him to offer that software and explain what it does. A lot of books are long on theory and short on practice. Show Me the Money is short on theory but, with the help of the software, long on practicality.

As a closing comment, if you are going to sell naked puts, make sure not to overextend your margin, the money you got for the puts has not been earned until either the puts are bought back or they expire worthless.

18 of 21 people found the following review helpful:

1.0 out of 5 stars A Written Infomercial, October 3, 2009

By 

T. John - See all my reviews

Amazon Verified Purchase

This review is from: Show Me the Money: Covered Calls & Naked Puts for a Monthly Cash Income (Paperback)

The first few pages are an advertisement for his website/software and I knew right away it was going to be "another one of those books." I love reading stock books though, so I chose not to judge a book by its cover or by the first few pages. It didn't get better... It was basically an infomercial, literally; it even had fake characters telling their story. The story is about a couple and their rich friends and in the beginning of the book the character even thinks to himself, "Hmm... I wonder which one of my rich friends that new bentley belongs too" (not literally word-for-word but that is the basic idea. From the title "Show Me the Money" I was expecting an advertisement, but like I said, I dont judge books by their cover. I feel like my intelligence has been insulted. Let me get one thing clear: selling monthly options IS a good strategy and that is why I bought this book - I wanted to learn more about the strategy, but this book quickly ended up in my garbage can. If you want to learn about selling options then I encourage you to keep researching, however, save yourself the time and try other books first.