Palm Beach Current Income Program FAQ

I do not live in the U.S. Can I use and take advantage of this strategy if I live abroad?

Yes. The option market in the U.S. is among the largest in the world. Brokers in your country should have access to the option market in the U.S.

Do you know of any non-U.S. brokers that will let me trade the U.S. options you will be recommending in Palm Beach Current Income?

We cannot give recommendations of brokers located outside the U.S. There are simply too many. Please do your own research. A simple Internet search for “option brokers” should reveal several brokers in your country. Interactive Brokers has several offices worldwide. You could start your research with that service.

It seems like a lot of work to enter a new order every day until it gets filled. Can’t we just use a GTC order?

Entering day orders IS more work, but it is also much safer. It is easy to accumulate several GTC orders that sit in your account indefinitely. There will come a time when you will forget about a previous GTC order you placed and end up entering a double order. Or a previous trade that is rated a “Hold” all of a sudden gets executed.


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If you are concerned about the extra work, then place a day order on the day we recommend a trade. If it does not get filled, track the option price daily, and when it gets closer to the sell range, you could enter another day order.

Can I trade options in my retirement account (IRA, Roth IRA, 401(k))?

Yes, it is possible to trade options in your retirement account. All of the brokers mentioned on our list allow option trading in an IRA. There are many different levels and classifications of risk with option trading. Each broker has their own set of rules and guidelines on the type of trading allowed in your retirement account. When talking to your broker, mention that you will be doing “covered call writing” and “cash-secured put writing.” Your broker may use different terminology.

What happens to the money in my account when I sell a put option? Do I earn interest?

This money will remain in your cash account. Your broker does not transfer or move this money. Depending on which broker you have, you may earn a small amount of interest on this cash. The cash must remain in your account in case someone accepts your low-ball offer. If your low-ball offer is accepted, this cash will purchase the stock at the low-ball price you specified.

What will happen to our option trades if the stock market has a major correction? Isn’t there a chance we could end up having to buy all of the stocks we made offers on well below our low-ball offer price?

In Palm Beach Current Income, we’ll be making low-ball offers on only safe companies. These companies do not typically have a lot of volatility. Remember, our primary goal is to earn a second income, and our secondary goal is to acquire companies we want to own anyway at cheap prices. We’ll be happy if we end up purchasing some of these companies. Once our low-ball offers are accepted and we own these companies, we can turn around and generate more income. In case of a true stock market meltdown, we always have the choice to exit a trade. We’ll manage the risk and keep you updated in each weekly issue.

Will you ever “buy to close” or exit an option trade before it expires? 

Yes. When it makes sense, we may decide to exit an open option trade to lock in a gain and free up our capital for a more profitable trade. In some cases, we may need to cut our losses and exit a trade if it moves against us. In each weekly issue, we’ll update all of our open positions and let you know what to do.

How are option trades taxed?

In Palm Beach Current Income, we’ll be selling puts for short periods of time. Typically, our option trades will be in effect for two to three months at a time. As a result, they will be considered a short-term capital gain and taxed at your marginal tax rate.

Why don’t you recommend options on stocks in The Palm Beach Letter portfolio?

These are stocks we want to own. It would make sense to make low-ball offers by selling put options on them. The problem is that many of our Palm Beach Letter stocks are small and off the radar of most of Wall Street. They do not have liquid options markets and enough volume to recommend in Palm Beach Current Income. However, we will monitor Palm Beach Letter stocks and let you know when there is a good opportunity to make low-ball offers on them.


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Why? You’ll be blown away when you see it – click here for the video.”


I am confused about the terminology that my broker is using on the option agreement and suitability form.

In Palm Beach Current Income, our primary income-earning strategy will be to sell put options. Your broker may use terms like “writing put options” or “cash secured puts” or “put writing against full deposit of strike price” or “uncovered put selling” or “naked put selling.” There are many different terms used.

The terms “naked” or “uncovered” mean that you are selling options on stock you do not own.

If you are in doubt about which option to select, pick up the phone and call your broker. Tell them you would like approval to sell put options on stocks you do not own. Tell them that you will not be using margin and will only be selling put options up to the cash value in your account. Your broker will then tell you what category you need to be approved for. Even though we will not be using margin in Palm Beach Current Income, your broker may still require you to open a margin account.

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