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3 Naked Puts for $1,000 in Monthly Income

Trade options against SBUX, DLTR and ECPG for a cool grand

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Encore Capital Group (ECPG): Naked Puts

encore-capital-group-ecpg-stockThe next choice for naked puts is a terrific company that is vastly undervalued. Encore Capital Group (ECPG) is a global buyer and collector of bad consumer debt. ECPG has a very sophisticated operation and just reported blowout earnings, with earnings continuing to increase at an astounding rate. I think ECPG stock should be trading in the mid-$60s, yet here it is at $48.69.

This is where I would love to have a stock put to me — at a valuation well below where I think it should be trading.

In this case, I would sell two of the April 50 Puts for $2.10, for a premium collection of $420.

I wouldn’t mind buying the stock either, then selling covered calls against half the position, but only if ECPG stock goes above $50. Right now, the 50 strike is too far away to make any good money on the premium from covered calls.

All told, you now have $760 in income ($340 + $420).

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