As the cost of living continues to rise, it can be challenging to make ends meet, and paying bills on time can be a daunting task. One of the questions that Austin Nelson, a cash flow trader, received was how to pay for practical things, such as phone bills. In this article, we will discuss how to pay off your Verizon phone bill using options trading.
Verizon is known as a blue chip stock and is one of the leading telecom companies in the United States. The company’s stock symbol is VZ, and it is a well-known company that competes with AT&T, Sprint, among others. The blue-chip stock is known for its stability and usually goes up over time.
So, how do you use Verizon to pay off your monthly phone bill? Austin recommends using a naked put trade, which is an option that promises to buy the stock at a value below the current rate.
To start, you need to open a paper trading account, which allows you to trade with virtual money without risking any real money. Austin encourages people to use paper trading accounts before investing real money.
Suppose your Verizon phone bill is due next month, and it costs $100. You can use a naked put option to create a monthly cash flow to pay off your bill. For example, if the current Verizon stock price is $49.50, you can promise to buy the stock at $48 for a dollar and 50 cents less than the current value. For making the promise to buy at a lower price, you get paid between the bid-ask spread, which is around 47 cents.
Each contract represents a hundred shares, so if you sell two contracts, you will get paid around $94. Austin recommends selling two contracts that would be just under $100, which will pay off your phone bill for the next month. If the Verizon stock stays the same or goes up, you keep the money and don’t have to buy the shares. If Verizon’s stock price goes down, you still keep the money, but you may have to buy the shares at the lower price.
In conclusion, using options trading to pay off your Verizon phone bill is a great way to create monthly cash flow. It’s essential to do paper trading before investing real money and to understand the risks involved. The naked put trade is a tricky way to get paid before owning the stock and buying it at a discount.