Give me a few minutes of your time and I will show you how I made $2,450.00 income off my Yamana Gold shares in just 4 months, and more importantly how you can too. 

Having owned Yamana gold shares for over a year, like all gold investors, I was pleasantly surprised at the momentum that all gold stocks had in the first half of the year. Yamana Gold (TSX:YRI) started the year trading near $2.00 a share before bullishly breaking out to $5.99 by May 18^th.  Having been around the block a few times in regards to these types of stock moves, I suspected the overbought shares would eventually begin to consolidate or retrace the prior rally.

My first instinct was to ask the question if I should simply sell the shares and take my profits.  But, I was reluctant to lose my position so easily.  So I figured, if I think the stock is approaching the top end of its range, why not use the shares to make myself some income using options.

Let me show you what I did.

First off, many beginners stereo type options as risky.  I don’t look at it that way.  To me options are a tool, a tool that can be used to create risk, but also can be used to hedge risk, or to generate income. 

Here was my scenario. I owned 5000 shares of Yamana or about $30,000 of stock at the $5.99 price.  Back on May 18^th, I sold 50 contracts of the September 16^th, 2016 $7.00 covered calls which were bidding $0.49.  I made $2,450 ($0.49 x 5000) in immediate cash flow for the obligation to have to potentially sell the shares for $7.00 at any point prior to the September expiration. That represented an 8.18% cash flow income return in just 4 MONTHS!  

Well, 4 months passed, and on September 16^th, the shares of Yamana Gold were trading a $5.84, just a few cents away from the levels back in May.  The calls profitably expired freeing me from by potential obligation to sell. 

Let’s just be clear on a few points. I made this income on the shares I already owned.  In a negative interest rate world, how hard is it to find income?  Yet I made 8.18% in 4 months.  Most importantly, I never took any more risk then any other investor.   

What I know is that most investors are intimidated by options, but you don’t have to be.  The solution is easy.  You need to educate yourself. Once you do, you will realize that it is not that hard to do.  Is it time for you to take your investing skills up a notch?

Patrick will presenting two workshops in Vancouver and Calgary as part of the TMX Options Education Day. This is a fantastic opportunity to learn about options from Patrick and a number of other TMX/Montreal exchange experts:

1. Vancouver – Saturday, October 15th

2. Calgary – Sunday, October 16th

CLICK HERE to register or for more information