Negative Cost Basis Stocks

Did you know that it is possible to have stocks in your account that you have already made a profit on before you sell it? It is rare, but it can happen.

Here are some tips help you pull out some money from the stocks you already own, and possible even pull out more cash flow from the stock then you originally put into it.

1. Sell Puts to Enter

If you are not already in a stock you can start pulling off an income by selling a naked put to enter the trade. This gives you a premium up front but forces you to buy the stock at a given strike price if the stock goes to that strike price or lower.

The downside is that you could end up getting into a stock for more than it is worth, but if you are planning on holding it for na long time that might not be such a bad thing.

2. Sell Covered Calls

Selling calls on a stock is the best way to make some cash flow off of your position and lower the amount of cash it cost you to enter the stock. For example if you buy a stock for $20 and nsold the $25 call for $2 you just pulled out $2 from that trade.

3. Dividends Help

Dividends help you to lower the cost of a stock. Even a monthly dividend of .1% helps off a little. Dividends aren’t where the real money comes from, but they are nice to have.

4. Lower Cost Stocks

It is pretty hard to sell enough calls on a $200 stock to get a negative cost bases, but you might be able to pull out enough money to pay for a $10 stock in a year or two. Just remember cheap does not always mean better.

For more on covered calls visit http://www.stocks-simplified.com/covered_calls.html

For an idea to find good dividend stocks visit http://www.stocks-simplified.com/Gordon_Growth_Moddl.html