GPC has paid $3.42 per share but is currently paying investors during this bear market $0.90 per share.
Genuine Parts Company is an American service organization engaged in the distribution of automotive replacement parts, industrial replacement parts, office products and electrical/electronic materials.
#3. VNQ (Real Estate REIT)
Dividend Yield: 3.53%
VNQ has paid $2.86 per share but is currently paying investors approximately $0.56 per share in today’s bear market.
VNQ is Vanguard’s real estate ETF which invests in stocks issued by real estate investment trusts (REITs), companies that purchase office buildings, hotels, and other real property.
#4. OMF (One Main Holdings, Inc.)
Dividend Yield: 7.96%
OMF currently pays investors $0.95 per share but has paid them as much as $6.80 per share during the bull market.
OneMain Holdings, Inc. is an American financial services holding company that provides loan products, offers credit cards, and other personal loans.
#5. T (AT&T)
Dividend Yield: 9.71%
AT&T is currently paying shareholders $0.28 per share but has paid investors $1.60 in the past.
AT&T Inc. is an American multinational telecommunications holding company offering internet and cellular services.
#6. NRZ (Real Estate REIT)
Dividend Yield: 9.85%
NRZ stock is currently paying investors $0.25 per share but has paid $1 per share before.
New Residential is a publicly traded mortgage real estate investment trust with a diversified portfolio and a strong track record of performance.
#7. EMR (Emerson Electric Co.)
Dividend Yield: 2.45%
EMR pays shareholders $0.51 per share but has paid investors $2.05 per share prior to today’s bear market.
Emerson Electric Co. is an American multinational corporation headquartered in Ferguson, Missouri.
The Fortune 500 company manufactures products and provides engineering services for industrial, commercial, and consumer markets.
#8. ESGV (ETF)
Dividend Yield: 1.26%
ESGV currently pays shareholders $0.20 but has paid investors $0.88 per share in the past.
ESGV tracks the performance of large-, mid-, and small-capitalization stocks.
The ETF specifically excludes stocks of certain companies related to the following: adult entertainment, alcohol, tobacco, cannabis, gambling, chemical and biological weapons, cluster munitions, anti-personnel landmines, nuclear weapons, conventional military weapons, civilian firearms, nuclear power, and coal, oil, or gas.
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What is a call option?
A call option is a bullish strategy that allows a trader to profit from a trade on the upside.
The trader essentially bets that the price of a stock is going to go up by buying call options.
How does a call option work?
When you open the options chain, you will have many contracts to choose from, ITM, ATM, or OTM, which I’ll use as a quick example for now.
If you are betting on the price of a stock to go up, you might buy a contract with a strike price of a few dollars above the underlying securities’ current price, depending on your risk.
If the stock does indeed move up in price, you will begin to see gains on your contract.
You may then sell your contract and profit from your play when you are ready.
What is a put option?
A put option is a bearish strategy that allows a trader to profit off a trade on the downside.
Unlike calls, traders buying put options are betting the price of a security will drop.
How does a put option work?
I’ll use another OTM example for now and explain the other scenarios below.
You will have many options in the options chain to choose from.
Here you will be able to select a contract to buy based on the ‘strike’ price you’ve selected.
The strike price you’ve selected is where you believe the price of a security will go down to.
If a price of a stock is at $20 and you buy a contract for a strike price of $17, you’re betting that the price of the stock will fall in the future.
If the stock falls to $19 then $18, you will begin to see gains on your bet.
The closer the price of the underlying security gets to $17, the more gains you will see.
You can then close your position at any moment before the contract’s expiration date and take profits.
Both these examples are examples of an OTM contract which I’ll explain more below.
Here are other examples of how calls vs puts work.
What is ATM and ITM?
ATM stands for “at the money”.
At the money (ATM) is the current price a stock/security is trading at.
When your strike price is near the current share price this is considered to be “at the money” (ATM) for both calls and put options.
ITM stands for “in the money” and will be a little different for puts vs calls.
When a strike price is in the money for put options, it means the price is above the “at the money” (ATM) price.
Example: You’re betting the price of a stock will go down, so you buy a put options contract “ITM” for $11 while the stock is currently trading at $10 (ATM).
You contract has a higher probability to earn gains since the current share price (ATM) is already below your strike price (ITM).
The further the price of a stock goes down from your strike price, the more money you make.
When a strike price is in the money for call options, it means the price is below the ATM price.
Example: You’re betting the price of a stock will go higher so you buy a call option contact “ITM” at $9 while the stock is trading at $10 (ATM).
Your call option contract has a better probability of making money from the start since the current share price is already above your strike price.
If the price of that stock continues to surge, then you will continue to make gains.
“In the money” (ITM) contracts are a little more expensive to buy since your probability to make money is higher.
“At the money” (ATM) contracts which are closer to the “current” share price had a medium risk factor and are cheaper than ITM contracts.
So then what are OTM contracts?
OTM “out the money” explained
OTM, or “out the money” is the strike price above the ATM for calls, and the strike price below the ATM for puts.
Call option example: If you buy a call options contract OTM at $12 and the price of the stock is currently at $10 “at the money” (ATM), you are betting the price of a stock will rise above $10 per share.
Put option example: If you buy a put options contact “out the money” (OTM) at $8 and the price is currently at $10 “at the money” (ATM), you are betting the price of a stock will go below $10.
Remember, the closer a stock’s price gets to your strike price, the more gains you will reap.
So, the further out the money your strike price is, the higher the reward may be.
Should you buy ATM, ITM, or OTM?
Every trader will use the strategy that best tailors to their risk.
Out The Money (OTM) = High Risk / High Reward
At The Money (ATM) = Medium Risk / Medium Reward
In The Money (ITM) = Low Risk / Low Reward
Traders will need to study the performance of an underlying asset to get a feel and understanding of where the price may go.
Once you have determined whether you will be buying puts vs calls or vice versa, then you may begin to look at the contracts available.
Options contracts explained
Every 1 contract equates to 100 shares of a particular stock.
OTM contracts are usually less expensive.
With these contracts you can buy 100 shares of a stock for only cents.
ITM contracts are more expensive because they are the safest choice.
ATM contracts are in between ITM and OTM in pricing.
The options chain will allow you to choose when contracts based on short-term or long-term expiration dates.
You can go short or long on both a call and put options contract.
These expiration dates may vary from only a few days to weeks, to months, and even years.
Whether you should trade short-term or longer-term expiration options contracts is a strategy that will be highly based on your trading goals.
Where can you trade options?
The most popular platform to trade options is Webull.
Webull is where I personally began learning reading charts and familiarizing myself with the options chain and data.
Here traders will be able to purchase calls vs puts or vice versa.
Some traders use both strategies to make money during a bull and bear market.
Other platforms where you can trade options include:
If you’re already invested in stocks, you might already be using one of these platforms.
The difference between trading stocks and trading options is that you will need to open a margin account for options.
A cash account will not allow you to buy calls vs puts.
You can earn 5 free stocks from Webull when you sign up using my affiliate link.
If you choose not to keep these 5 stocks, you can sell them and fund your margin account to trade options.
Puts VS Calls: Why trade options?
Buying puts or buying calls allow traders to bulk up on stock and use leverage to make money in the stock market.
There are 4 different ways you can trade options.
All four essentially allow you to use leverage and make money whichever side of the play you want to begin trading options.
However, selling calls and selling puts from the get-go will require further in-depth explanation, which I will do in another article.
For today’s breakdown, I’ve explained buying both calls and puts.
There are a variety of things that attract investors to trading options.
Losses are limited to what you put in your contract
Quick accumulation of cash / shares
If you’re here today, it’s because you’ve probably seen people in your space talk about how much money they’ve made playing options.
And while options can yield a full-time income stream, new traders should also be aware of the risks.
Is trading options risky?
Trading options has its risks as bets aren’t 100% guaranteed to play in your favor.
However, there are a few things you can do to increase your chances at becoming profitable.
Familiarize yourself with technical analysis / chart patterns
Only buy what you can afford to lose
While traders can certainly trade based on market sentiment, it would be wise to gain some understanding of how prices move through technical analysis.
TA can help traders determine the trajectory of a stock’s price moves in the coming minutes, hours, days, and even weeks.
It’s best to armor yourself up and learn as much as you can to properly set yourself up for success.
If you’d like me to do a write-up on bullish and bearish patterns leave me a comment below.
When it comes to choosing between calls vs puts, it really comes down to adapting to the changes in the market to help you increase your income potential.
If you have any questions, be sure to leave a comment below.
Robinhood is an online investing platform that offers commission-free stocks with high-yield cash management offerings.
This popular stock market trading app does not charge commission for stocks and cryptocurrency trading.
Robinhood, the financial technology company offers trading in stocks, ETFs, other options, and cryptocurrency.
Moreover, this online brokerage provides web and mobile-based services which will allow you to invest and trade easily.
Additionally, the mobile-based services of this platform have made it stand out from its other competitors.
You may be wondering about many questions arising in your head about Robinhood & Robinhood stock.
Here in this article, you’ll find the answers to your queries and get to know all the details about this popular online brokerage like- How does it make money, the pros & cons of Robinhood, Robinhood stock price, the behavior of Robinhood in cryptocurrency & its future, and benefits of long-term investing in stocks & cryptos.
With more than 13 million users, Robinhood is the best platform for active investors or younger investors who want commission-free trading and investing on mobile.
If you want to invest in cryptocurrencies like Bitcoin, Ethereum, Dogecoin, you can use this mobile and web trading platform to invest long term.
Apart from it, Robinhood (a popular stock trading app) went public in July 2021 and its share price was set at $38 for IPO (Initial Public Offering).
Also, Robinhood was listed on the Nasdaq stock exchange under the symbol “HOOD.”
Recently, Robinhood’s CEO Vlad Tenev said that the company is planning to release the feature that allows customers to trade stocks outside of market hours.
The company named this feature, “Hyper-extended hours.”
According to Bloomberg, Robinhood stock is the favorite stock of Cathie Wood’s ARK funds and they’re purchasing the stocks every week since October 2021.
Last week, ARK Funds have bought about 2.45 million shares of Robinhood markets.
Robinhood Business Model- How the company generates income
With no minimum and no fees for trading in stocks, cryptos, and ETFs, the company has to generate income as a business to be sustainable.
This online brokerage makes money from market makers and some other ways.
Here are the ways through which the company generates revenue.
Payment for Order Flow
In 2021, the company generated 75% revenue through the process payment for order flow (PFOF), in which the company directs their customer’s orders equity and options to a particular market maker and the company receives payment for this compensation.
Hence, PFOF is the major income stream for the company.
Payment for order flow unfortunately plays against retail investors.
The SEC has talked about banning the practice since it allows market makers to manipulate the stock prices.
Stock Loan Income
Robinhood generates revenue by lending margin securities to counterparties.
Furthermore, the company keeps all money it generates from lending your stock and does not share it with you.
This is a big problem because large financial institutions make more money from the user while orders are processed through dark pools.
Borrowing Uninvested Cash
Robinhood generates income by borrowing uninvested cash and depositing this cash in interest-bearing accounts.
Membership Fees for Robinhood Gold
Robinhood Gold program is a paid subscription service that allows users to benefit from premium features like margin trading, Level II Market Data, professional research, and enhanced quick access to deposits.
It is also one of the income sources of the company.
Robinhood Gold costs $5 per month.
Also, it gives a free trial of 30 days.
What can you invest in on Robinhood?
Robinhood is a popular trading platform that allows the user to invest in stocks, cryptocurrencies, Exchange Traded Funds (ETFs), and options.
If you want to do commission-free trading in stocks, ETFs, and cryptocurrencies, then Robinhood is great for you.
Moreover, the company allows the investors to buy portions of stocks without paying the full share price.
It gives a free stock upon making referrals and opening the account.
When it comes to investing in cryptocurrencies, Robinhood allows to trade in several digital currencies including Bitcoin, BitcoinCash, Ethereum, Ethereum Classic, Litecoin, Bitcoin SV, and Dogecoin.
Most importantly, Robinhood has introduced IPO access for traders.
Besides, Robinhood does not offer the ability to invest in mutual funds, forex, bonds, and futures options.
The pros and cons
Simple, Easy to Use, and Easy to navigate
Free stock, ETFs, Cryptocurrency Trading
No account minimum
Cash management accounts
Margin investing and Fractional shares
Limited customer support
No mutual funds and retirement accounts
Limited investment offerings
Limited investing research and trading tools
The Pros explained
Robinhood, the popular brokerage in the US, is extremely easy to use and accessible for people of any age and any income.
Robinhood is a mobile-first company that differentiates it from other companies.
Its trading app and web-based platform are well-designed and more than enough to trade.
The new investors or inexperienced users can easily trade on it due to its simple and user-friendly features.
When it comes to costs, Robinhood provides commission-less trading with no minimum fees.
You can invest in stocks, cryptos, options, and ETFs for free.
Furthermore, the company offers fractional share trading, and you can invest in expensive stocks without much capital.
Additionally, it gives quick access to deposited cash.
The account opening process in Robinhood is fully digital and free.
Rather you get free stock upon opening the account and by referring the new members.
Last but not least, the company offered IPO access in July 2021 to benefit its users.
If you trade often, the savings can be huge on this platform due to the lower cost.
The Cons explained
Along with plenty of advantages, there are a few cons of it.
Robinhood does not offer to trade in mutual funds, bonds, and futures trading.
The research, educational resources of this financial company is limited.
It provides basic tools for the services and users can access professional research by purchasing paid membership of Robinhood Gold.
The customer support available in this stock trading app is limited.
Although, the company had made necessary improvements to its customer service in the last year.
The Robinhood scandal has blown up after the freezing of buying ‘meme stocks’ in 2021.
The company lacks full trust from retail investors after restricting the rights to buy specific stocks from its users.
The company is going to be accepting cryptocurrency as a form of payment and is also in the works to getting licensing agreements that will allow it to premier live sports events and even live concerts.