Profit whether a stock goes up or down (stock + options)

This thread is to share a very profitable stock trading strategy combined with options that I learnt from a seasoned trader about how to trade stocks the right way and make profit no matter the direction of the stock...When the stock rallies up , we make money..When the stock rallies down we make money as well..When the stock consolidates , we lose little money..We want to focus on stocks that move much..This is what the strategy entails...Buy shares of a stock that you are comfortable owning for at least 6months or more...After buying the stock , we buy insurance which is also called a put option to cover any decline in the stock.If the stock rallies up , we lose our insurance because it becomes useless(Its just like having a car insurance or home insurance) but then we make money from the upside movement of the stock..If the stock rallies down after the purchase , we claim the insurance which is out put option and use that profit to buy additional stocks..Rinse and repeat until you are happy with the money you have made..If you want to make a killing in the market , this is how the big players do it....If you are serious about building serious wealth in the long term this is a strategy that you might consider trading..This is not a get rich strategy..It is a long term strategy that requires iron clad patience but the patience will be worth it in the long run..
NB:This strategy doesn't care whether the stock goes up or down..We will still make money whether the stocks goes up or down provided the stock is moving much and not ranging..

All constructive ideas , suggestions and criticisms are welcome...I am forward testing the strategy currently and if you are interested , you are welcomed to join me forward test this strategy and share ideas....

I will use CNBC stock screener , IBD 20 and IBD 50 and Finviz to select my stocks I will be trading with this strategy..

If you're going to use this strategy, I'd pay for part of the put cost by selling OTM calls against your position.
I think you'll lose too much buying the puts unless you go pretty far OTM in which case most will expire worthless so rarely profit from a fall in price.
Just my opinion :-)

Example:

Facebook (FB)
Buy 100 shares @ 135.54
Buy Jun 135 P @ 6.45
Sell Jun 150 C @ 2.05

Break even = 139.94
Profit on options starts with price below 130.60

If stock falls to 120:
Loss in stock = $1,554
Profit in options = $1,060

There is no such free lunch

Usually, options are priced based on several factors, one of them is volatility of the underlying. So if you pick highly volatile stocks to execute this strategy, you will find puts are expensive, so you will pay more premium and hence your breakeven point will be a higher price level for the stock.

Secondly, this strategy is time bound, i.e. it's limited to the life of the put, unless you will keep rolling your position forward every time the put is about to expire.

Finally, the insurance (Put) is made to offset your losses on the underlying, not to make you money, unless you are buying more puts than the underlying, in which you will make more money from the puts than what you lose on the underlying, but of course in that case, you will pay more premium.

All in all, I agree with srt that selling OTM calls against your stock position will enhance the overall performance and tighten breakeven points. Still you will need a large amount of capital to execute such strategy in order to make a meaningful amount of money.

A long underlying, long put and short call is a collar position in options jargon. It's almost exactly the same as a Bull Call Vertical Spread, but the Bull Call Vertical Spread requires a lot less capital to execute.