The company I speak of is Whole Foods Markets Inc (NDQ: WFMI).

A quick review of the Whole Foods Markets financial data, comparing it to other food retailers, plus other statistical data, as well as a single glance at the long-term WFMI stock chart (see below), tells you that this company is on the Cara Global 100 Best Companies list.

The problem is trying to buy the stock, when you are staring at a 66 PE. Yikes!

But here is where my strategy of put and call overwriting of core portfolio positions works out. Your goal is to constantly drop your cost base over time. Then your dividend yield marked to your cost (and not current market price), which is the only thing important to you (i.e., maximum sustainable cash-on-cash return), is always going to grow. Ergo: success.

Unless you have read it here, I'll bet 99 pct of you have never thought of this, but really trading is a strategy (involving tactics), not a goal or objective in itself. We trade to make ourselves wealthy. And, we become wealthy when we earn a higher cash-on-cash return than our peers. Simple.

How we do that is to select a group of say 100 stocks and become sufficiently knowledgeable that we can, with the help of mathematics, economics and corporate fundamentals, determine when to trade in those stocks in a way that can reduce our cost base.

Using mathematics, for example, we can use RSI and MACD to determine when the current price of a stock is above its long-term trend line.

At extreme points in a bull rally, we can write covered calls against some of our holdings in that stock. Using a concept called ‘time decay', most calls expire worthless, which means that we add the premium to our portfolio, which is applied to our cost base, lowering it.

Say there is a spike high price activity, then another trader will call that optioned stock (i.e., the "underlying") from you. But at whatever price you set the call option strike is the price you get. On such a spike, you may decide to sell some stock as well " if it has not been called away already and you have no short call options outstanding. At the end of the bull cycle, if you maintain a core position, you apply the net proceeds to the cost of the remaining position.

At extreme points in a bear phase, we can write puts against some of our holdings. The same situation occurs in the opposite to call writing, except that if the price of the underlying drops below the put option strike for the option you have sold to another trader, then you are likely to have to buy that stock at that price when it is put to you. That usually happens on downward price spikes, since mostly the option expires worthless and you get to keep the premium. As well, on downward price spikes, you could buy more of the stock of this favored company.

The only traders who are not well suited to this strategy are (i) the one who day trade (i.e., literally during a day or two), or (ii) those who are caught up in the ego game of trying to pick price cycle tops and bottoms.

But to me, trading is about portfolio management, which is about risk management first (i.e., keeping from losing capital in bad trades), and continuously lowering the cost base of the core holdings in my portfolio. Whether traders have $50,000 in the market, or $50 million or more, it's the same game.

When you play it this way, you get to play the market; it doesn't play you.

Unfortunately Wall Street and Big Media represent the sell-side, so they need you to buy their stories, i.e., invest in whatever's fashionable. They need you to trade frequently, which is probably ore frequently than you'd like.

So getting back to Whole Foods Markets (WFMI), which is a company that is acknowledged in the food retailing industry as being truly successful, with a great management and business model, what you need to do is pick those times to write calls or puts. Then you have to be ready for when there are the inevitable price spikes as they are the times you want to buy and sell the stock itself.

Traders may see that the annual dividend payout is just 60 cents per share. That gives a 0.4 pct current dividend yield. But this is a solid management team who is quite aware that over 88 pct of the stock is held by financial institutions that like to see dividends. Given that annual earnings have grown by 19.6 pct compounded over the last 5 years, and where analysts are forecasting the same growth rate for the next 5 years, it is quite reasonable to expect the WFMI dividend rate to increase. So while I don't normally like to build core positions in stocks with such a low dividend yield, in this case I look at the company as favoring a rapid internal growth strategy. And that's ok by me.

One final thing: the price chart shows how the RSI behaves differently in a secular bull move. Seldom does the RSI ever drop below 30 on the daily, weekly or monthly price data series. But by watching a management and a stock closely over the years, you will get a better sense of timing.

Eventually you will get it right. But you have to do the study work and use a disciplined system of trading.