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Welcome aboard! Are you already trading options or new to the process?

@@patriciasaylor-noviceinvestors I’m already trading options and I’ve been for quite some time. I really like this approach and I’m adding this to my trading!

Great question. I think there is no one right way to do it. Weekly trades produce a slightly higher annualized return, but less money up front for each trade. Monthly trades lock in more premium and offer more protection from big changes in the share price if the trade doesn't go your way. Have you checked out the trades I'm doing with SCHD? It only offers monthly expiration dates, but has the added income from quarterly dividends and is a little steadier/reliable. How far out do you usually set your expirations?

@@patriciasaylor-noviceinvestors I have been doing weekly for the added return, but go further out if I am traveling for any time.

Smart plan. I love the flexibility offered by selling this way.

Hi Todd- Thanks for the question. I love knowing my viewers are actively engaging with the content! The brief explanation is that a put goes in the money when the share price drops below the strike price, so at the current $491 share price, the $480 put is out of the money. I have a more thorough explanation in the video I'm linking at the end of this comment. Your question is answered starting right before the 5 minute mark. Will you come back here and let me know if it clarifies things for you? th-cam.com/video/ItuMv8b9aOo/w-d-xo.htmlsi=fWL0Hp0fqjsfLFg0

That is awesome! Thanks for the kind words. My viewers and students are the best inspiration for my content, so I'd love to know what else you're interested in learning about.

Glad the videos are helpful. I have a link to download the spreadsheet for $7.50 on my website - I'm not monetized on these videos yet, so I'm trying to pick up at least a little income for myself as I build this channel! www.saylorfinancialfundamentals.com/product-page/trade-log-spreadsheet-template

Hi Paul - the advice people usually give for an unexpected windfall is to preserve it carefully in low-risk investments for the first year while you make decisions. I'm glad you are planning time for study and reflection. Do you have a simulated account where you can practice strategies? Let me know if I can help talk you through any of your decisions or if you want to meet to discuss ideas. I know it can be really overwhelming. www.saylorfinancialfundamentals.com/

@@patriciasaylor-noviceinvestors I’m in Canada. It’s all currently in GICs except for a small VFV holding. Paper trading ETFs to get a feel for it. But I want to maximise my returns (like everyone) so I want to do more than just hold. So I want to study what you’re doing much more closely to learn what to do.

@@paulm918 Let me know if I can help or answer any questions. I have found the key to generating ongoing income is making sure you have a plan to manage any positions that may go in the money.

Right - when I started trading options, I could not understand why anyone would actually pay me for the contracts I was willing to sell them! I made a video about it which has not gotten many views, but I think it might be my most important one. th-cam.com/video/rYWpIovKxKo/w-d-xo.html

Tell me more about what you're looking for. There are so many data visualization tools out there! I've been looking at a lot of them recently, but mostly don't find them too helpful. I've just using a trade log and that "probability of expiring in the money" cheat on ThinkorSwim, which I think corresponds to Delta.

Hi Troy, Thanks so much for reaching out! I'm glad you found the channel. There’s actually a more detailed bio on my website if you’re interested (Bonus: MRI image of the brain tumor that led to my retirement from public education). As for qualifications, they mostly revolve around my approach to teaching-I’m a self-taught investor and options trader. Once I figured things out for myself, I realized I could break it down in a way that makes it easier for others to understand, without the overwhelm that I faced. With SCHD, my main objective is to lower my adjusted cost basis and steadily increase my share count. I’m in the accumulation phase now, and when I retire for good, I plan to use the dividends to supplement my pension. It’s definitely a more relaxed strategy, and like you said, it’s less stressful compared to some other trading approaches. I’m curious, what options strategies did you use when you were trading? I know a lot of traders aim for those big wins to offset losses, but I prefer a "less dopamine, more consistency" approach. Looking forward to hearing more about your experiences and what’s been working for you in retirement! www.saylorfinancialfundamentals.com/

@@patriciasaylor-noviceinvestors - Patricia, I took you up on your offer and read the bio on your website. Thanks for sharing so much of your personal backstory. So many youtubers don't do that and thus you really don't know with whom you are dealing. I started trading CC and NPs back in 2006. My very first trade was a CC position in Hewlett Packard (HPQ) where I had a ROIC of 9.31% (46.5% annualized). That was enough to get me hooked on trading options. Over the next 10 years I placed over 1100 trades and learned many hard lessons along the way. One person I followed as a mentor was Ronald Groenke who wrote a series of four books, the first of which is entitled, "The Money Tree". Like you, Ron had a knack for making difficult subjects easy to learn. He also was very gifted technically and wrote a software program to find and model trades that met his criteria. As I got closer to retirement I came to the realization that I didn't want to have to generate the entirety of my retirement income by trading options. That lead me to begin investing in commercial real estate which I've done very well in over the past 8 years. However, now I'm starting to think I might enjoy getting back into CC & NP trading more as a sideline than as a source of serious retirement income. I really like what you're doing with SCHD. What lead you to choose SCHD over SPY or any other broad-market ETFs?

Great story and thanks for sharing your history as well. I chose SCHD for my trading videos because the relatively low share price (at least compared to SPY and QQQ) makes it accessible for mid-level investors to sell puts, calls and hold shares. I chose SCHD and QQQ for my trading videos -SCHD for price and stability and QQQ because of the available frequent expirations and ease of making trade adjustments. In my own accounts, I also use this strategy with SPY, VIG, and IWM. (I had some rental property I sold recently - it's a lot less trouble to sell options!)

You've got it. I get pretty consistent returns and spread out the risk. It's sort of a DRIP DCA combo strategy. I do the same on QQQ, IWM and SPY for higher premiums on the options and higher growth, but lower dividends. I only make the videos for SCHD and QQQ, though.

@@patriciasaylor-noviceinvestors Ignoring taxes, you'd double your money in 9 months @ 15%.

That's 15-25% annualized. If I made that on each trade, I'd be crazy rich. There's just no way to do that safely, unfortunately. But I do this in my IRA accounts for the most part, so I don't have to worry about the taxes.

I use my "calm teacher voice" in my videos. Just habit. Some people have mentioned that they need to turn up the volume - and one commented that they were glad I "don't yell like so many trading videos." 😆 I'll see if I can adjust the microphone settings next time.

@@patriciasaylor-noviceinvestors - I think it was just on this video. I, too, had to turn up the volume. However, on your previous SCHD videos I did not have to do that.

Great questions. The last minute of the video, I analyze all the possible outcomes, and if you check out the next video in the series, you can see exactly how I managed it on expiration day, August 16. (At 9:05 in the video, a link pops up for the next trade.) I rolled both positions and I explain how I chose my strike prices and expiration dates. I have yet another expiration coming up Sept. 20, so I'll make another video this Friday and show you how I manage it going into the next month. There's an ex dividend date coming up, so I take that into consideration in my decisions. I know it sounds like a lot, but the management really takes me about 15 minutes/month. The videos are a lot more time-consuming than the trades!

Thanks for the question. First, I am glad to see you appreciate the importance of holding the cash in your account to secure the put. And you are right that using $44800 of a $60,000 portfolio commits you heavily on a single position. But because QQQ is an ETF with 102 holdings, it's still a lot less risky than committing to a single stock. That said, if you want to diversify beyond the NASDAQ index, you might want to look at some other ETFs. IWM follows the Russell 2000 and holds small cap stocks. Since the share price is only 207 right now, you could sell puts with just over $20,000 of capital. And have you seen my videos on SCHD options trades? SCHD is a highly-rated dividend fund and the share price is only in the low 80s. You would have enough capital to sell both puts and covered calls and hold shares to collect the dividend. It's not as exciting as QQQ, and it only has monthly expiration dates, but you can make some solid income with it. Good luck and let me know what you decide to do! th-cam.com/video/MDH1msyGxtI/w-d-xo.htmlsi=wDxNgK3AWwVFHJPb

Glad it was helpful!

Thanks, Chibwe. I always appreciate that I can count on you to watch my videos and give me feedback.

I agree! When I started, I didn't know what the words meant. And when I asked for definitions, the explanations also included words I didn't know or understand. I finally wrote the book I wished I had when I started! "The author, a retired educator, and successful investor and option trader, starts at the very beginning. She defines the terms novice investors need, allowing you to ask smarter questions and understand the answers you get. The helpful homework, comprehension questions (and answers), and glossary/index highlight the most important information and skills for beginners, as well as for “not-so-novice” option traders." $9.99 at Amazon. www.amazon.com/Novice-Investors-Guide-Stocks-Options-ebook/dp/B0CMD5SMFH

@@patriciasaylor-noviceinvestors I see... thank you for the recommendation. I'll check it out. Like any language, practical application is key to truly understanding.

@@lorenzovillegas2457 Yes. Once you understand the terminology, you can use it to learn concepts. I even see the same issue with my elementary school students. Many teachers use terminology for reading and math concepts, without first teaching the students what those words mean. (What is a word? syllable? letter? Sentence? Digit vs. number? etc.) Even my middle school English language learners all thought Texas was a country! So I taught them the difference between a continent and a country and a state. Then we could talk about their journeys. Don't discuss dividend reinvestment until you tell me what a dividend is. I'm kind of passionate about this part of teaching!

Did you have to take a loss to close it? If you want something less exciting with lower capital requirements, SCHD might be a position to consider. th-cam.com/video/MDH1msyGxtI/w-d-xo.htmlsi=dIWrDLsMRvHwOP50

If it goes/stays ITM, I hope they will announce the ex dividend date before I have to make a decision whether to roll or accept assignment.

Derivatives on an ETF that sells derivatives! Makes my head hurt a little but I can see the appeal of having a fund manager do the work for me. I think I still like choosing the underlying myself and deciding when to sell puts and when to sell calls, though! 🙂

Agreed! I'll use the annualized return formula to decide whether to leg down or straight roll. If I can lower the strike and still generate greater than 15% annualized, I'll probably do that.

Hope the content is helpful to you. I'll keep posting QQQ updates every week and SCHD every month.

Thank you! 😃

More to come! I'll be updating the SCHD trades every month, and the QQQ position every week. And I have a few more ideas to share also.

50 extra shares to participate in the upside in case the share price rises above $82. Also want to be sure I still own some for the dividend in September. I'll be using the options premium to continue to add shares to hold long term. I would need to own at least 200 shares to sell two covered calls and I like the diversification of selling both a put and a call. (They can't both go in the money at the same time.) So I'm pretty much using all the available safe strategies to build a position in a strong ETF.

@@patriciasaylor-noviceinvestors thanks! I was thinking that might be the case. I just started thinking about using SCHD for selling CCs a few days ago

Good question. The return is annualized. $67 every 24 days for one year on $8000 would result in more than 12%. Converting the returns to an annualized rate of return lets me compare one trade to another in a consistent way.

@@patriciasaylor-noviceinvestors still kind of lost where are you getting 24 days is that an average based on the year unless I miss my understanding we received 12 times to sell throughout the year if you're making less than 1% for each of those times how are you getting an annualized 12 plus percent.

​@@WealthandTravelonaDime The option contracts were both opened on July 25 and will expire on August 16. There is a formula to calculate the annualized return. I also bought 150 shares of the ETF today. For the next 24 days, I'll keep $8000 in cash to secure the put (just in case I'm assigned to buy the shares). The covered call is secured with 100 of the shares that I just bought. There will be an ex dividend date in September, so I'll make sure I still own some shares in September to collect the dividend.

In no order: 1) VOO 2) QQQM 3) SCHG/VUG 4) VTI 5) SCHD/DGRO. Personally I put down 1.3m$ on few ETFs, still diversifying. It was this time last year I made my huge break through with a liquid 200k. Handed it to a Pro here in FL, I get impressive weekly pay out which I put back on long term ETF's. Tesla will be a huge buy for me when the market bottoms.

Thank you, I already added VOO and QQQM, can you share this Pro with me

Yeah, Diana Leayani Lara use her name to look her up

SPY, QQQ, IWM, and currently TLT. I only have 4. Leayani grows my stock, I live in Connecticut.

I have heard other brokers speak of her good works in the industry

I don't have a hyped up delivery, I guess. But I can hear it fine. Maybe captions would help? Next time, I'll turn up the volume on the microphone.

@@patriciasaylor-noviceinvestors I was able to turn up the volume so it wasn't a big deal. It just seemed a lot lower than most finance videos.

@@brian4181 Thanks for the heads up.

I appreciate that you don't yell like some financial videos. That's my 2 cents.

Fine audio here

Welcome!

That's a good choice to trade options with lower capital requirements. I like QQQ because it's more heavily traded and the bid and ask are usually a little closer together. But maybe I should consider using the options premium to buy QQQM shares to hold long. I could buy shares more often because of the lower price.

Were you able to roll down to the lower strike and still get a credit? You may have made the better choice. We'll compare again next Friday.

I don't worry about getting assigned on calls for a few reasons. 1) the dividend on this fund is really small - less than 1% annualized. 2) I only place trades for calls that will improve my overall position if I'm assigned, 3) If I'm assigned to sell shares, I can usually turn right around and use the available funds to secure a new put.

These trades reflect actual trades in my IRA, but I use paper trades for the purpose of the videos.

@@patriciasaylor-noviceinvestors I get it. No one needs to know all the details. I still like the fact that you walk thru the screens and choices.

@@Friend-gineer Right, no need to show my entire retirement account to the world. 🙂 But these trades are nearly identical to to the trades in my actual account. My profit in the "real money" account is a little greater because I've been doing this longer there, but the trades and decision-making process are the same.

I'm enjoying following your trades. And the great thing about selling options is the flexibility. Even if it goes in the money, you can keep rolling for income. Are you buying any shares to hold long?

@@patriciasaylor-noviceinvestors thank you. I have never done a roll before so that could be good practice for me. Yes for long term stock holdings I have filtered the dividend aristocrats, for dividend yield as well as what I would call BRE Biblical Responsible Investing through the Inpsire Investing Filter so example names include : CAT, CVX, GPC, ITW, VLO

I'm sharing a passage from The Novice Investor's Guide to Stocks, Funds, and Options, Second Edition, Chapter Six: "Trade Management and Record Keeping for Not-so-Novice Investors" You already know some of this information, but you might find some ideas to explore. Lesson 110: Understand The Negative number When you sell to open a new option, you are paid money up front. The position then shows up in your account as a negative number. The negative number represents the amount you would need to pay if you decided to buy to close, or end the contract. Buying/paying to close the contract is a way to end your obligation to buy or sell stock at the strike price. As long as the option stays out of money, the negative number will get closer and closer to $0 as you approach expiration. Eventually, the contract will expire worthless and both the number and your obligation will disappear. As the negative number gets smaller, your profit on the option increases. If you just leave the position alone and allow it to expire, you will realize the maximum profit from the trade. If the contract goes in the money, shares are more likely to change hands, so the cost for you to end the contract may increase. Going in the money causes the negative number to get bigger, but the passage of time decreases the cost to close the contract. These two factors work together to determine the value of the contract, and ultimately, your profit or loss. Lesson 111: Other Choices As we have discussed, you can do nothing and the passage of time and the share price of the underlying shares will determine whether a contract expires or is assigned. But you have some other choices about how to handle the position. Sometimes, you might choose to: pay to close the position early or roll it for more income. Let’s discuss each of these strategies, and look at some examples and when you might choose them. We examine several variations of closing and rolling orders. Close early to lock in gains. Close early to free up capital. Close early to avoid assignment. Roll straight out for a credit. Roll to a new strike price for a credit. Roll the position and add a contract for more income.

@@patriciasaylor-noviceinvestors thank you so much for this am so grateful this is very helpful.

It sounds like you are generating steady income. Thanks so much for sharing your trades. I was coming here to ask what you had decided to do, and I'm glad to see you already posted. 🙂

I'll look forward to seeing how it works out. What was the share price when you sold it? I noticed the share price dropped after I opened my position, so I would have made more premium if I'd waited an hour.

@@patriciasaylor-noviceinvestors the price was $483.87.

Thanks for the positive feedback. I'd love to know more about the trades you are making and how you choose them.

Glad you're following along! Are you trading options in your own account as well?

@@patriciasaylor-noviceinvestors Not yet I thought I should learn in the paper trading account until I got more confident and understood the basics. So I am learning alot. When I am ready I will contact you for a one-on-one session.

If the shares are called away, I want to have one left. I am using the options premium to help pay for shares in my account.

For cash secured puts, I use a formula to calculate the return on the cash required to secure the contract, and convert the holding period return to an annualized return based on the duration of the option contract.

Glad you are finding the videos helpful! I also have information available at my website, including some blog posts you might find useful. I'll link you to my most basic blog post about options. www.saylorfinancialfundamentals.com/post/calls-and-puts-buy-or-sell-rights-and-obligations-understand-options-contracts