Assigned in 4 Positions - Here's What I'm Doing Now
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- เผยแพร่เมื่อ 5 ส.ค. 2024
- Assigned in 4 Positions - Here's What I'm Doing Now | Coffee With Markus | Episode 134
Intro: 0:00
$500K Account Recap: 1:39
The Wheel Strategy Recap: 4:26
Getting Assigned: 6:12
What To Do When You Get Assigned: 14:03
Deep Dive Q&A: 34:11
$500K Account Trading Goal: Update #4
Earn $15K/month = $500/day (weekends included)
Margin account - Put in $250K in cash
Started Trading January 11, 2021
Today: Feb 1st
Realized Profits: $21,281. I made my goal. I will wire this amount to my personal checking account.
The Wheel Strategy recap:
1) I identify stocks with strong support.
2) I sell Puts
3) If stock stays above the strike price, I just keep the premium.
4) If the stock goes below the strike price, I get assigned.
Getting Assigned (a part of the plan!)
WYNN:
- I sold the 100 put. On Friday the stock closed below strike price and I got assigned, which means I had to buy 100 shares per option at $100/share.
- I sole 10 puts, so I received 10 Xs 100 shares @ $100. I received 1,000 shares
- The price of WYNN is already at $102 so I'm already at a profit of $2,000.
What happens if the price drops?
Using HAL as an example:
- I sold 54 Puts at the 18.50 strike price
- HAL closed below 18.50, and I got assigned.
- I bought 54 xs 100 shares = 5,400 shares at $18.50 each
- Today HAL is trading at 17.80
- I'm losing 0.70 per share X's 5,400 shares = Open loss is $7,380
Selling Calls After Getting Assigned To Get More Premium:
HAL:
- Sold 19 Call for $23 per option Xs 54 call options and collected $1,242 in premium
- If HAL stays below 19 I'll keep the premium, if it closes above I'll get "Called Away"
I use The PowerX Optimizer to show me what to do.
According to the PowerX Optimizer, I can make $227 per day in premium, or I can sell the 19 call $130 per day.
If the price goes to 19 or above, I also make money on the stock because I bought the shares at $18.50
This morning for the 19 call, I got 0.23 and right now I'm making $248/day.
WYNN:
- Selling calls to collect premium like I did with HAL. I plugged the numbers into The Wheel Calculator.
- Sold 105 Calls for $2.45
- By doing so I collect $490/day
With these two positions, I'm already making more than $500, alone.
If there is any discrepancy between what you expect from your broker and what happened, you need to contact them. I received an email stating I would be assigned shares of UAL but was not. I reached out and they replied:
Due to the crazy volume, I was not assigned.
Recommended Videos & Links:
The Wheel Master Class: www.rockwelltrading.com/produ...
Wheel Playlist: • Options Income Trading...
tastyworks: rockwelltrading.com/tastyworks
Cash Covered vs Naked Puts: • Cash Covered vs Naked ...
How to find strong support and resistance: • How To Identify Strong...
Options Income Stading Strategies playlist: • Options Income Trading...
#OptionsAssignment #SellingPutsForIncome #SellingPutOptions
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I hope this cleared up "getting assigned" for some of you, as you can see, not only is it a part of The Wheel Strategy, but it is the most lucrative step. Let me know your thoughts down in the comments below.
Recommended Videos & Links:
The Wheel Master Class: www.rockwelltrading.com/products/the-wheel-master-class/
Wheel Playlist: th-cam.com/play/PLBa3sAx-Io2mybLLdWtbjTFqK9-BR5SJb.html
tastyworks: rockwelltrading.com/tastyworks
Cash Covered vs Naked Puts: th-cam.com/video/aUVw9HYrFFE/w-d-xo.html
How to find strong support and resistance: th-cam.com/video/ZkEOuWW5GVc/w-d-xo.html
Options Income Stading Strategies playlist: th-cam.com/play/PLBa3sAx-Io2mybLLdWtbjTFqK9-BR5SJb.html
yes i understand the wheel, you sell puts , so eventually you will get assigned, but f the market keep going down, the call you wish to sell will be getting less, so how do you determined when to sell more puts ??
great video thank mate easy to follow and understand
Great video! Love these videos, learn a ton, Keep up the great work
Thank you! :)
Congratulations on reaching & exceeding your goal Markus 🍾. $21k profit in one month is simply amazing! Keep up the great work.
Hi keen99, thanks for watching. And thanks for your feedback. Much appreciated. "See you" in the next video 👍
Hi Markus, there is a setting under Gear icon=> General-=>Zoom level in tastywork that let you increase the font size to 120%. Default is 100%. Hope that's helpful.
Helpful stuff, thanks!
Hi Ruan Marais, thanks for watching. And thanks for your feedback. Much appreciated. "See you" in the next video 👍
Love it, I'm impressed on your strategy I will study that.
Hi See Me, thanks for watching. And thanks for your feedback. Much appreciated. "See you" in the next video 👍
Thanks a lot, Markus this is really helpful
Hi Patrick Vidanagamage, thanks for watching. And thanks for your feedback. Much appreciated. "See you" in the next video 👍
great content. love your videos. Thank you. Increase font size - contrl + scroll wheel on mouse (this will zoom in). Question: Wheel Strategy - could one use put spreads and call spreads plus the wheel strategy to compound profits?
The difference between Friday and Monday is the gain on GDXJ went from $4K to $11K. I have already funded an $80K margin account and implementing the strategy. Its hard to have confidence to have all your positions open at one time. That's the key. Thanks for great content and looking to join up soon.
Always helpful Markus Thank you
Thank you for watching!
wow great job. you are the real deal. Quick question is it 4 or 5 days if you sold the calls on Monday? thanks
Markus, I have been watching option trading channels for a long time, I can easily say that you're one of the best... Mach weiter so, bruder 👍
Hi RichPlusHappy, thanks for watching. And thanks for your feedback. Much appreciated. "See you" in the next video 👍
You should be able to change your font size from your computer settings - it’ll make the fonts on all programs bigger, so you might not want to keep it on, but it’ll work for streaming purposes.
Very helpful. You are great at explaining. Just subscribed. You caught my interest with the SRC strategy because I have discovered this on my own after years if chasing after " the next shiny object" strategy. TH-cam is full of guys preaching that strategy. That kind of strategy wears you out with little or nothing to show for it.
Thank you! :)
Great video
Thank you! :)
Gordie ,yes you can S2O (sell to open) a (cc) then B2C (buy to close) then sell the stocks or you just S2O next weeks (cc) at a higher price.
I have a friend that spends too much time rolling puts to avoid getting assigned and seems he is losing profit. Keep telling him instead of playing one stock find the best at support and trade it! If you get assigned follow the wheel strategy!
You can still receive credit for rolling but yes you can possibly make more on taking assignment and selling calls.
Option time value decays in a curvilinear fashion. The closer you get to expiration hour, the more accelerated its decay becomes.
Say on Monday you sell an option for $2. Assuming the stock price remains flat, that option may still be worth $.75 early on the morning of the expiration day, but be worth $1.9 at the end of the first day of time decay. So a great portion of its time value decay occurs during the last day, assuming the stock price remains flat, for discussion purposes.
Time value is another term for extrinsic value.
What a great way the invest!
Awesome! Thank you for watching! :)
Thanks Markus for the informative the "Wheel" strategy. Comparing the "Poor Man's Call", which one do you prefer and why?
TX for the video.This strategy gets presented as if it is an ATM to create income !! Misleading,stock could go to zero and capital tighted up!
I suppose you are right that stocks could go to zero, but that is why he looks for stocks that have a high degree of support. BTW, can you identify a stock that has gone to zero in one or two weeks? Even Enron took weeks and maybe months before it circled the drain. Are you truly worried that Wynn or Haliburton are going to zero?
Hi! Very nice video! Congrats... I can't get what's the plan if stock continues to go down. It loses with higher delta than the sold call...have you plan to buy a call? If yes at what strike/dte? Or selling a further dte call? Have u already done a video on this "step3"? Thanks for your kind answer
Helpful Yess..waiting with bated breath...
Hi apfelsnutz, thanks for watching. And thanks for your feedback. Much appreciated. "See you" in the next video 👍
I understand getting assigned is part of the plan.
All good and nice as you can be happy that your assigned stocks are rising now but what if an assigned stock keeps falling and falling.. so that selling the call for the assigned strike price doesn't give you much premium anymore.
Then you are sitting on your 100 shares and the losses are just increasing.
Yes, the maximum loss on each of his positions is $100K (minus premium received) if a stock goes to zero.
I will follow up on your steps one by one
Awesome! :
Markus great video and I’ve bought the alerts package already. I’m planning to dip my toes in The Wheel strategy. One question I have though is that when you get assigned in HAL and you sold $19 Call for the week, what happens if the stock falls further, say to $14? What’ll be the steps 3, 4 & 5 in The Wheel strategy if HAL continues to fall successively in the following weeks? It looks like you’ll loose money on the 5400 position and incur loss that can’t be offset by just selling calls. Thanks in advance!
Hi Markus, I follow all the updates of this $500K account, and really awesome. What happened to GDXJ position since Friday 01/29 ($4065 Profit on 01/29 to $11065 Profit on 02/01)? Your position could not be assigned or the profit is not this much. Did you sell GDXJ stock on Monday 02/01? Does selling stocks (not cover calls) part of your plan?
Sir, how do you calculate the annualized premium ? The credits earned are such a small fraction of the sum needed to buy the stock in case of assignment - I cannot seem to arrive at the annualized figure in your spreadsheet. Would you be able to enlighten ?
I enjoy the videos! WYNN has earnings Thursday, and I've heard that you should not sell calls into earnings.... Do you not worry about earnings? And, that email you got from Scott might have been Scott Sheridan, the CEO from Tastyworks! how many CEOs will personally answer emails?
ok, I should have watched more of the video....your system does warn about earnings....
Hi Markus when we sell put , will it be naked or have to do it as spread for the strategy "The Wheel" ?
I’m nervous to get assigned especially when I’m selling puts on margin... I feel like the brokerage will just start liquidating my account if the stock goes down 😬
So what happens if the markets goes down further, but the call premium is to low, so what do you do ????
Just hold... IMO this is where picking the right stock is so important....
Hi Markus, you‘ll wire your full earnings for January to your cash account for living expenses. Don’t you have to pay taxes for the realized profit? How do you handle this? Thanks.
@Markus
Thanks for sharing your knowledge. Got a question relating your margin. You funded your account only with 250k so with margin you trade with 500k and each of your five positions is trading with 100k. What the average amount of assignings you have in parallel. I personally don’t feel well to trade a lot with margin although I know it has a leverage effect on your account. If you are assigned to all positions and there is a price drop for 40-50% in multiple of them, I can’t see how to get out of the position. Following the plan would mean you may get a margin call as you can’t sell enough calls to soften a rapid price drop like we have seen for example in Boeing after the second air crash.
I believe that he indicated in other videos that he doesn't use all of the margin. I might be wrong but I don't believe that each of his positions was for $100K. I agree with you that getting out on a limb is not where you want to be.
@@TheYoyozo Those positions _are_ for ~$100k each (assuming Markus gets assigned). Just multiply the strike price by the number of option contracts * 100. This would give you the capital requirements to own that stock IF assigned. Assigning on all of the positions is possible but less likely. In any case, He would have still "only" used a leverage of 2:1 ($500k : $250k) while portfolio margin gives you something like 5:1 or 6:1 even.
Markus, it cost you approximately $100k per assignment right? So I don’t understand the no margin call if they all went to zero (as you put it). Maybe I don’t understand how “capital required” works?
Thanks for your patience.
Sir if you have an opportunity to talk about trading this way with small accounts.. and how to use a small account effectively... I think many new bees like me would benefit from your style of teaching.. If you have a video like this already my apologies..
THANK YOU..
Hi
Very nice to see your videos, I have one question- you have assigned for around $400K, your cash is $250k, so the balance in leverage and your have to pay interest for that?, if yes, you have not shown this interest calculation for this trading journey, if I am not wrong
You are doing a wonderful job, by showing real trading, not the screenshots of old trade
Thanks
I think when assigned in one position where the securities are worth $100,000 and assuming an 8% interest, then that is $8000/year => $22/day. So as long as he is making above this in selling a covered call (he is as described in the details of the video), he is still making profits. However, I think there is less interest being paid since these calculations assume all $100,000 is on margin.
What happens if the underlying tanks way below the strike price (somehow crashed) and you can't even sell any call option that has premium even at breakeven price?
Example:
I sold a put with a strike price of $10.00. I got assigned and the trading price is at $7.00. Call premiums are at 0 (no one wants) for $10.00. Do you hold on to this position or take a loss?
This does and can happen. He mentioned at the beginning that he looks for stocks that have strong support meaning that the trend lines reflect a strong tendency that any dip will not be too great. I don't know what Markus' statement would be about the loss, but you can sell calls that are further out in time, as one option. Waiting for the price to recover and then selling a call might also work. I can also appreciate that taking a loss is also part of the strategy since we live in an imperfect world.
Thanks for this video! Do you sell put spreads? What happens if the put spreads go against you and the stock price sits between or below your spreads? Do you have a plan for this as well that you can share?
No he is just selling puts, with the goal of getting assigned. I wouldn't recommend credit spreads for the wheel strategy, actually I wouldn't recommend credit spreads in general. Markus does some good videos on these subjects.
@sam chump there’s lots of BS on You Tube!
This strategy is a consistent way to grow your portfolio or use for income!
Markus is the Real Deal!
Thank you! :)
Hi Markus, in your video "update on my $500,000 account update #2" (look at 34:05) you showed us that your realized profits were about 7k and then your unrealized profits were another 7k... so you anticipated your January profits would be $14,394; still above your $500 per day goal. How did you get $21K in realized profits though? Or was there another update between update #2 and this video I need to go back an watch?
It might have been some calls getting exercised and thus the underlying would be called away (with a profit)? I think that would explain it and it would not show up in the P&L columns on tastyworks.
We are trading ETF's with a high premium. Any reason you don't?
Hey Marcus, I heard ‘The Wheel’ book has gone to the printers. When will it be available to buy in the U.K.? Thanks.
It will be announced soon! :)
If I had a beer at lunch is that ok? Are you going to judge me?
@Markus Heitkoetter thanks, really enjoying this strategy! This is my first assignment on HAL, I ended up putting on the $18.50 call so if it goes higher by Feb 5th I will only collect the premium and no extra profits if the stock goes higher, correct?
Not Mark, but yes. You’ve sold an obligation to sell those shares at $18.50. So, you can potentially “miss” some profits if it shot up to $25 or something, but don’t beat yourself up if that happens. Just stay consistent and don’t get greedy.
If you really like the stock, you can “roll” the call out and up to a later expiration/higher strike by buying back the $18.50 and selling a different/higher one for a credit (but don’t do this unless you can still get a credit in a reasonable time frame).
@@KevinStudent Great thank you for the clarification. Yes still learning so sticking to not being greedy and getting consistent income building up my account. So IF it hit the 18.50 strike by the 5th, the stock I hold would also sell?
@@donnareed5816 correct - if it hits $18.50 (or above), the stock will be 'called' away from you - you will be paid $18.50 per share. If it hits $18.49 (or less), you will keep the entire premium and you will still have the stock.
At this point, you can sell another call and repeat the process.
@@KevinStudent fantastic thanks again. Got my head around it now. 😃
@@donnareed5816 it’ll take a bit, so don’t feel bad if it doesn’t all make sense at once. What you might find helpful is to set up a paper (fake) account just to start throwing around as many trades (good or bad) as possible. You can get a feel for it all quicker while making more conservative trades with your real money account.
Where can I find this power X optimizer tool? I'm trading with IBKR, is it possible to use this tool under any broker?
Hi Lev, you can email social@rockwelltrading.com for more information.
In your example of HAL, you calculated a .70 loss,but what about the premium you took in? The premium gives downside protection until you exceed the amount you took in. If you took in .80 in premium,the your are still up.10 If you took in .50, you are only down .20
Sorry, I mean the premium you took in for the puts you sold to open the position.
If the options expire on a friday how are you holding positions over the weekend?
It was mentioned in the video, but brokerages need to take time to sort out what's gone on. It isn't automatic. For example one of my covered call positions that expired, took until nearly noon on Saturday before it was officially changed in my ETrade account. Obviously, since he had put options that got assigned, his account would reflect his having purchased those shares.
Hi Markus,
How is your return per year expected to be higher using a margin account if you are not actually using the margin $$. You show in this video lots of unused buying power. It can't make returns if you don't use it.. ??
Thanks. Mike
The margin capital is technically being used as it is needed as collateral to secure the put options sold. It is then utilized to purchase said stocks when assigned. Percentage ROI is higher since you're doubling your buying power.
@@shoot112 Exactly, if Markus got assigned on all his positions, he would have used $500k for that. On a cash account it wouldn't have been possible with just $250 in cash.
😎
would it be possible to make $1500 with a $25k account?
If its so easy making money with the US versions of weekly options on put and call options expiration why is not everyone doing it Markus?
i think u need a big capital/collateral to enter such trade. so for a 10$ stock, u need $1000 to start or own 100 stocks of that
A lot of people are doing it. But it comes with risk. He is risking $100K with each position (in the unlikely event the stock goes to zero). On smaller accounts, you can do credit spreads and iron condors which are defined risk trades.
Where to inquire about software
Hi Don, just email social@rockwelltrading.com or go to here powerxoptimizer.com/
Markus, but what happens when the stock keeps dropping?. This happened to me in 2012, when aapl kept dropping for 9 months. Went from $700 down to $385. I used the wheel strategy and got killed over a six month timeframe. Now what?!?if I would of rolled, I would of just had zero profit for 9 months instead of losing $60,000.
You can hedge yourself by buying a put lower than the put you sold, but this limits your profits. It is super important to choose the right stocks and timing..
In that situation I personally would sell 20 Delta weekly calls and just grind it out (I would be careful about a sharp reversal to the upside - don't want to sell the shares at a massive loss). If I had any spare capital/margin I would also sell far OTM puts to boost income
You can sell weekly strangles around your position. When the put gets assigned you lowered your cost basis all while collecting the premium. This is a capital intensive strategy and aapl may have been too large for you to trade.
Markus, wouldn't it be better to roll your options on Friday instead of giving up 2 days of theta decay over the weekend?
hahahaha siri
the youtubes, lol
😄
The gains shown in the video aren't realistic because majority of the people don't have 250k to trade the wheel which a capital intensive strategy.
Edit: Show the wheel with a smaller account.
Use simple math to workout returns on a smaller capital..
@@Hazed_77 of course simple maths can derive the returns on a small account. My point is it was misleading to emphasis on the absolute gains in the video when most people will not have 250k capital leverage to achieve those same absolute gains in the video.
@@criticalthinking7975 I agree. I recommend Core Position Trading for videos on running the wheel on small amounts.
Markus said he was a boomer, not true! If he was 51 y.o last yr then he's generation X. FYI LOL
Lol. What do you think?
@@rockwelltradingservices Actually i think you are neither one since these are generations of ppl born in US. Although it's a free country so you can call yourself a Boomer if you want! (although the last Boomers were born in mid 1960's so you're making yourself older than you are!)
Lol! Maybe you are right!