I say this to people all the time, they complain of having to buy back early and make less money, i say, its more about making more successful trades, rather than making more money, from each trade. The profit flows when you make enough good decisions.
I'm beginning options trading and am wrapping my head around buying back early. The way I look at it, I"m locking in profits over an uncertain future waiting for expiration. It's probable, but not certain I will keep the whole premium by waiting for expiration... but it is certain gains if I buy out at 50-60% profit early. Also, when you annualize the gains... it's can be higher percentage buying out early over waiting for expiration. like you said, more frequent successful trades by buying back early seems to result in higher gains over the longer term. If I'm 80% successful in my trades... and by buying back early I can say double the amount of trades I do in a year... then I'll make more money. I think. ha.
I sold two cash secured puts on SPY, then sold a covered call on them both. I've only been doing this each week for five weeks, and so far am making about $500-700 a week.
@11:00 consider selling leap cover call that expires year from today, another thing is if you have enough fund to sell 10 put contracts for example (around $400k).. then spread them at different lower strike prices all the way down.. any contract exercised take it and sell calls against it. Then you end up selling calls and puts next month. Just make sure you sell the calls at a strike of your cost or higher for each contract. You need a spreadsheet for this :-)
Great Video ! I've seen people also sell put / call credit spreads on SPX ... Options available every day ... European style options ... No assignments
I like the content, I can really relate to your style of instruction too … though you can lose the colorism …. You don’t need it! You’re sharper than that 😊
Really good video! Thanks! Another advantage to this method if you use Fidelity is that you earn interest in SPAXX while simultaneously using your money for collateral. Currently that increases your 12% return to 16 +%.
Is that really true? In my Robinhood account when I sell put the collateral is subtracted from cash balance that accrue interest. Does fidelity let you accumulate interest on the collateral portion?
Good stuff Dave. This year I'm selling calls 2-3 times a week on large SPY core position to generate a 5% extra dividend per year. Try to avoid exercise, but can use the wheel when needed. Goal is to beat the SPY by 5%, so far so good. What do you think of that?
💯💪💪💪🤘🏽🤘🏽🤘🏽🔥🔥🔥 solid advice. Thanks again for all your work. I finally sold my 1st contract. I still go back and watch your videos to better my methods.
I am retiring next yr at 57 with steady monthly income stream from my dividend portfolio total $250,000 a yr to live comfortably, All thanks to my Investment manager. I love S&P 500 SOO MUCH! Also 3 houses paid off worth 4.5 million. One is my place of residence the other 2 properties will give me $150,000per/yr rent. I also have no debts... Stay Motivated!!🌹✅
Amazing! I have Liquid $150K to put into stocks, but I want to ensure good profits & safety. With tons of Advisors now, how did you find the right Investment Advisory?
This is exactly up my alley. Dividends are anemic and I can't afford any meaningful quantity. I'd rather focus my limited financial energy where I can profit in a controlled and calculated way. Can you do a LEAPS? Poor Man's Covered Calls and Puts?
Thanks for the nice strategy. Question for accounts with less powder, will a SPY Long LEAP help with this strategy and if yes how would you manage if the short call get ITM to avoid the leap being called away?
Hi. Long call needs to be deep in the money. Short calls can be protected by keeping the OTM. You can sell OTM and roll up if the strike is breached prior to expiration. You will take some wins and losses on the short call but you are still getting the gain on the long call during strong moves in the S&P.
Hi! A lot of great videos! Thanks! What about using cash index (xsp or spx)? No assignment, instead of buying etf u could only roll out(&down) the itm put. Or going inverted, selling itm call to cash in premium and get ur be down. Ur opinion?
Hi Andrea! I have actually been looking at this recently. I hope to do a video on it soon. It does get expensive for many individuals but for those with the means it is an option and comes with some perks. Taxes being one. With indexes there are no shares to trade so trades are settled in cash and they are European style options. I have always utilized SPY and QQQ but I'm exploring. Thanks for watching and hopefully I can have more info soon.
Hey Dave, just watched this video again. I have a question... Can we roll down and further in case of a correction? So the new short would cover the loss, and get mor time for spy to rebound....
Hi. You can always roll down and out but, the position of the option will determine if you can do it for a credit. For example, if you sold a SPY put now for 420 out 2 weeks and it drops to 417 you will be able to roll it out a month and down a few points for credit. If SPY crashes down to 390, it will be difficult to roll out and down for credit without adding significant time.
@@purplecadence7390 I sell PUTs and CALLs weekly, out about a month, on a basket of stocks and ETFs. It has been a solid way to generate income but still has risks.
@@wealthadventures ive been combing through your videos. i dont think i see one about which ETFs you prefer to do these weekly trades on. would you mind telling me?
@@purplecadence7390 SPY and QQQ are the big boys with the most option volume. I like many of the select SPDR ETFs (XLE, XLF, XLI, XLU, XLV). I've used some Vanguard ETFs but not optimal (VOO, VYM) in my opinion so more of an opportunity trade.
Hey, new sub. Going through your videos, like the way you explain it simply. Do you have any videos showing how we can see the current profit on the CC and how to close out early/roll on fidelity? Last piece I think I need to figure out before I really get going. thanks!
Just watched this video. I’m wondering..I looked up SPY for March-April 2022 and it was falling (closed at $412 on exp date). How did you end up managing this trade? Thanks for your clear, informative training.
Hi. I kept rolling my SPY options out and down. The small rallies that we did have this year allowed me manage my shares well. It was rough but I made money with my SPY trades in 2022. That includes some losses in the shares adjusted for premiums received.
I’m glad to see you talking about QYLD. I started with QYLD and also with X Wildey. And I think I can get better returns but of course you have to have $45,000 in capital
Hi. Yes. This is definitely a consideration and is a barrier. For those looking for a straight income play without that capital requirement QYLD and some others could work.
Nice! Since 3 months l’m doing something similar but on a much shorter timeframe bc of volatility. I bought 100 shares Microstrategy for 335$. And on friday l sell calls $20-30 above the share price, bc this shareprice goes up/ down like crazy the option premium is huge. Normal week l do this 1 time ( friday-friday), but last week l went in/out 3 times. Note: not all weeks are positive as l have to roll but overall l think l made about 20% in about 12 weeks. Yr starting point about spy is interesting , l will definitely check this out the coming weeks!
when you lose on SPY.. and trade it again .. do you have a simple system for wash sale .. or do you have trader status.. if trader status how do you treat Long term gains.. can you still have VOO for Long gains . Thanks... if you cant answer public .. please let me know personal message .. i think your awesome
Hi. Not a tax advisor but if you sell the shares for a loss, you will need to wait 30 days before getting assigned any shares to avoid the wash sale rule. If you do get assigned, you can sell and wait again.
Hi Dave. I am bit late to commenting on this video but like many of your videos, I like to let the content sink in. Perhaps the passage of time has changed things but to generate the 1% 30 day or return by selling an out of the money put on SPY at its current level requires you to sell around a 436 ish strike price (not very far from the current SPY price). You were able to quite a bit further down the chain in your hypothetical trade to get the 1% return..Any comment as to why things have changed? Thanks again.
Hi. Good observation. We are now in a low volatility environment so option premiums, especially on the put side, are low compared to when this video was made. Plus this video is pretty generic when I look back at it now. This last video I made talks about it: th-cam.com/video/eaMCV-TUK-o/w-d-xo.html
3:20 I like this strategy and have been doing it myself this year. Can you discuss more in detail about your arbitrage strategy with your low interest mortgage? Or, please point me to one of your videos if you have already done so? Thanks! New subscriber
HI. I've talked about it a little but not directly related to this video. Mainly using options and dividend paying stocks to pay down the mortgage over time. Is that what you are asking about?
@@wealthadventures yes-I was wondering if you had a specific strategy, such as you refinanced your mortgage, so that you still had positive cash flow, while selling options on a certain underlying for a certain percentage return each month.
@@ACR4008 I'm trying to generate enough from dividends and option premium to cover the mortgage while maintaining my basis. I do this with a basket of ETFs and individual stocks. I set a goal each week and month to cover. That is about it!
Hey Dave, Fellow options trader here implementing similar strategies for some time now. Thanks for your videos. Have you looked into doing this with shorter maturities (
Hi. I do some shorter expirations depending on the trade. When nothing is going on I have been starting with a strangle on SPY out about 1-2 weeks. If there is a CPI read like today I run and hide. 😁 Are the shorter expirations your preference?
Thanks for the video. After watching another TH-cam video on the topic, my goal is to get my Roth to 400K in about 15 years to sell puts on $SPY. Instead of selling at the money puts like that video suggests, I'm thinking .30-.15 deltas would be more of my comfort level. Your idea of trying to attain 1% a month, 12% yearly sounds great to me. Making half of my take home (or more) income in a ROTH IRA sounds great to me.
@@patrickalexis6230 I prefer selling OTM. A 30 delta would be fine but I focus on the 1% return which means I can go to a lower strike. Would be a good back test to run for the 1st quarter of 2022 to see how they would both play out.
Hi. I am still using this strategy. It does smooth out the ride but tough to keep up with SPY crashing. My breakeven or cost adjusted basis is around 377 at the moment. Not bad when I look back at this video and see a PUT at 425. Currently have 300 shares but may let 100 go Wednesday depending on the next 2 days. I continue to roll down calls and puts.
David, do you have any video using the platform of Fidelity where you sell a Call/Put option contract for a week/month expiration but at the same time having an OCO that way if the Call/Put option contract is becoming less profitable have that OCO order to close that contract ? I have been checking your videos and haven't see any. Help please.
No. I don't have an example like that with Fidelity. I have some on basic option trades: th-cam.com/video/4agbxqlS1oA/w-d-xo.html Honestly, OCO is not something that I use. I tend to manage myself.
Seems like you could, do a put credit spread basically every 3 days? make 1%. Maybe it wouldn't get filled if it was to deep out OTM? I don't know I'm fairly new to this. So I guess i'm wondering why go a month out?
Hello! Not a bad line of thinking but a 3 day put credit spread would require a fairly large max loss in relation to the 1%... and it could happen fairly often. The further OTM we go the smaller the potential gain compared to the max loss. Monthly options are popular as they grab the period of time when the options start to decay at a more rapid rate.
@@wealthadventures Ok, Yeah I'm learning rather quickly this is harder, SPY is less stable over a week than it is over a month. a lot less. So when it moves one direction it impacts the price more and has caused me to back out early. One other thing I'm wondering Though is it seems like you can do a put credit spread with an option that gets you 1% from selling only and make more like 2%. what is the downside to this? is it harder to close both the put buy and put sell? Are there any inherent dangers with this?
@@wealthadventures I sent you an email, a thing I noticed though right off the bat is you have to buy a lot more options to do a put credit spread. like 85 put credit spreads equals one put sell. but the return is basically double I think?
@@itsme1232620 As I'm sure you noticed, credit spreads will allow you to limit your downside. However, the % compared to a simple sold put will depend on the width between your strikes on the sold put (short put) and the put you buy (long put). 85 seems awfully high. Likewise, as you go further out of the money, the profit will get squeezed.
Hi Matt. I typically wait till I'm in the 80%+ range to close but you can adapt this type of trade to what meets your specific criteria. If you are selling a monthly option and see that you can collect 50% that first week or two it might be wise with the volatility that we are seeing. Good luck!
I have a very similar strategy except I'll go really far out of the money say in this case the $400 strike puts with hopes of getting assigned at a great price, though it basically never happens. Im collecting a bit less than 10% a year on my account so its maybe a bit to conservative but if I ever get assigned we can crack out a 20% move back up in a few months but will just have to waite. Also it doesn't hurt to buy a put why the market is taking on a weekly and quickly sell the premium before it expires in 7 days and then possibly still take asignment on the naked put if it should continue to tank.
Hello! No I certainly don't. I use them rarely. I do have one on now. Might be time to add one if we have another good start next week and the VIX continues to fall to the low 20's.
Wish I knew Miguel! I've sold some puts on SPY the last 2 weeks and still looking ok at the moment but I'm not real confident in the market at this time. Shaky!
I've been watching TLRY, I have 94 shares & was looking forward to selling this contract. If you happen to use this as an example on your channel, I'll keep a look out for it. Call or puts. Thanks again my guy 💯💪💪💪🤘🏽🤘🏽🤘🏽🔥🔥🔥
I bought a bunch of TLRY after they bought sweet water brewing. Depending on where you own it I would look at buying six more shares and selling calls based on where you need to be for profit. especially where the stock has fallen. However, they have several well preforming companies they have acquired for the long term,
New sub, I’ve been watching a lot of your videos. Kudos, you give some fantastic option advice on how to make money with a portfolio instead of just sitting on it. I like how you’re not trying to YOLO everything to hit the ‘jackpot”, but systematically using options to make money.
Even if a massive correction happens it's reasonable to assume that at, historically speaking at some point in time in the future, the market price will recover.
Hi Kyle. I keep it pretty simple selling monthly options on SPY. I will look at moving averages, volume, and RSI. I may look at a few others but that is about it.
Hi again. the 1% in premium is simple but protecting your investment (basis) is the trick. For example, you buy 100 shares and sell an OTM covered call. You collect 1%. The ETF climbs 10% that month. You let the shares get called away. You buy 100 shares again. Collect another 1% but the ETF falls 10% back to the original value. You are down 8%. If you just bought the stock and did nothing you would be even. You still collected 1% each month but your basis has been eroded.
@@wealthadventures I use zero commissions. So far so good but I know I could be missing out. I have been using the 10-13 delta for the shorts. It was easy the last coupla weeks after the melt down but today I noticed we are getting close to a top so I sold a OTM Call spread and that worked for small money but I am looking for something that works consistently in all markets. I have been playing with settings on the MACD (not the default) to see if it gives a signal that is reliable. My thinking is In a Bullish only Longs and Visa Versa In a Bearish market, shorts only (moving averages on the 4 hour chart for weekly trades and 1 hour for 2 day trades) and then fine tune the MACD to signal when to go long in a Bull and Short in a downturn. Just trying to think it through. All my profits I have been buying shares of SPY. BTW in all markets I Know I cant always be Bullish or Bearish but need to know when to think long or short, hence the Moving Average idea.. I will be looking at your channel for ideas.
Just curious...are there any tax benefits or liabilities to owning the stock/allowing assignment then getting it called away by covering the stock (wheel strategy) vs. only using options and essentially playing "keep away" by rolling until right?
Hey Jesse. Both would classify as a short term capital gain or ordinary income. If you hold the stock for over 1 year before it gets called away you would have the tax benefit as a long term gain. I should add, I'm not a tax pro!
Assuming the market is down in the next 2 years , don't you agree that buying to open a 300 put on SPY 12/18/2026 and selling to open a 400 put on SPY 12/18/2026 will always bring a profit as long as SPY remains above 400 ?
That is a true statement... Assuming it stays above 400. And I usually have a trade similar to that open but I usually do it as a put ratio spread. So I like to sell 2 puts at say 400 and buy a 430 put way out in the future. This spells it out: th-cam.com/video/17irGcYJqC0/w-d-xo.html Just my pref!
Okay, I mean no offense when I state the following. Why are you doing what you're doing? You can achieve significantly better gains by implementing level 2/tape, price action and vwap in your trading. I made 220% this past week on a small account and made $10k. I just started options trading. If you want to go slow, sure, do this method. But with that much capital, and buying IN THE MONEY, you can make $100-250 on a single contract per day. There are better ways! Edit: trading for 3yrs, options trading for 2m.
What percentage of your portfolio is in stocks or ETFs that are permitted holdings. That you don’t trade. And what percentage of your portfolio do you use for options trades to collect current income? I’m thinking maybe a third of my portfolio I will trade in options.
Dave, great video! You mention still earning 1% a month when using a protective put...how is this done when your using some of the premium to buy the put...I missed something...? Thx!
Hello. An option would be to sell closer to the money to earn more premium that could be used to buy a protective put and still maintain the 12% overall. That was the thought process. Would be a good test to back test this Q1 2022 which I will try and work on.
@@wealthadventures Thanks! I do like this strategy with SPY as the premiums are definitely robust...great income. I have 100 shares now, and my 30 delta call is already close to being challenged.
With this strategy, I have the collateral available in case I decide to purchase the shares. You can talk to your broker and have unsecured puts available but it does add risk and I would stress that you are clear on the strategy first.
You’re talking about a vertical credit spread correct? When you buy two puts. I wish I understood this better. I think this is the way to go when you are risking $45,000
Hey! I must have missed this previously. Credit spread for this would begin with combo of selling a put and buying a put further at a lower cost to receive a credit. That is one way of reducing the capital requirement.
Hello coach , finally , I activated my " vertical spread " in fidelity . Now , this is my strategy( as you said at the beginning of the video . I would like to do a put spread ( selling put( short leg ) and buying put ( long leg ) ,with the same expiration date since don't have a collateral for 100 shares of spy .....AND I would like to do this every day or every other day for target income of 10 dollars per day . My main question : For next day expiration date , what should be my strike target for these two legs ..... lets say as we are speaking spy is at : 445.33 1) what should be my strike point for short leg ( selling put ) and what would be my ( second leg BUY put ) ???? ...... when I went deep ( OTM ) like 430for short leg and 5 dollars ( spread ) 425 strike target for the second leg I got only 35 cents or 0.35 dollar credit PER day , way lower than my expectation 10 $ per day ...lol ....but when I went really close to current price short leg strike price 443 and send leg 442 , It gave me the net profit of 8.85 /day ( not bad ) , but i think that is too risky because the delta is 0.14 ( 14 percent chance that I get assigned ) by the next day ....so , i guess my question is :if I am picking up the next day expiration for steady income of 10 $ per day , how close can I select my strike target to the current price and not being assigned within one day ( 24 hours ) ........I guess to be productive in this ETF( SPY ) I MUST have a collateral of 100 shares to see a decent result and choose an expiration date of 30 days and going deep OTM strike price , and not being assigned and get the target of 1% per month or 12 % per year as you said ....bummer
Look man, IV increase so does the VEGA. Starting at .35 because you are deep OTM, as time goes by, the avg daily may move up closer to the $10. In some cases, you get .35 day 1, and 7 days out from exp, you are getting 16.35 per day. That will Avg out close to 10 per day. Other than that, 6 years of University should be able to provide you with the knowledge required to work this out, and the variable is, no one knows what's going to happen to price next, hence we take the option.
Thank you for this video, Dave! I’m new to options and just had a question regarding your reiteration that selling options would mainly be for generating income, and that if you are interested in growth it might be a better idea to just invest in safe index ETF’s. However, if someone already has large enough holdings in an ETF like SPY to sell options, then wouldn’t that estimated 12% of income be additive on top of the gains you’d be making on the growth of the ETF? In other words, why is it one or the other: income vs. growth? Wouldn’t someone have more growth if they continually reinvested premiums from selling options on an underlying they’d own anyway?
Hi. When you sell a call you are limiting your gain by the strike price (plus the premium). If the stock/ETF takes off you may miss out on a large portion of the gain. For example, suppose you sell a 410 call right now on SPY with it trading at 407, collect a $200 premium, and it climbs to 420 by expiration. You decide you want to keep your shares so you close the option prior to expiration which would now cost your about $1300 ((420-407)X100). Now you own the shares at $420 but lost $1100 on the option trade ($1300-$200) so essentially you limited your gain to 409 (420-11). Make sense? If not, this may be a good place to start: th-cam.com/video/-ZrZoeIs8yU/w-d-xo.html
@@wealthadventures Yes that totally makes sense! Thank you. Considering that tradeoff and the others involved with selling options, do you think that ultimately no matter what strategies you use, in a long time horizon, it will all revert back to the mean of the return you'd get just buying a market index etf? And therefore selling options is more just a way of engineering different distribution schedules/tax consequences?
@@ppcalpha1042 No. You can make money both ways (stocks and options) independently of each other. Think of them as 2 different markets but linked by the underlying securities. Options are worth learning about but are also not necessary to be successful.
@@wealthadventures I agree, my point is you are accepting more risk by selling option rather than buying an option and daytrading it’s direction. Selling premium adds additional risk
@@MyClothesDontFit Thanks! Preference for me is to buy and hold so I'm not drawn to day trading much. I like selling options as a way to generate income with a portion of my account. A small portion of what I do is buying puts and calls.
@@wealthadventures Amazing!!! I would love to see you do a market analysis video for SPY given the crazy trading era we are in! These times only come like every 10 years!
If you're planning to accumulate a lot shares of something like a growth ETF - Does it make more sense to acquire them via selling a PUT and letting it be assigned?
If you can afford to buy 100 shares at a time I think selling PUTs is a good way to activate money that is in cash. Especially if you don't like the current price. Dollar cost averaging is also a great option if you need to buy smaller lots.
@@wealthadventures Been doing this for a while now, happy to share what I learned. Futures are probably the best for individual traders due to the liquidity and better margins unless you have portfolio margin. You ever read up on volatility risk premium? It's the underpinning on why option writing "works" essentially.
@@mrhankkingsley Hey. Sorry for the delay. I have read about volatility risk premium but I have stayed away from trading futures up to this point. Always willing to learn! What platform do you like to use for futures?
@@wealthadventures I use IBKR, which has its quirks, but good enough for simple option selling on ES futures. The big difference is that ES, the SP500 futures contract, has a multiplier of 50 while SPY has a 100 multiplier. So currently December ES contract is around 4000 so each contract has a notional value of $200k (4000 x 50).
Hi Dave, a few weeks ago we traded texts about sharing your PUT/CALL analysis spreadsheets. Are you open to that? I understand if you’d rather not. Thanks, Jerónimo
I have done 50000 options trades...dont do this....never invest directionally, in this case place a strangle and never hold past 20 days dte gamma risk is real...strangle 60dte is way better sell at 20dte no matter what
@@wealthadventures have you done a deep dive on Tesla? The more you understand Tesla the more you'll see that it's not only going to be the fastest growing large cap in the world over the next 10 years but it's also the safest place to park your money, safer than the indexes actually. The amount of disruption you'll see over the next 10 to 20 years will mean most of the companies in the indexes will actually go broke. While on the other hand, Tesla is doing most of these disruptions. Just to get you started just look into these 2 industries. 1. Automotive. By 2030, at least 80 to 90 percent of new car sold would be an EV. If you dont believe this simple fact, I suggest you dig deeper into the cost of EVs and how they will reach parity in the west by next year... thats sticker price parity. Evs aee already cheaper to own over 5 years even if you compared a Tesla model 3 vs a Camry. So, when EVs reaches sticker parity, it's game over, even those that are price sensitive will never want an ICE again... so, you're talking about going from 6 oercebt to 80 percent over 8 years.. Tesla is smack right in the lead of that growth.. taking most of EV profits as Apple did with smartphones. 2. Energy Tesla will go from 4GWH of battery storage to 1.5TWH by 2030. Thats 375x growth in a business as big as their car market or bigger. Of course on top of those 2 industries that are no brainers, you'll see full self driving cars taking over the logistics industry which is even bigger than the above 2. Then Tesla is also working on a humanoid robot... with prototype coming out next year. Or even end of this year. Don't think of a sci fi conscious robot that does everything. But think of the 1st iteration as a factory bot. A robot that can do repetitive work, learn to do it with AI better than a human can. For example, putting the wire harness in cars, fluffing the chairs, basically factory line work that currently regular special purpose robots can't do due to their shape and dexterity. The software to run these robots are already done, ie, tesla FSD software. Now, think of the value of ea h of these robots that can replace 3 to 5 people each. And now think when Tesla produces them in the millions. Anyways, happy to answer any specific question u have in Tesla. Oh, as for options, nothing better than earning bybselling Tesla puts n calla as well... they pay a lot more than the spy options. I have been doing that with my Tesla shares.
@@wealthadventures here's a great deep dive you can do on valuation of tesla. I'll give you a starting place. In Q1, tesla operating profit was 3.6b, this was bigger than Toyotas operating profit of 3.56b even though Toyota sells 9x more cars. It's the margin Tesla has that are akin to Apples margin on smartphone vs Nokia on theirs. Btw. Now, also compare Tesla with another big tech, Amazon. Tesla also more or less equate Amazon's q1 earnings of 3.9b. So, essentially both companies earned the same but Amazon is currently valued 1.5x Tesla. That shows you how under valued Tesla is. Remember, Tesla will grow top line by more than 50 percent, more like 60 to 80 percent over many years to come.. while big tech is essentially growing at 15 percent or so... yet, Tesla is valued less than Amazon... On another thing to deep dive on, look into how much faster Tesla bottom line grows vs their top line. The more cars Tesla produces the higher their operating margin, thus growing the bottom line. Btw.. I don't suggest you take my word for it. Best way to build conviction is to do the 100s of hours to dig deep yourself. And do not read articles by the mainstream. Or, from any wall street analysts. They are all focused on spreadsheets and short term numbers and do not understand anything deeper than rhat
@@ezerratchaga Thanks for sharing your thoughts. I appreciate it! I work in the auto industry. I see a lot of companies rolling out competition. Might be a tough market going forward and with the current market valuing PE it might be tough period for TSLA. I do like the product and will look at it some more. Thanks again!
@@wealthadventures I think looking at Tesla as a car company is where the wall street analysts are making a big mistake. As you try to understand Tesla, look into these things. 1. Supply chain. Over the next several years, maybe even till 2028 or 2030, the entire EV industry will be limited by battery supply. This is due to raw materials as the limiting factor. And this is one of the reasons why the competition isn't coming. Not in the way most will think. Look at their plans of new models, and their plans for certain numbers. Then ask yourself, where is their battery supply. The legacy autos will soon realise they can't make it. Tesla on the other hand have secured and continuously trying to secure all the materials they can and all the battery supply they can put their hands on. Even then Tesla itself is battery limited. The growth I listed for tesla at 50 percent and above is already limited.. else they would be growing even faster. 2. Think of EVs as computer on wheels. Tesla as an iPhone vs the legacy auto EVa as blackberry, or tesla as a word processor vs legacy as electric typewriters. Most of the profits from EVs will go to tesla even though they'll likely end up with 15 to 10 percent of the car market once it's completely transitioned to EVs... same with how Apple is making 80 percent of all smartphone profits while selling only 12 percent of then. When you add up the above 2, you'll see competitors wont be coming. Btw. If you look at the ads the competitors put out at the superbowl. It ended up giving Tesla twice the orders.. Tesla doesn't need to advertise. When competitors advertise EVs, people will then look it up, and see tesla and they'll get Tesla. That being said, overtime, I think most legacy will either go bust or consolidate or become a shadow of themselves. Look at Ford, GM, VW, they actually plan for about 50 to 60 percent of their sales to be EVs by 2030. If you look at the adoption S curve and also the cost curve, you'll realise that by 2030, almost all new car sales will be EVs, which means, even if the legacy autos plans comes to fruition, they'll be half the size. Here's one last thing to think about. Tesla main advantage is their manufacturing prowse and their speed of innovation. Take their model Y, assume an average price of 60k. Their margin is 20k. That means they are building it for 40k. Now take the competitors, to build the same product, they'll have to sell at 75k and their profit margin will be something like 10 percent rather than 30 percent like Tesla. That means their coat would be like 65k. When competitors do come, Tesla has lots of levers to pull. Lastly, as I say, even with just their EV business, you can do the math on that and see that their revenue will grow by 50 percent a year and their profits by closer to 80 to 100 percent. And even very conservatively I put their stock price at 6k by 2030 based on just selling cars. On top of that you can look into how massive their energy business will be, and then their AI business. You may not think the robots are real, but as a computer programmer, I can tell you ronontaxis are coming. Maybe not in Elons timeline, but it really doesn't matter whether its 2024 or 2026, it will come, and when it does, that alone will be bigger than their car n energy business. And then the same fsd software is also used in their Tesla bots. Also, not in the way you think. Like an asimov robot that thinks and be as good as a human in everything. It doesn't need to be. Just having a human body, rhe dexterity, and the fsd software that allows it to learn a task and do things specialized robots can't do, will open up revenue stream that may be bigger than the entire world economy today as we know-it... I will post a link of a video about this... you can have a look. You really need to dig very deep to understand what Tesla is. What their business models are. Why aren't competitors coming, etc.
This is a great strategy for someone whose a little more comfortable selling options. Why not teach Buying a Call instead for new traders? Buying helps to control your risk. Buying a Put can provide protection and give you a guarantee, as long as both expire in the money.
Hi Kris. My perspective with options has come from being a long term buy and hold investor. I eventually gravitated toward selling puts because it made sense to say "if a stock falls to this price, I will buy it but in the meantime pay me a premium so that I can put my money to work". I have done videos on buying calls but it is not something that I would teach first.
Very nice! Really liked the way you explained. I took the liberty to write to you via instagram, to ask your opinion on a strategy I'm trying to build. Really could use the advise from someone with experience selling covered calls on SPY :)
I say this to people all the time, they complain of having to buy back early and make less money, i say, its more about making more successful trades, rather than making more money, from each trade. The profit flows when you make enough good decisions.
I'm beginning options trading and am wrapping my head around buying back early. The way I look at it, I"m locking in profits over an uncertain future waiting for expiration. It's probable, but not certain I will keep the whole premium by waiting for expiration... but it is certain gains if I buy out at 50-60% profit early. Also, when you annualize the gains... it's can be higher percentage buying out early over waiting for expiration. like you said, more frequent successful trades by buying back early seems to result in higher gains over the longer term. If I'm 80% successful in my trades... and by buying back early I can say double the amount of trades I do in a year... then I'll make more money. I think. ha.
Dave! You have to be the only person
to give actual scenarios if price goes
Up or down. Thank you for that. Good stuff man 👍🏼
Thanks! Appreciate it.
I sold two cash secured puts on SPY, then sold a covered call on them both. I've only been doing this each week for five weeks, and so far am making about $500-700 a week.
Best of luck! Hopefully you don't get a significant move in SPY to break the streak.
$500-700 a week means nothing. What's your % return? If you have $1M capital that's a poor return, if it's only $10K then you're doing well.
He said the quantity, why be so rude.
Lol..he literally said 2 puts so jist do the math to understand how much is the % of return😅
Yes, they mention they sold 2 strangles, but makes no mention as to the delta or DTE. What was the CVaR?
@11:00 consider selling leap cover call that expires year from today, another thing is if you have enough fund to sell 10 put contracts for example (around $400k).. then spread them at different lower strike prices all the way down.. any contract exercised take it and sell calls against it. Then you end up selling calls and puts next month. Just make sure you sell the calls at a strike of your cost or higher for each contract. You need a spreadsheet for this :-)
Thanks Sami!
Hi Sami, can you elaborate on the pros and cons of your method? It sounds interesting.
Not putting so much money in is key. No matter what happens you will not blow up everything. Thank you.
Thanks for watching!
Great Video ! I've seen people also sell put / call credit spreads on SPX ... Options available every day ... European style options ... No assignments
Thanks! Yes. That is another approach and has some advantages as well. I will try and do a video on it here in the future.
I like the content, I can really relate to your style of instruction too … though you can lose the colorism …. You don’t need it! You’re sharper than that 😊
Ha! Thanks. Will take into consideration!😁
Really good video! Thanks! Another advantage to this method if you use Fidelity is that you earn interest in SPAXX while simultaneously using your money for collateral. Currently that increases your 12% return to 16 +%.
Is that really true? In my Robinhood account when I sell put the collateral is subtracted from cash balance that accrue interest. Does fidelity let you accumulate interest on the collateral portion?
Loved this video, thank you! 🙏
Good stuff Dave. This year I'm selling calls 2-3 times a week on large SPY core position to generate a 5% extra dividend per year. Try to avoid exercise, but can use the wheel when needed. Goal is to beat the SPY by 5%, so far so good. What do you think of that?
Hi Greg. Sounds like a good plan. I like the idea of following a consistent laid out process.
I'm looking to start doing the same. How is that going for you?
💯💪💪💪🤘🏽🤘🏽🤘🏽🔥🔥🔥 solid advice. Thanks again for all your work. I finally sold my 1st contract. I still go back and watch your videos to better my methods.
Congrats! Good luck and if you have any questions, just ask.
QQQ is another great index fund to trade options. High liquidity, tight spreads just like SPY.
I am retiring next yr at 57 with steady monthly income stream from my dividend portfolio total $250,000 a yr to live comfortably, All thanks to my Investment manager. I love S&P 500 SOO MUCH! Also 3 houses paid off worth 4.5 million. One is my place of residence the other 2 properties will give me $150,000per/yr rent. I also have no debts... Stay Motivated!!🌹✅
Amazing! I have Liquid $150K to put into stocks, but I want to ensure good profits & safety. With tons of Advisors now, how did you find the right Investment Advisory?
Hello Peter, Care to share how you achieved such milestone?
Essmildaa Morgan is well known, just look her up.
Good video -- clear info nicely presently. Keep up the good work sir!
Thanks Steve! Appreciate it.
@@wealthadventures meant presented. You're welcome!
Honestly I just enjoyed hearing you talk. I’m definitely not in a position financially to be selling options lol
Hello! Thanks. Appreciate the feedback. No problem with learning something new!
This is exactly up my alley. Dividends are anemic and I can't afford any meaningful quantity. I'd rather focus my limited financial energy where I can profit in a controlled and calculated way. Can you do a LEAPS? Poor Man's Covered Calls and Puts?
Hello! Glad you liked it. Are you looking for examples of LEAPS and the others against SPY specifically?
@@wealthadventures i would like to see this.
with the market beat down i am lookin at 2 year spy leaps then sell coverd calls over the next 2 years
@@brewdog8568 Gotcha! I will look at doing a PMCC video.
I like your style Dave.
Thanks Andrew!
Thanks for the nice strategy. Question for accounts with less powder, will a SPY Long LEAP help with this strategy and if yes how would you manage if the short call get ITM to avoid the leap being called away?
Hi. Long call needs to be deep in the money. Short calls can be protected by keeping the OTM. You can sell OTM and roll up if the strike is breached prior to expiration. You will take some wins and losses on the short call but you are still getting the gain on the long call during strong moves in the S&P.
Hi! A lot of great videos! Thanks! What about using cash index (xsp or spx)? No assignment, instead of buying etf u could only roll out(&down) the itm put. Or going inverted, selling itm call to cash in premium and get ur be down. Ur opinion?
Hi Andrea! I have actually been looking at this recently. I hope to do a video on it soon. It does get expensive for many individuals but for those with the means it is an option and comes with some perks. Taxes being one. With indexes there are no shares to trade so trades are settled in cash and they are European style options. I have always utilized SPY and QQQ but I'm exploring. Thanks for watching and hopefully I can have more info soon.
Hey Dave, just watched this video again. I have a question... Can we roll down and further in case of a correction? So the new short would cover the loss, and get mor time for spy to rebound....
Hi. You can always roll down and out but, the position of the option will determine if you can do it for a credit. For example, if you sold a SPY put now for 420 out 2 weeks and it drops to 417 you will be able to roll it out a month and down a few points for credit. If SPY crashes down to 390, it will be difficult to roll out and down for credit without adding significant time.
bro that intro was gold lmao. XXDD
Ha! Thanks! Appreciate you watching.
@@wealthadventures what do you think about trading options weekly using monthly expiries since the theta decay is technically "non existent"?
@@purplecadence7390 I sell PUTs and CALLs weekly, out about a month, on a basket of stocks and ETFs. It has been a solid way to generate income but still has risks.
@@wealthadventures ive been combing through your videos. i dont think i see one about which ETFs you prefer to do these weekly trades on. would you mind telling me?
@@purplecadence7390 SPY and QQQ are the big boys with the most option volume. I like many of the select SPDR ETFs (XLE, XLF, XLI, XLU, XLV). I've used some Vanguard ETFs but not optimal (VOO, VYM) in my opinion so more of an opportunity trade.
Hey, new sub. Going through your videos, like the way you explain it simply. Do you have any videos showing how we can see the current profit on the CC and how to close out early/roll on fidelity? Last piece I think I need to figure out before I really get going. thanks!
Hi Gavin. Thanks! Appreciate it. This may help:
th-cam.com/video/dS7LsbPsf7U/w-d-xo.html
Good luck!
Very good interesting videos, the way you keep viewers tagged please keep making such videos,
Thanks! Appreciate the feedback.
Do you have an example of this same stock using leaps? And how to handle a correction?
I have an old video on LEAPS. Probably due for an update so adding to my list!
Just watched this video. I’m wondering..I looked up SPY for March-April 2022 and it was falling (closed at $412 on exp date). How did you end up managing this trade? Thanks for your clear, informative training.
Hi. I kept rolling my SPY options out and down. The small rallies that we did have this year allowed me manage my shares well. It was rough but I made money with my SPY trades in 2022. That includes some losses in the shares adjusted for premiums received.
I’m glad to see you talking about QYLD. I started with QYLD and also with X Wildey. And I think I can get better returns but of course you have to have $45,000 in capital
Hi. Yes. This is definitely a consideration and is a barrier. For those looking for a straight income play without that capital requirement QYLD and some others could work.
@@wealthadventures I started with RYLD. It makes more sense to own options on vtwo
@@62orbetter33 Might make sense to own both.
I retire next year and I need income. I think this is a strategy that I'm going to use.
Hi. Thanks for watching. Start paper trading and see how it goes. Good luck!
Nice! Since 3 months l’m doing something similar but on a much shorter timeframe bc of volatility. I bought 100 shares Microstrategy for 335$. And on friday l sell calls $20-30 above the share price, bc this shareprice goes up/ down like crazy the option premium is huge. Normal week l do this 1 time ( friday-friday), but last week l went in/out 3 times. Note: not all weeks are positive as l have to roll but overall l think l made about 20% in about 12 weeks. Yr starting point about spy is interesting , l will definitely check this out the coming weeks!
Thanks. Appreciate it and good luck.
when you lose on SPY.. and trade it again .. do you have a simple system for wash sale .. or do you have trader status.. if trader status how do you treat Long term gains.. can you still have VOO for Long gains . Thanks... if you cant answer public .. please let me know personal message .. i think your awesome
Hi. Not a tax advisor but if you sell the shares for a loss, you will need to wait 30 days before getting assigned any shares to avoid the wash sale rule. If you do get assigned, you can sell and wait again.
Hi Dave. I am bit late to commenting on this video but like many of your videos, I like to let the content sink in. Perhaps the passage of time has changed things but to generate the 1% 30 day or return by selling an out of the money put on SPY at its current level requires you to sell around a 436 ish strike price (not very far from the current SPY price). You were able to quite a bit further down the chain in your hypothetical trade to get the 1% return..Any comment as to why things have changed? Thanks again.
Hi. Good observation. We are now in a low volatility environment so option premiums, especially on the put side, are low compared to when this video was made. Plus this video is pretty generic when I look back at it now. This last video I made talks about it:
th-cam.com/video/eaMCV-TUK-o/w-d-xo.html
Excited to start building my shares, gonna flip flop and sell contracts
Good luck!
3:20 I like this strategy and have been doing it myself this year. Can you discuss more in detail about your arbitrage strategy with your low interest mortgage? Or, please point me to one of your videos if you have already done so? Thanks! New subscriber
HI. I've talked about it a little but not directly related to this video. Mainly using options and dividend paying stocks to pay down the mortgage over time. Is that what you are asking about?
@@wealthadventures yes-I was wondering if you had a specific strategy, such as you refinanced your mortgage, so that you still had positive cash flow, while selling options on a certain underlying for a certain percentage return each month.
@@ACR4008 I'm trying to generate enough from dividends and option premium to cover the mortgage while maintaining my basis. I do this with a basket of ETFs and individual stocks. I set a goal each week and month to cover. That is about it!
Hey Dave,
Fellow options trader here implementing similar strategies for some time now. Thanks for your videos.
Have you looked into doing this with shorter maturities (
Hi. I do some shorter expirations depending on the trade. When nothing is going on I have been starting with a strangle on SPY out about 1-2 weeks. If there is a CPI read like today I run and hide. 😁 Are the shorter expirations your preference?
Thanks for the video. After watching another TH-cam video on the topic, my goal is to get my Roth to 400K in about 15 years to sell puts on $SPY. Instead of selling at the money puts like that video suggests, I'm thinking .30-.15 deltas would be more of my comfort level. Your idea of trying to attain 1% a month, 12% yearly sounds great to me. Making half of my take home (or more) income in a ROTH IRA sounds great to me.
Hello! Both offer pluses and minuses but I'm more comfortable with this approach. Good luck!
@@wealthadventures when you say this approach do you mean at the money or 30 delta?
@@patrickalexis6230 I prefer selling OTM. A 30 delta would be fine but I focus on the 1% return which means I can go to a lower strike. Would be a good back test to run for the 1st quarter of 2022 to see how they would both play out.
@@wealthadventures thank you for your feedback. I'm going to back test and see what comes up.
@@patrickalexis6230 Please let me know what you find out. I'm curious.
Hi! Are u still doing this strategy on this crashing market? Can u receive enough income to smooth the capital loss?
Hi. I am still using this strategy. It does smooth out the ride but tough to keep up with SPY crashing. My breakeven or cost adjusted basis is around 377 at the moment. Not bad when I look back at this video and see a PUT at 425. Currently have 300 shares but may let 100 go Wednesday depending on the next 2 days. I continue to roll down calls and puts.
What about the dividends you get from owning the shares? Wouldn't you lose out on all that potential income on SPY?
You would get the dividend if you owned it prior to the ex-dividend date. If not you would miss out on it but it is 1.3%.
Liked subscribed and triple thumb’d up
Thanks Dee Gee! Appreciate you watching.
What about collecting premium on spy using pmcc or pmcp for income, I don’t have 35k
Hi. Certainly can go that route with SPY. Here is my video if unfamiliar:
th-cam.com/video/wvhyj6uyQ-c/w-d-xo.html
Just not my preference.
David, do you have any video using the platform of Fidelity where you sell a Call/Put option contract for a week/month expiration but at the same time having an OCO that way if the Call/Put option contract is becoming less profitable have that OCO order to close that contract ? I have been checking your videos and haven't see any. Help please.
No. I don't have an example like that with Fidelity. I have some on basic option trades:
th-cam.com/video/4agbxqlS1oA/w-d-xo.html
Honestly, OCO is not something that I use. I tend to manage myself.
@@wealthadventures David, thanks sir for your fast response. I really do appreciate it. Will check the video you post here as well.
Seems like you could, do a put credit spread basically every 3 days? make 1%. Maybe it wouldn't get filled if it was to deep out OTM? I don't know I'm fairly new to this. So I guess i'm wondering why go a month out?
Hello! Not a bad line of thinking but a 3 day put credit spread would require a fairly large max loss in relation to the 1%... and it could happen fairly often. The further OTM we go the smaller the potential gain compared to the max loss. Monthly options are popular as they grab the period of time when the options start to decay at a more rapid rate.
@@wealthadventures Ok, Yeah I'm learning rather quickly this is harder, SPY is less stable over a week than it is over a month. a lot less. So when it moves one direction it impacts the price more and has caused me to back out early. One other thing I'm wondering Though is it seems like you can do a put credit spread with an option that gets you 1% from selling only and make more like 2%. what is the downside to this? is it harder to close both the put buy and put sell? Are there any inherent dangers with this?
@@itsme1232620 I'm not sure I follow. Can you send me an example of what you are talking about with 1% and 2% you mentioned?
@@wealthadventures I sent you an email, a thing I noticed though right off the bat is you have to buy a lot more options to do a put credit spread. like 85 put credit spreads equals one put sell. but the return is basically double I think?
@@itsme1232620 As I'm sure you noticed, credit spreads will allow you to limit your downside. However, the % compared to a simple sold put will depend on the width between your strikes on the sold put (short put) and the put you buy (long put). 85 seems awfully high. Likewise, as you go further out of the money, the profit will get squeezed.
Dave - Do you close early at 50% profit? Would you then net .5% rather than the 1% collected? So you do it again to keep the 1%?
Hi Matt. I typically wait till I'm in the 80%+ range to close but you can adapt this type of trade to what meets your specific criteria. If you are selling a monthly option and see that you can collect 50% that first week or two it might be wise with the volatility that we are seeing. Good luck!
I have a very similar strategy except I'll go really far out of the money say in this case the $400 strike puts with hopes of getting assigned at a great price, though it basically never happens. Im collecting a bit less than 10% a year on my account so its maybe a bit to conservative but if I ever get assigned we can crack out a 20% move back up in a few months but will just have to waite. Also it doesn't hurt to buy a put why the market is taking on a weekly and quickly sell the premium before it expires in 7 days and then possibly still take asignment on the naked put if it should continue to tank.
Always appreciate your insights. Please keep the videos rolling!
Will do! Thanks Leigh!
Do you have protective put at all time? It’s costly and reduces income. What’s the best way to hedge and still be profitable?
Hello! No I certainly don't. I use them rarely. I do have one on now. Might be time to add one if we have another good start next week and the VIX continues to fall to the low 20's.
Is spy going down or up this week to put some buy calls or puts I lost big money last week 😭 doing calls when it went down
Wish I knew Miguel! I've sold some puts on SPY the last 2 weeks and still looking ok at the moment but I'm not real confident in the market at this time. Shaky!
@@wealthadventures definitely shaky it could keep going down or just pop right back up
@@thevisionone007 I expect it to continue... rough start to the week.
@@wealthadventures sounds about right I am going for a put see if I make it at least threw Thursday since first market is closed ;(
So what delta u chose to sell initial put to make 1% on spy ?
I've been watching TLRY, I have 94 shares & was looking forward to selling this contract. If you happen to use this as an example on your channel, I'll keep a look out for it. Call or puts. Thanks again my guy 💯💪💪💪🤘🏽🤘🏽🤘🏽🔥🔥🔥
Hello! I will check it out. Not real familiar with TLRY.
I bought a bunch of TLRY after they bought sweet water brewing. Depending on where you own it I would look at buying six more shares and selling calls based on where you need to be for profit. especially where the stock has fallen. However, they have several well preforming companies they have acquired for the long term,
@@thebeermoneyinvestor5565 yessir, did just that 💯💪💪💪🤘🏽🤘🏽🤘🏽🔥🔥🔥
New sub, I’ve been watching a lot of your videos. Kudos, you give some fantastic option advice on how to make money with a portfolio instead of just sitting on it. I like how you’re not trying to YOLO everything to hit the ‘jackpot”, but systematically using options to make money.
Hello! Thanks for feedback and for subscribing.👍
Even if a massive correction happens it's reasonable to assume that at, historically speaking at some point in time in the future, the market price will recover.
I sure hope so! Could take some time.
What indicators do you use?
Hi Kyle. I keep it pretty simple selling monthly options on SPY. I will look at moving averages, volume, and RSI. I may look at a few others but that is about it.
How about selling XPS coz of taxes
What could cause you not to achieve 1% monthly on options premium if you use OTM strategy?
Hi again. the 1% in premium is simple but protecting your investment (basis) is the trick. For example, you buy 100 shares and sell an OTM covered call. You collect 1%. The ETF climbs 10% that month. You let the shares get called away. You buy 100 shares again. Collect another 1% but the ETF falls 10% back to the original value. You are down 8%. If you just bought the stock and did nothing you would be even. You still collected 1% each month but your basis has been eroded.
Question: Now that SPY has expirations every day has your strategy changed to consider trading next day expirations every day?
No. I still like having time in the option. Easier to manage and there are also fees to consider. 1 vs 30 can add up unless you have a free option.
@@wealthadventures I use zero commissions. So far so good but I know I could be missing out. I have been using the 10-13 delta for the shorts. It was easy the last coupla weeks after the melt down but today I noticed we are getting close to a top so I sold a OTM Call spread and that worked for small money but I am looking for something that works consistently in all markets. I have been playing with settings on the MACD (not the default) to see if it gives a signal that is reliable. My thinking is In a Bullish only Longs and Visa Versa In a Bearish market, shorts only (moving averages on the 4 hour chart for weekly trades and 1 hour for 2 day trades) and then fine tune the MACD to signal when to go long in a Bull and Short in a downturn. Just trying to think it through. All my profits I have been buying shares of SPY. BTW in all markets I Know I cant always be Bullish or Bearish but need to know when to think long or short, hence the Moving Average idea.. I will be looking at your channel for ideas.
@@wealthadventures I have free options with robinhood. Just pay the 3 cents a contract for the regulatory fees.
Just curious...are there any tax benefits or liabilities to owning the stock/allowing assignment then getting it called away by covering the stock (wheel strategy) vs. only using options and essentially playing "keep away" by rolling until right?
Hey Jesse. Both would classify as a short term capital gain or ordinary income. If you hold the stock for over 1 year before it gets called away you would have the tax benefit as a long term gain. I should add, I'm not a tax pro!
But if it’s in a Roth or a traditional IRA then it’s not an issue correct ?
Is it easier to day trade spy or qqq
Hello! I'm not a day trader so can't be much help in this area. Both trade lots of volume so I would think both would be viable.
Assuming the market is down in the next 2 years , don't you agree that buying to open a 300 put on SPY 12/18/2026 and selling to open a 400 put on SPY 12/18/2026 will always bring a profit as long as SPY remains above 400 ?
That is a true statement... Assuming it stays above 400. And I usually have a trade similar to that open but I usually do it as a put ratio spread. So I like to sell 2 puts at say 400 and buy a 430 put way out in the future. This spells it out:
th-cam.com/video/17irGcYJqC0/w-d-xo.html
Just my pref!
@@wealthadventures Isn't sell 2 puts at say 400 and buy a 390 put more premium if SPY never goes below 400 by expiration? vs 400/430?
What is the minimum needed for this strategy?
As shown, you should be able to buy 100 shares at your strike price... so about $43000 at the moment.
Why would you pay off a low interest loan?
Okay, I mean no offense when I state the following. Why are you doing what you're doing? You can achieve significantly better gains by implementing level 2/tape, price action and vwap in your trading. I made 220% this past week on a small account and made $10k. I just started options trading. If you want to go slow, sure, do this method. But with that much capital, and buying IN THE MONEY, you can make $100-250 on a single contract per day. There are better ways!
Edit: trading for 3yrs, options trading for 2m.
What percentage of your portfolio is in stocks or ETFs that are permitted holdings. That you don’t trade. And what percentage of your portfolio do you use for options trades to collect current income? I’m thinking maybe a third of my portfolio I will trade in options.
Dave, great video! You mention still earning 1% a month when using a protective put...how is this done when your using some of the premium to buy the put...I missed something...? Thx!
Hello. An option would be to sell closer to the money to earn more premium that could be used to buy a protective put and still maintain the 12% overall. That was the thought process. Would be a good test to back test this Q1 2022 which I will try and work on.
@@wealthadventures Thanks! I do like this strategy with SPY as the premiums are definitely robust...great income. I have 100 shares now, and my 30 delta call is already close to being challenged.
@@kanegs1 Interesting market for sure. Might be good timing and allow to buy it back at a lower level... but who knows! lol.
You don't have to put down collateral right?
With this strategy, I have the collateral available in case I decide to purchase the shares. You can talk to your broker and have unsecured puts available but it does add risk and I would stress that you are clear on the strategy first.
Agree with you but I do this on daily expiry. This means I get profit/loss every day.
Lots of good approaches to this type of trade.
This is good info
Thanks! I appreciate the feedback.
You’re talking about a vertical credit spread correct? When you buy two puts. I wish I understood this better. I think this is the way to go when you are risking $45,000
Hey! I must have missed this previously. Credit spread for this would begin with combo of selling a put and buying a put further at a lower cost to receive a credit. That is one way of reducing the capital requirement.
Hello coach , finally , I activated my " vertical spread " in fidelity . Now , this is my strategy( as you said at the beginning of the video . I would like to do a put spread ( selling put( short leg ) and buying put ( long leg ) ,with the same expiration date since don't have a collateral for 100 shares of spy .....AND I would like to do this every day or every other day for target income of 10 dollars per day . My main question : For next day expiration date , what should be my strike target for these two legs ..... lets say as we are speaking spy is at : 445.33 1) what should be my strike point for short leg ( selling put ) and what would be my ( second leg BUY put ) ???? ...... when I went deep ( OTM ) like 430for short leg and 5 dollars ( spread ) 425 strike target for the second leg I got only 35 cents or 0.35 dollar credit PER day , way lower than my expectation 10 $ per day ...lol ....but when I went really close to current price short leg strike price 443 and send leg 442 , It gave me the net profit of 8.85 /day ( not bad ) , but i think that is too risky because the delta is 0.14 ( 14 percent chance that I get assigned ) by the next day ....so , i guess my question is :if I am picking up the next day expiration for steady income of 10 $ per day , how close can I select my strike target to the current price and not being assigned within one day ( 24 hours ) ........I guess to be productive in this ETF( SPY ) I MUST have a collateral of 100 shares to see a decent result and choose an expiration date of 30 days and going deep OTM strike price , and not being assigned and get the target of 1% per month or 12 % per year as you said ....bummer
Look man, IV increase so does the VEGA. Starting at .35 because you are deep OTM, as time goes by, the avg daily may move up closer to the $10.
In some cases, you get .35 day 1, and 7 days out from exp, you are getting 16.35 per day. That will Avg out close to 10 per day.
Other than that, 6 years of University should be able to provide you with the knowledge required to work this out, and the variable is, no one knows what's going to happen to price next, hence we take the option.
@@lethal2453 Thank you bro !
Thank you for this video, Dave! I’m new to options and just had a question regarding your reiteration that selling options would mainly be for generating income, and that if you are interested in growth it might be a better idea to just invest in safe index ETF’s.
However, if someone already has large enough holdings in an ETF like SPY to sell options, then wouldn’t that estimated 12% of income be additive on top of the gains you’d be making on the growth of the ETF?
In other words, why is it one or the other: income vs. growth? Wouldn’t someone have more growth if they continually reinvested premiums from selling options on an underlying they’d own anyway?
Hi. When you sell a call you are limiting your gain by the strike price (plus the premium). If the stock/ETF takes off you may miss out on a large portion of the gain. For example, suppose you sell a 410 call right now on SPY with it trading at 407, collect a $200 premium, and it climbs to 420 by expiration. You decide you want to keep your shares so you close the option prior to expiration which would now cost your about $1300 ((420-407)X100). Now you own the shares at $420 but lost $1100 on the option trade ($1300-$200) so essentially you limited your gain to 409 (420-11). Make sense? If not, this may be a good place to start:
th-cam.com/video/-ZrZoeIs8yU/w-d-xo.html
@@wealthadventures Yes that totally makes sense! Thank you. Considering that tradeoff and the others involved with selling options, do you think that ultimately no matter what strategies you use, in a long time horizon, it will all revert back to the mean of the return you'd get just buying a market index etf? And therefore selling options is more just a way of engineering different distribution schedules/tax consequences?
@@ppcalpha1042 No. You can make money both ways (stocks and options) independently of each other. Think of them as 2 different markets but linked by the underlying securities. Options are worth learning about but are also not necessary to be successful.
You have strong sense on SPY direction. Why not BUY weekly options and make 200-300% trades?
Hello! Hard to predict the direction of the market. If it was easy, we would all be making billions by now. I prefer to sell and reduce that variable.
@@wealthadventures I agree, my point is you are accepting more risk by selling option rather than buying an option and daytrading it’s direction. Selling premium adds additional risk
@@wealthadventures I love your mindset!
@@MyClothesDontFit Thanks! Preference for me is to buy and hold so I'm not drawn to day trading much. I like selling options as a way to generate income with a portion of my account. A small portion of what I do is buying puts and calls.
@@wealthadventures Amazing!!! I would love to see you do a market analysis video for SPY given the crazy trading era we are in! These times only come like every 10 years!
has your strategy changed at all in this choppy sideways market? this market seems to favor option sellers as a whole.
Hi. I have been doing more call credit spreads and iron condors with SPY. Also, some longer duration PUTs.
If you're planning to accumulate a lot shares of something like a growth ETF - Does it make more sense to acquire them via selling a PUT and letting it be assigned?
If you can afford to buy 100 shares at a time I think selling PUTs is a good way to activate money that is in cash. Especially if you don't like the current price. Dollar cost averaging is also a great option if you need to buy smaller lots.
Your credit spread allows trading short SPY options in accounts of any size. No need to go full montie naked to get income from the option market.
I love "dry powder"
Lots of it laying around these days!
You can definitely outperform QYLD
I agree!
You ever looked into doing this on equity index options or futures? You get the nice 60/40 tax treatment plus better margins and less gaps.
Hi. I have explored index options but not futures. The tax benefits are a nice perk. Is this something that you have done or just looking into?
@@wealthadventures Been doing this for a while now, happy to share what I learned. Futures are probably the best for individual traders due to the liquidity and better margins unless you have portfolio margin. You ever read up on volatility risk premium? It's the underpinning on why option writing "works" essentially.
@@mrhankkingsley Hey. Sorry for the delay. I have read about volatility risk premium but I have stayed away from trading futures up to this point. Always willing to learn! What platform do you like to use for futures?
@@wealthadventures I use IBKR, which has its quirks, but good enough for simple option selling on ES futures. The big difference is that ES, the SP500 futures contract, has a multiplier of 50 while SPY has a 100 multiplier. So currently December ES contract is around 4000 so each contract has a notional value of $200k (4000 x 50).
@@mrhankkingsley I will check it out. Thanks! I've got some reading to do now.
Wanna know where the hugh Rogan fam is?? I grow up there. The hose is gone
Hi Dave, a few weeks ago we traded texts about sharing your PUT/CALL analysis spreadsheets. Are you open to that? I understand if you’d rather not. Thanks, Jerónimo
Hi. I did clean it up a bit. No problem sharing it at all. Let me see if I can get it done here quickly.
While I finish this off, if you want to email me here I will send what I have now:
davewealthadventures@gmail.com
Great video, talking tooo fast! most of youtubers fall for that! I need 10 coffees to keep up with you! lol
Hey Alen. Thanks for the feedback! I do appreciate it. I owe you a coffee... or 2.
I have done 50000 options trades...dont do this....never invest directionally, in this case place a strangle and never hold past 20 days dte gamma risk is real...strangle 60dte is way better sell at 20dte no matter what
Better to just buy and hold Tesla shares.
Hi Ezra. I still struggle with TSLA... which just means I missed out so far! I have a few shares but that is it.
@@wealthadventures have you done a deep dive on Tesla? The more you understand Tesla the more you'll see that it's not only going to be the fastest growing large cap in the world over the next 10 years but it's also the safest place to park your money, safer than the indexes actually. The amount of disruption you'll see over the next 10 to 20 years will mean most of the companies in the indexes will actually go broke. While on the other hand, Tesla is doing most of these disruptions. Just to get you started just look into these 2 industries.
1. Automotive.
By 2030, at least 80 to 90 percent of new car sold would be an EV. If you dont believe this simple fact, I suggest you dig deeper into the cost of EVs and how they will reach parity in the west by next year... thats sticker price parity. Evs aee already cheaper to own over 5 years even if you compared a Tesla model 3 vs a Camry. So, when EVs reaches sticker parity, it's game over, even those that are price sensitive will never want an ICE again... so, you're talking about going from 6 oercebt to 80 percent over 8 years.. Tesla is smack right in the lead of that growth.. taking most of EV profits as Apple did with smartphones.
2. Energy
Tesla will go from 4GWH of battery storage to 1.5TWH by 2030. Thats 375x growth in a business as big as their car market or bigger.
Of course on top of those 2 industries that are no brainers, you'll see full self driving cars taking over the logistics industry which is even bigger than the above 2. Then Tesla is also working on a humanoid robot... with prototype coming out next year. Or even end of this year. Don't think of a sci fi conscious robot that does everything. But think of the 1st iteration as a factory bot. A robot that can do repetitive work, learn to do it with AI better than a human can. For example, putting the wire harness in cars, fluffing the chairs, basically factory line work that currently regular special purpose robots can't do due to their shape and dexterity. The software to run these robots are already done, ie, tesla FSD software. Now, think of the value of ea h of these robots that can replace 3 to 5 people each. And now think when Tesla produces them in the millions.
Anyways, happy to answer any specific question u have in Tesla.
Oh, as for options, nothing better than earning bybselling Tesla puts n calla as well... they pay a lot more than the spy options. I have been doing that with my Tesla shares.
@@wealthadventures here's a great deep dive you can do on valuation of tesla. I'll give you a starting place.
In Q1, tesla operating profit was 3.6b, this was bigger than Toyotas operating profit of 3.56b even though Toyota sells 9x more cars. It's the margin Tesla has that are akin to Apples margin on smartphone vs Nokia on theirs.
Btw. Now, also compare Tesla with another big tech, Amazon. Tesla also more or less equate Amazon's q1 earnings of 3.9b. So, essentially both companies earned the same but Amazon is currently valued 1.5x Tesla. That shows you how under valued Tesla is. Remember, Tesla will grow top line by more than 50 percent, more like 60 to 80 percent over many years to come.. while big tech is essentially growing at 15 percent or so... yet, Tesla is valued less than Amazon...
On another thing to deep dive on, look into how much faster Tesla bottom line grows vs their top line. The more cars Tesla produces the higher their operating margin, thus growing the bottom line.
Btw.. I don't suggest you take my word for it. Best way to build conviction is to do the 100s of hours to dig deep yourself. And do not read articles by the mainstream. Or, from any wall street analysts. They are all focused on spreadsheets and short term numbers and do not understand anything deeper than rhat
@@ezerratchaga Thanks for sharing your thoughts. I appreciate it! I work in the auto industry. I see a lot of companies rolling out competition. Might be a tough market going forward and with the current market valuing PE it might be tough period for TSLA. I do like the product and will look at it some more. Thanks again!
@@wealthadventures I think looking at Tesla as a car company is where the wall street analysts are making a big mistake. As you try to understand Tesla, look into these things.
1. Supply chain. Over the next several years, maybe even till 2028 or 2030, the entire EV industry will be limited by battery supply. This is due to raw materials as the limiting factor. And this is one of the reasons why the competition isn't coming. Not in the way most will think. Look at their plans of new models, and their plans for certain numbers. Then ask yourself, where is their battery supply. The legacy autos will soon realise they can't make it. Tesla on the other hand have secured and continuously trying to secure all the materials they can and all the battery supply they can put their hands on. Even then Tesla itself is battery limited. The growth I listed for tesla at 50 percent and above is already limited.. else they would be growing even faster.
2. Think of EVs as computer on wheels. Tesla as an iPhone vs the legacy auto EVa as blackberry, or tesla as a word processor vs legacy as electric typewriters. Most of the profits from EVs will go to tesla even though they'll likely end up with 15 to 10 percent of the car market once it's completely transitioned to EVs... same with how Apple is making 80 percent of all smartphone profits while selling only 12 percent of then.
When you add up the above 2, you'll see competitors wont be coming. Btw. If you look at the ads the competitors put out at the superbowl. It ended up giving Tesla twice the orders.. Tesla doesn't need to advertise. When competitors advertise EVs, people will then look it up, and see tesla and they'll get Tesla.
That being said, overtime, I think most legacy will either go bust or consolidate or become a shadow of themselves. Look at Ford, GM, VW, they actually plan for about 50 to 60 percent of their sales to be EVs by 2030. If you look at the adoption S curve and also the cost curve, you'll realise that by 2030, almost all new car sales will be EVs, which means, even if the legacy autos plans comes to fruition, they'll be half the size.
Here's one last thing to think about. Tesla main advantage is their manufacturing prowse and their speed of innovation. Take their model Y, assume an average price of 60k. Their margin is 20k. That means they are building it for 40k. Now take the competitors, to build the same product, they'll have to sell at 75k and their profit margin will be something like 10 percent rather than 30 percent like Tesla. That means their coat would be like 65k. When competitors do come, Tesla has lots of levers to pull.
Lastly, as I say, even with just their EV business, you can do the math on that and see that their revenue will grow by 50 percent a year and their profits by closer to 80 to 100 percent. And even very conservatively I put their stock price at 6k by 2030 based on just selling cars. On top of that you can look into how massive their energy business will be, and then their AI business. You may not think the robots are real, but as a computer programmer, I can tell you ronontaxis are coming. Maybe not in Elons timeline, but it really doesn't matter whether its 2024 or 2026, it will come, and when it does, that alone will be bigger than their car n energy business. And then the same fsd software is also used in their Tesla bots. Also, not in the way you think. Like an asimov robot that thinks and be as good as a human in everything. It doesn't need to be. Just having a human body, rhe dexterity, and the fsd software that allows it to learn a task and do things specialized robots can't do, will open up revenue stream that may be bigger than the entire world economy today as we know-it... I will post a link of a video about this... you can have a look. You really need to dig very deep to understand what Tesla is. What their business models are. Why aren't competitors coming, etc.
Selling SPY is nice and all, I'd rather sell put credit spreads with fundamental analysis
Hello. Can't disagree. I would say my option trades are about 50/50 ETF to individual stocks with most trades simple sold puts.
Are you still doing this strategy?
Hello! Yes. Although not as aggressively until I see how my current trades progress.
Definitely the wrong time to sell SPY puts
Hey Logan. Does that mean it is time to sell calls or call credit spreads? Always time for something...
This strategy is though in a bear market. You better off selling puts on GOOG, less capital required..
This is a great strategy for someone whose a little more comfortable selling options. Why not teach Buying a Call instead for new traders? Buying helps to control your risk.
Buying a Put can provide protection and give you a guarantee, as long as both expire in the money.
Hi Kris. My perspective with options has come from being a long term buy and hold investor. I eventually gravitated toward selling puts because it made sense to say "if a stock falls to this price, I will buy it but in the meantime pay me a premium so that I can put my money to work". I have done videos on buying calls but it is not something that I would teach first.
I'll bet 5 months later you are not still doing spreads on spy. Never seen anyone do this long-term.
Hi Doge. Still going strong but what part of this references spreads? I don't remember having that in this video.
Options gets me laid each month. Women aren't cheap you know...
Ha! Is that how it works? I'm taking notes...
Lol this works until it doesn’t and qyld was the right choice all along
This is bushit
Why?
@@raytailor9251why ? You lose money .
Do spreadbetting Margin on Sp500 Option writing and make 5% a week at least lol
Very nice! Really liked the way you explained. I took the liberty to write to you via instagram, to ask your opinion on a strategy I'm trying to build. Really could use the advise from someone with experience selling covered calls on SPY :)
Hi Juan. I will check it out! I need to check Instagram more often so sorry if it took some time. Thanks for watching and talk soon!