Top 3 Options Trading Strategies for Monthly Income
ฝัง
- เผยแพร่เมื่อ 23 ส.ค. 2023
- Learn the top 3 trade setups we are using on the desk here: tinyurl.com/bddmz748
#optionsstrategy #optionsincome #optionstrading
SMB Disclosures www.smbtraining.com/blog/smb-...
The market's direction can swiftly change, with indexes frequently transitioning from a bear market to a bull market precisely when the news is most negative and investor sentiment reaches its lowest point.
For the average person, the strategies are fairly demanding. In actuality, most professionals who have the necessary abilities and knowledge to complete such occupations do so successfully.
When you make new purchases, be prepared with an exit plan. Think about taking some profits early to secure gains. I've been talking to a financial analyst regularly since COVID. Popular stock investing is easier now; the challenge is knowing when to buy and sell. My advisor handles investment and exit choices for me, and my account has grown to over $500K in less than a year.
That's awesome! Investing in stocks with a reliable trading system can lead to great outcomes. It's fantastic that you've been working with a financial advisor for a year now. Starting with less than $200K and being just $19,000 away from making half a million in profit is impressive! Keep up the good work!
Mind if I ask you to recommend this particular coach you using their service?
Carol Vivian Constable is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment..
I can never catch a break in the stock market. I was up by nearly $4000 but I regret not selling sooner. I think I am too impulsive and not fast enough at the same time.the Market is too volatile.
With my demanding job, I lack time for investment analysis. For seven years, a fiduciary has managed my portfolio, adapting to market conditions, enabling successful navigation and making informed decisions. Consider a similar approach.
@@Andrian-ch3on Wow, I bet that you cannot recommend anyone.
Kristin Amy Rose is the licensed coach I use. In doubt? Just research the name. You'd find necessary details to work with a correspondence to set up an appointment.
Thank me later.
Respect!One of the most efficient strategies I have ever met!🍇
All of my favorite methods in your videos. But you using it like a real pro!🐒
One of my favorite strategies is to sell cash-secured puts on stocks with a high dividend with an expiration prior to the ex-dividend date. If I don't get assigned, (forced to buy the shares) then I buy them outright and sell a covered call for a strike price that would pay more than the dividend return if it's assigned. Once the ex-dividend date has passed, I continue to sell call options at the lowest strike price that is more than what I paid for the stock until I get assigned, at which time I look for another stock with a high dividend to sell puts against. Selling the call at a strike price closest to the cost of the stock gives the best price for the call option
It's basically a wheel strategy using dividends to increase returns.
@Darylking265, I've done very similar trades in the past and they can provide you with a much greater return long term than just buy and hold on high paying dividend stocks. It's a version of the wheel strategy that I happen to like very much. Thanks for sharing!
Such a great strategy! I employ that very same technique as well. If you really understand options, and know what kind of possibilities there are to generate cash flow, a whole other world opens up. I use a philosophy called K.I.S.S. which means "keep it super simple" and I have done very well for myself with it in the options world.
@@luxurylife7464would like to hear more about how you employ your super simple trading strategy as I’m entering into the “wheel” strategy. One thing I’m not seeing much discussion on or maybe I’m not understanding when it’s discussed, is what are people looking at on the chart to determine engagement? This video did address this topic somewhat when mentioning entering / engaging once the underlying is depressed. Is that the only time people using the “wheel” / selling puts enter into these trades?
Amazing can you give a real life example of a high div stock you recently did this strategy? They would be really helpful
@@MStar10 Sure. Tues June 13th was the ex-dividend date for Camping World Holdings (CWH). I sold 4 cash secured puts on Jun 5th for the Jun 9 expiration $26 strike for $0.30 per share.
On the 9th, I bought back the puts for $.03 per share, bought the 400 shares outright for $28.94 and sold 4 call options with a $30 strike Jun16 expiration for $0.20 per share. I wanted to own the shares before the ex-dividend date.
Jun 16 I buy back the calls for $0.07 per share and sold 4 call option contracts for $0.44 with a $29 strike and a Jun 23 Expiration
Jun 23 the calls expired worthless
Jun 26 I sell the 4 calls with a $29 strike and a Jun 30th expiration for $0.30 per share.
Jun 29 I receive a dividend of $0.625 per share for the 400 shares I held.
Jun 30 Camping World Holdings closed above $30 and I was assigned, selling my 400 shares for $29.00, closing the series..
.3 - .03 (open and closed the puts) + .2 - .07 (open and closed 1 set of calls) + .44 (calls expired worthless) + .30 (calls assigned) came to $1.14 worth of premium for each of the 400 shares. Add the .625 dividend and the .06 difference between the purchase price and the assigned strike and you have $1.825 times 400 shares or $730 return for about 1 month's trading of the one security.
6 transactions * 4 contracts * $0.65 fee charged for the transactions of the options gives me a trading cost of $15.60
Very well structured, everything is clear and logical.
You are blessed, man! These trading tactics really works, I tested by myself
Fantastic explanation. Thank you!
These strategies are so cool... Thank's for showing them🎇
I have been writing puts below support on stuff I’d like to own for 15 years now. Normally NTM too, and if I can, dividend paying ones. If they go ITM I get them at a price I wanted, then I write calls on the assigned stock. Normally 30 delta but depends how I feel. Rinse and repeat. Only in the last few years I see people now calling this the “Wheel” strategy. Keep some cash in case of a shock tank and you need to buy more to bring the average price down of the underlying (else the cost basis call could end up too far OTM for any decent premium) Stick to billion dollar household names, steer clear of memes, and you’ll be fine. Capital intensive though (unless you go down the PMCC route but you have to know what you’re doing in terms of IV and the higher delta long call). All good fun, and you can do this stuff whilst in your day job.
Are you doing the “wheel” to bring in income or to lower your cost basis?
Can you explain your strategy with a recent example please. Much appreciated
Thanks for sharing how your strategy works out.
Very encouraging to hear!
Great content as usual. Options trading simply has limitless potential. I’m glad decentralized options trading is advancing very quickly, too. Lyra, for example, will introduce features like portfolio margin, capital efficient spreads, multi-asset collateral, and loss-minimizing partial liquidations with its V2.
Thank you for sharing, very informative , just an observation at 8:29 , second line on slide says PUT option , I think should say CALL OPTION
Regards
I noticed that in each example, the trade was executed at a strike with about a 35 delta. That tells me that the trade has a probability of 65% being OTM at expiration. I have watched countless videos on put selling, and "experts" recommend using a delta of
@gabeaurbach6083 Thanks for your comment. There is no one way to establish the perfect location for a short put. It is done many different ways and could be based on technical support, deltas or standard deviations. I don't just focus on deltas.
The delta you choose largely depends on the strategy. For a cash secured put you should be selling it on a stock you are willing to own long term. So a higher delta like 0.3 gives you more premium if the 0.3 strike price is still a.price you'd like to own at. Don't forget you can turn around and sell covered calls on a stock if your cash secured put gets assigned. So your cash secured put expiring in the money isn't a huge deal if it's a good stock. You DON'T want a credit spread to expire in the money at all. You just lose money and don't own anything. So spreads should be done on much lower deltas like
context of derivatives trading, particularly when one is engaged in the systematic writing of put options, the concept of 'Delta' assumes critical importance. Delta, denoted as a Greek letter and often considered the first derivative of the option pricing model, measures the rate of change of the option premium with respect to infinitesimal movements in the underlying asset.
In advanced portfolio management, you may want to target a specific Delta, which correlates directly to the option's moneyness and indirectly to its probability of expiring in-the-money. A Delta of approximately 0.30 is commonly employed by traders to balance the risk-return paradigm-capturing sufficient option premium while mitigating the statistical likelihood of assignment. This is generally aligned with a moderately bullish or neutral market outlook and serves as a de facto income-generation strategy, colloquially known as 'being the house.'
Should you possess a more conservative risk profile, a put option with a Delta around 0.20 may be more apropos, minimizing assignment risk albeit with a concomitant reduction in the option premium. Alternatively, a Delta closer to 0.50 or above would suggest a more aggressive stance, capturing higher premiums at the expense of increased risk exposure.
As Delta is inherently dynamic in nature-subject to alterations due to Gamma, another second-order Greek-it necessitates ongoing surveillance and potential rebalancing to align with your evolving investment thesis and risk tolerance. Consequently, sophisticated risk management protocols should be stringently observed.
@@Christiankota nice chatgpt bro
As an investing enthusiast, I often wonder how top level investors are able to become millionaires off investing. . I’ve been sitting on over $670K equity from a home sale and I’m not sure where to go from here, is it a good time to buy into stocks or do I wait for another opportunity?
Well the bigger the risk, the bigger the reward and such impeccable decisions are better guided by professionals.
Absolutely, making informed and thoughtful decisions when it comes to finances is crucial. Whether it's budgeting, investing, or managing debt, having a plan and taking the right steps can lead to financial security and success.
Yes true, I have been in touch with a financial advisor. With an initial starting reserve of $80k, my advisor chooses the entry and exit commands for my portfolio, which has grown to approximately $550k.
I've been considering hiring an advisor for a long. Could you please direct me to your advisor?
I work with NICOLE ANASTASIA PLUMLEE. If you would like more information about her, you can conduct a search online.She got featured on CNN recently.
This guy knows a lot of great things! If you want to know more about trading, check all of his videos
SMB ON❤🔥, thanks guys!
if you want to a rich check all lessons of this guy. He knows how to make money
Seth has done well over the years
WOW You really good at trading Thank you for help
Excellent sir
I believe you can use covered call strategies with dividend stocks too, if i'm not mistaken.
Thank you for such a great video. These strategies are the basses for cash flow in the stock market. I would appreciate if you post a video about delta hedging for these strategies.
@Dorian, we can do that in the future. We'd have to break it up in to different videos for different strategies because delta hedging varies greatly from strategy to strategy.
I bought my first call option last week. Need T stock to hit $17.89 before June 😊
Awesome 👏
The Straddle is a gold mine. Been doing it for years😎🤟🔥
Strangle>Staddle
Just wait until you learn how to turn your straddle into an appreciating asset
@@ATLJB86what happens when you overlay a strangle over a straddle?
How do you make the straddle work for you?
@@jodolski buy a put and a call in the money all at the same strike price. When the stock is goin more in one direction of the straddle sell the loser and keep the other put or call and reap the profits. It works everytime. The only downside is the bookmakers make the straddle contracts so pricey that u got to know what u are doin or they will shave a lil off the top until you figure it out..lol
In the credit spread, does your broker automatically sell the shares after you are assigned them and don't have the money? For example, 3775 Put is exercised so you have to buy = $755,000 trade. Say market is 3770, so your put expires, no automatic excerise. Of course you can sell for $754,000 but is this automatic too or do get extended a huge margin loan?
The person teaching this has a great "teaching" voice...
What call spread strategy is recommended for IWM and/or SPY at this time
Straddle Options are good. But it's nothing compared to hedging "Long Call Butterfly Options" are nice!
does smb count verticals as one trade or two for its 100 trades over 60 days?
SMB Capital, a proprietary trading firm, typically refers to its trading strategies as focusing on intraday equities and options, among other instruments. However, the specific mechanics of how they count their trades for any stipulated period such as "100 trades over 50 days" is proprietary information and not publicly disclosed.
If by "vertices" you're referring to turning points or specific events within a single trading strategy, it's not clear whether SMB would count those as individual trades or part of a broader trading strategy. In general, proprietary trading firms often have their own internal definitions and methodologies for counting trades, especially when multiple instruments or strategies are involved.
Therefore, to get an accurate understanding of how SMB counts trades for any metrics they may publicly discuss, you'd likely need to consult directly with the firm or access their specific training and educational materials.
I’m assuming you meant Calls at 8:27 … you were talking about the covered call strategy then began talking about puts.
I'm just starting and don't have 49k to sit in the account fro a trade or 40k off Tesla stock for CC's Since I'm starting I can't use spreads either. Any idea's what I can do to make more then the commissions to try and grow to this video's parameters.
Great Value, but you didn't speak about the downside of any of those strategies
So, if the Tesla calls sold for premium get assigned, wouldn't selling a put be a better strategy versus buying them back outright and then sell a call?
@Minlakhani8358 Yes selling a put would have been an alternative, but remember this example involved the trader ALREADY owning the TSLA shares.
@@sethfreudberg4750,
So you've explained everything very nicely it should hopefully help many, having a discussion about it sorta adds to that learning process.
I, for one, prefer to sell puts after getting my shares called away. If a sold call gets assigned, this means the stock rose much faster than I anticipated, at such a point I have to consider and prepare for potential dips. If fundamentals support, I can always sell an ITM put. If I can buy something for less than what it's worth today, why not?
Thanks for a very informative video!
What is the DTE when you enter the trade? It is weird that you don't provide that information directly as an option trader.
Days to Expiry
They’re all monthly
Which trader are you referring to Ernest?
Does selling puts work for weeklys?
Yes it does because your taking advantage of volatility when buying options are a depreciating asset
It certainly can and I know many people who trade that way.
bit strange , Seth talks about covered call strategy but in example he mention selling two of 200 strike price put options +7.72 x 100 x 2 puts. (not calls)
I got etrade and they've now got a 5000 min to sell covered calls and CSPs even on a stock like SOFI can someone explain this to me because I can still buy 0dte options...
the shirt🤣 But great video.
Was there any criteria for selecting the width of the credit spread?
No. My interest was mainly selling puts and covered calls.
That's purely a matter of how much protection you want on the trade and how much you're willing to pay for it Aaron.
wouldn't you lose money from buying the 3750 put as this is a bearish play?
When you sell a covered call, does the buyer have to factor in they money they paid for the call when determining if it is prudent to exercise or not?
If they pay $5 for a $200 call option, isn't their break even $205? And, will the market automatically assign the shares to the buyer at $200 even if the buyer does not exercise?
It will be exercised automatically
@@stephenoutram3926 What Stephen said :)
If the call expires in the money, it will be exercised. If you don't want to pay for the shares you need to close the call before the shares are assigned. You do that by buying back the call. Also Registration--he didn't pay anything for the call--he received cash for the call.
When a buyer purchases a call option, the breakeven point indeed factors in the premium paid for the option. If they paid $5 for a call option with a $200 strike price, their breakeven would be at $205. For it to be financially prudent to exercise the option, the underlying asset should ideally be trading above $205. This way, the $5 premium is "recovered," so to speak, making the trade profitable.
The market does not automatically assign shares to the buyer if they do not exercise the option. Assignment is an action initiated by the option holder (the buyer). If they do not exercise the option, it will expire worthless if it is out-of-the-money (i.e., the market price is below the strike price for a call option) at expiration. If it's in-the-money (market price is above the strike price), the buyer still has to manually exercise the option to take possession of the underlying shares, unless they are using an options trading platform that exercises in-the-money options automatically at expiration. But even automatic exercises usually consider the strike price alone, not the premium, so it would trigger at $200, not at the $205 breakeven point.
Therefore, the onus is on the option buyer to exercise prudently, taking into account not just the strike price but also the premium paid.
@@Christiankota Excellent explanation! Thanks!
Or you do a CSP on Tesla until you get the price you wanted.
Oh ye
Option buying strategy plz.....
@NoatraderX we have a full course on that topic actually.
Please share also daily income option strategies for small account traders that can only trade the first 1.5 to 2.5hrs when market opens if there are any.
@dllmohh6026 it's a little difficult to find income strategies that only last two hours because there's not much time decay that can occur over that period of time. Certain strategies can be closed within a few hours but that's not totally reliable,
This doesn't count 20% cercuits.... You are bound to go bankrupt if this happens.
I have been trading for about 6 months now and just about every trade backfires and slaps me in my face. Nearly impossible for me to catch more than a few points. I try to do a top down analysis but it doesn't work for me . I say to myself, clearly I'm in the 90% that lose money, so I open a demo account, do my analysis, then take the opposite of what I would normally take and get the same result. I'm starting to feel hopeless, any advice for a struggling trader?
Can I transfer funds from my retirement account
😂 don't do it
@@thabangmnguni6539
Agree
vv
As a stock trader this is so confusing to me lol
Johnny I'd suggest you watch the video here to give you the basics first and then you can come back to this video and it will be much easier to understand:
th-cam.com/video/w_BjFmbwbYA/w-d-xo.html
I'm favoured $130k every 4 weeks! I now have a good house and can afford anything and also support my family
I would suggest for the example just use one option instead of doing x5 x10. That m,ae the whole calculations a lot more confusing. It also would falsely making people think the profit they can make is so much. I knows you want to show how good these strategies can profit but you also not showing how much risk. For example the cash secure put u make 1 k but you are risking 50k to do that. Thsts not a good education video should do
Actually @John , you only sell cash secured puts on stocks you are happy to invest in, so to call it "risking $50k" is a little questionable in my opinion.
vertical spreads are much better than naked put sells , you can't justify tying up 50 grand to make a grand for a month and potential downside is unlimited and you can't just justify losing a trade by saying you d be assigned a great stock at great prices. You straight up lost the money !
Mathematics of this options is very complicated - I cannot understand all this complexity ... sorry - I am not that smart.
You are not stupid, just lazy ;)
@@maxxmahh One and the same - no difference in my mind between stupid and lazy. Oh wait .. I guess I just proved you right. 🙃
I am less likely to believe someone who uses a green screen to fake their background. Makes me wonder what else are they hiding. Plus you would have to be a complete idiot to sell options and risk being assigned, then really be screwed.
Don't stop trading and testing new tactics and you will find your own method
I'm favoured $130k every 4 weeks! I now have a good house and can afford anything and also support my family