►► AVAILABLE NOW! Limited to the FIRST 100 people, get my brand new online Option Trading course (Intermediate option trading) for $497. Regular price is $997. Here is the link to check it out: mylifeoflearning-randy.mykajabi.com/offers/EgeavtWJ Join my Patreon to get access to my all my Stock & Option Trades, Open Orders and Weekly Top 5 Stocks: www.patreon.com/mylifeoflearning Subscribe to this Channel: th-cam.com/users/MyLifeofLearning New Beginnings: The Option Trading Story amzn.to/2OgXx58 Website: mylifeoflearning.com/index.html
Super video, Randy. I love to see how the non-superstar trades get turned. This is what makes the basics of The Wheel so powerful. Thanks for showing the way.
I honestly greatly appreciate you for your video’s and time to do these videos! You have honestly brought everything I was trying to learn together! Again thank you very much for your time and video’s best wishes to you and your family
The wheel strategy works when there is low volatility. If prices rise or fall hard then it doesn’t make any sense to sell puts at ath or sell calls at very depressed prices, does it??
Personally, I believe our version of the upgraded wheels strategy works in any environment. As volatility increases, you can sell options that are farther OTM and still do well.
We don’t do just the basic sell put options, if they’re assigned switch it to a covered call until it’s also assigned. We do that to some extent but we also adjust, roll, we do PMCCs, credit spreads, we sell naked call options, we do ratio spreads, to name the ones that come to mind. We’ve taken the wheel strategy and tweaked it and made adjustments over the years to arrive at the trading strategy we’re currently using, that I call, the upgraded version of the wheel strategy.
@@StockandOptionMyLifeOfLearning I understand all of that but in the case of PYPL for example. where the price dropped 50% in two months, what do you do?? You have been assigned the stock then at what strike price are you going to sell calls at? Too close to the current market and you lock in a loss; too far OTM and the premiums are peanuts…. ?!? The large capital loss on the underlying is hard to make up with the small monthly premiums. ☹️
There are a lot of ways to tackle that problem. Each stock and situation is going to be different. It depends on where resistance is, if you already have a full position on or not, how much risk you want to take, etc. It can be tough mentally when that happens. But there are ways to fix it as long as the stock doesn’t go to $0 or continue a sharp decline. Sometimes it just takes a bit of time. Here is a video series I made on repairing positions that have gone against you if you’d like to check it out. I’m sure you’ll find something in there that can help you: th-cam.com/play/PL3j38I2YtGw2mMZNftBUDs1Ln984R0wV9.html
Randy, you should have a million subscribers! Seems like a ton of folks are following the passive/dividend strategy. Selling options in a growth portfolio blows them away! So what if your dividend champ pays a growing 3% yield? They need options. Pun intended.
Thank you so much for that Alex and for your support! 😊 They are made available to my patrons and I'm working on making them available on Etsy. I hope to have that available in the next month. When I do, I'll let you guys know.
Another great video, Randy! Love the tricky trades you share with us. I'd be interested to know how you are feeling about the SBUX puts you sold now the price is below your 95 strike?
I still feel good about them and the company. We sold some at 90 and some at 95. They may end up in the money at expiration in which case we'll try and roll them out. If we can't roll them out, then we'll either turn it into a CC or PMCC. However, if I did not have a position in SBUX already, I don't think I would initiate one right now because the daily chart is looking very weak. The weekly chart looks a little better because although SBUX pierced the 200 EMA, it ended up above that so if it can hold around 90, it might form a new support. But it's not looking very bullish right now. This is one that I would watch but wouldn't enter a position based on the charts as of the close of business Friday.
@@StockandOptionMyLifeOfLearning Thanks for your response! Great insight into your thought process. I'm still working on when to enter positions/when to not so found this very helpful.
Thanks Randy for sharing so openly about your options trades. I have a few Jan 2023 leaps calls strike $17.5 on SoFi that has gone really south is now on me. I bought them when SoFi was $20 back in Nov 2021 and it is now $11+. I am thinking of simply liquidating them and buying the common stock instead at the same day. Any suggestions on how to repair this? Thanks for your wise thoughts.
Thank you for your support! I’ve made a video series about repairing positions that have gone against you. I think it might helpful in coming up with some ideas. Here’s that link if you’d like to check it out: th-cam.com/play/PL3j38I2YtGw2mMZNftBUDs1Ln984R0wV9.html
@@StockandOptionMyLifeOfLearning Thanks Randy. I will take a look at it. Most repair positions that I could find are rolling it back and out. Appreciate your kind contribution.
@@fishphage2762 - First question you should ask yourself is IF you held stock in the company instead of leap calls, what would you do with the stock? If you think the stock won’t recover and it’s best to sell for a loss and move on then you should do the same with the leap. If on the other hand you think it will recover then hold on to the leap for now. Reassess again when there’s about 3 months left on the leap. If you still have confidence it will recover then roll the option out (I.e. sell the current leap and buy another leap a year out). Time decay starts to accelerate once there’s only about 3 months left on the contract. If plan on holding the leap, then you can sell calls against it to pick up some premium while the stock recovers. Of course when the stock has gone down that much you won’t find premium selling a call with strike above your break even so you may need to go under break even. Just make sure to pick a strike that you are confident enough that the stock won’t hit during the life of the short call.
@@seymoresmithh8908 thanks for your thoughts. Fully agree with them. In this tumultuous times, the puts are getting the premiums but not the calls. My account do not allow me to sell calls on my leaps. Anyway, I have sold most of my leaps and holding to the little cash and waiting to buy the underlying soon as the shares fell after I sold my leaps. You are right to juxtapose buying underlying instead of leaps. I lost about 25percent more due to theta.
More solid content Randy. Do you have any videos explaining how you quickly screen/scan your watchlist for viable puts? I have a watchlist of about 100 stocks and have been simply scanning the individual charts. I'm new to the game and still trying to figure out the most efficient pathways for all the moving parts involved with trading options. Thanks
In the past I wrote several hundred automated stock trading programs to help me receive alerts of potential trades. However, I couldn't quite get the programming to do what my eyes could do in a few seconds. I have it on my future to do list and have been researching potential program writers to do it for me. At this time though, I physically scan my charts. Here's a video I made on the process that I go through to find potential trades: th-cam.com/video/Q_Fl1K0-1G0/w-d-xo.html
Great video, may i know for wheel strategy, what DTE and delta do you normally go for, and also, when option expire you collect a credit, but when you get assigned shares, do you still keep the credit or no? Also, would you recommend naked puts? thanks mate
Thank you for that! Typically when I’m selling options I prefer 21 to 50 days to expiration. I don’t look at the Delta too much unless I’m buying LEAPS call options. Otherwise, I’m not too concerned with Delta. I will glance at it from time to time but it’s generally not a factor when I sell options. When the owner of an option that you sold assigns the option, for example if you sold a put option, you get to keep the whole credit no matter what happens, but you have to buy the shares at that strike price. Naked puts implies that you’re using margin. I never encourage the use of margin especially for newer traders. I prefer doing cash secured puts. That means you have all the cash set-aside to buy the stock that you’re selling put options in at the strike prices you’re selling the options at.
@@StockandOptionMyLifeOfLearning so given that selling cash secured puts particularly for great companies cost a lot, example a share of 100 usd requires a collateral of 10k usd, isn’t it better to have a portfolio of 50k usd and above to be able to do a WHEEL? because I can’t see how a small account that is less than 10k usd is able to do a wheel strategy
@@StockandOptionMyLifeOfLearning just to clarify how a WHEEL work, when you sell puts, if stock doesn’t hit strike you get a credit, then you keep repeating the process of selling puts, but if stock hits below strike at expiration you will be assigned shares and purchase it at strike price but still get a credit, and then you sell a call against the shares you own and get credit again, it sounds like you are constantly making money regardless where the stock goes, is it the case where you won’t realize any losses, or the only losses you make is when stock goes far below the strike price during expiration and you have to purchase shares higher than what the stock is (Stock goes ITM)?
The more capital the better because you can be diversified. I have a smaller account I share with my Patrons in which we have approximately $29k in it. We usually have around 5-8 CSP or CC positions on in that account using no margin. So it’s possible to have some diversification in a small account but not as diversified as if the account was larger.
If I've held the underlying stock less than 1 year, I hesitate to sell covered calls, since if they are called away, I would incur short term tax rate. If I've held more than one year, then I tend to go for it.
Hey Michelle yes I do feel comfortable selling a covered call or maybe even a PMCC where the short call option strike price is lower than where I was assigned or entered a position. I will especially do that if my cost basis is lower than the the strike I’m selling, which almost always it is. Then, I will try to sell those near term call options at or just above good resistance. There are some exceptions like when a stock is dropping aggressively. At that point, I quite possibly will sell them ATM if I believe the decline will continue.
@@StockandOptionMyLifeOfLearning If the stock price goes the opposite way, you would need to roll the call option to a higher strike price otherwise it will be forced to sell below the cost (gets called away with losses). Is my understanding correct?
Yes that is correct. Although, depending on where your cost basis is, you may still end up with a profit even if you sell it at a lower price than it was assigned to you at. For example in our 3M position, as of this moment, my cost basis is $111.70 per share since we allowed the shares to be assigned to us and have sold new CCs in it. I don't plan to let it get a call away from us at our current strike price but, anything is possible. I also talk through a position that went against us in a big way in the video I'll be releasing this coming Saturday. It did exactly what you're describing here. I think you'll find it interesting.
I've got to think that "opportunistic" buying would be a much better strategy. That is, buy shares when they are extremely low, on your terms rather than being assigned at a price that could be significantly more. For instance, during March of 2020, I backed up the truck and bought like a bandit when I thought we were somewhere near lows. I have margin accounts that I am comfortable with so there was no issue with cash availability. Though I missed the bottom by one week, these stocks would have increased significantly. In fact, within two weeks I was already in the green. I actually bought mostly very safe securities and even they went up 45%. The growth stocks doubled or tripled in some cases. I have a hard time thinking how I would be ahead had I held puts. All of a sudden I would have been underwater...way underwater. Then I would have had to spent countless hours writing covered calls to help me get out of a losing position. My concern would be a black swan scenario where all of a sudden I get assigned multiple securities. However, this would have meant that I had cash on hand (doing nothing) or access to leverage (not a great option for neophytes). I just want people to understand how their positions and portfolio could change overnight ... one never knows when the next war, or worse, could break out. Just saying.
Thank you for sharing! You make some good points. I like to look at things from more than just a couple weeks or a couple months point of view. I like to look at investing from the point of view zoomed out to many years. Personally, I found that all the really good, mature, experienced, and battle tested traders, even they have a hard time picking the exact bottom. I too was buying throughout the crash. As a matter fact, we take 10% of our cash every month that we generated by selling options to buy stock with it: th-cam.com/video/ucvb0ZDrR6U/w-d-xo.html I found that is always easy to look back and say I did this or did that and I nailed it perfectly. But in the present, although we can put the odds in our favor of winning, we can’t be 100% sure what Monday is going to bring. That’s why we get paid as often traders. I like both strategies. I love selling options and I love using some of that option premium to pick up companies I believe are beaten down. However instead of waiting for next crash, I get to do that every month. 👏😁 Going to do it again in a few days around the 1st. And boy do we have some option premium from February to pick up some of those stocks.
Most stocks trade in a range which makes selling puts and calls ideal, the strategy compliments a long only portfolio, I have many stocks I just own for years but I've also been doing the "wheel strategy "for years, it's a perfect way to put the cash in your account to work. Oh and also when markets correct I make way more money trading options then just being long. Being long is binary, selling options you are making money in a stock if it goes up sideways or even down.
delinquense - Why would a black swan event be worse for selling puts than to buy the stock outright? In either scenario, you’d be under by a lot. But in the case of selling puts, you’d actually be under less because your cost basis would be lower. Assuming you sold an out of the money put, you’d be assigned at a lower cost than if you bought the stock outright. And you would have collected the premium as well to further lower your cost basis. To compare apples to apples, this is assuming you sold a put at the time when you would consider buying the stock. You admit you were a week early in March 2020, had you sold a 1 week put that day instead buying stock, you could have been assigned the stock a week later at a lower cost basis. No one can predict when the exact bottom is. And if you are confident on a bottom, then sell a short dated put which gives you a bit of room to be wrong on the bottom. And if you are extremely confident on the bottom then buy a deep in the money leap call. You can be “opportunistic” and still sell puts or buy leaps during those “opportunistic” times.
Hey Michael I am not a licensed CPA so I can't answer with 100% certainty. However I did grill my accountant this past week for an hour and a half with questions similar to this. It's my understanding, that typically options are taxed as short-term capital gains once the position is completely closed. In the case of selling a put option that's then assigned to you, that option might possibly be figured into the cost basis of the stock although again I'm not 100% certain on that. Yes I do options trading in my ROTH. It's awesome because you don't have to worry about the taxes.
@@StockandOptionMyLifeOfLearning your understanding is correct on the assignment scenario. The premium you received for writing the Put option is deducted from the cost basis (strike price) of the shares acquired at the time of assignment.
Randy, let me ask you a hypothetical question. Let’s say I have one spy covered put option expiring on March 18. The third Friday of the month. I want to buy another covered put option expiring the third Friday of April. Would you make that next purchase on Friday, March 18? Would you make that purchase the following Monday or Tuesday?
If I'm understanding what you're describing here correctly, I guess it depends on if you're OK having two of those positions out there. If you're not, then you'd want to wait until the one that expires on March 18 is either assigned or the short put expires worthless. If it expires worthless, then you could just sell a new put option because you would still be short SPY. If you're OK having two such positions on, then I guess you could do it whenever you felt comfortable.
@@StockandOptionMyLifeOfLearning Thanks very much Randy. I guess I’m wondering if there’s a day when the market is more depressed because it’s the third Friday of the month and the majority of people are selling their options are the options are expiring.?
Over the years, I haven't noticed that third Fridays are necessarily depressed, even though I have noticed that weird things can happen on those days in certain stocks. But they're not always to the downside. Sometimes they are to the upside.
We will only execute orders if we get certain limit prices. However, I do post every night what orders we have sitting out there at set limit prices. But during the day, I don't know if an order will get filled until it actually gets filled because they have to be filled at certain limit prices.
It'll be interesting to see how this 3M saga plays out. Until then, we'll continue to collect cash flow by selling options, thus reducing our cost basis.
i think making say 1500+ a year extra not that great.. you said you made the 11000 over several years.. take the 11000 and divide by 7 is almost 1600... that is not that great at all...if you can make that 11000 in a year or say in say 18 months then now your talking.. just my 2 cents....
Here’s a playlist that shows all our trades each month along with the cash flow and return we realized: th-cam.com/play/PL3j38I2YtGw0W9xSkNpaOw73OmuEA5xf9.html
►► AVAILABLE NOW! Limited to the FIRST 100 people, get my brand new online Option Trading course (Intermediate option trading) for $497. Regular price is $997. Here is the link to check it out: mylifeoflearning-randy.mykajabi.com/offers/EgeavtWJ
Join my Patreon to get access to my all my Stock & Option Trades, Open Orders and Weekly Top 5 Stocks: www.patreon.com/mylifeoflearning
Subscribe to this Channel: th-cam.com/users/MyLifeofLearning
New Beginnings: The Option Trading Story amzn.to/2OgXx58
Website: mylifeoflearning.com/index.html
Super video, Randy. I love to see how the non-superstar trades get turned. This is what makes the basics of The Wheel so powerful. Thanks for showing the way.
Thank you for that Sam and for your support! 😊 Dealing with those tough ones is a big part of being a successful trader IMO.
This is amazing. I think I’m going to be doing a similar strategy with my Roth IRA since there’s no cap gains.
Thanks for sharing!
Thank you for your support! Let us know how it goes Jacob.
I honestly greatly appreciate you for your video’s and time to do these videos! You have honestly brought everything I was trying to learn together! Again thank you very much for your time and video’s best wishes to you and your family
Thank you so much for that and for your support! 😊
The wheel strategy works when there is low volatility. If prices rise or fall hard then it doesn’t make any sense to sell puts at ath or sell calls at very depressed prices, does it??
Personally, I believe our version of the upgraded wheels strategy works in any environment. As volatility increases, you can sell options that are farther OTM and still do well.
@@StockandOptionMyLifeOfLearning How is your version of the upgraded wheel strategy different than the regular wheel strategy??
We don’t do just the basic sell put options, if they’re assigned switch it to a covered call until it’s also assigned. We do that to some extent but we also adjust, roll, we do PMCCs, credit spreads, we sell naked call options, we do ratio spreads, to name the ones that come to mind. We’ve taken the wheel strategy and tweaked it and made adjustments over the years to arrive at the trading strategy we’re currently using, that I call, the upgraded version of the wheel strategy.
@@StockandOptionMyLifeOfLearning I understand all of that but in the case of PYPL for example. where the price dropped 50% in two months, what do you do?? You have been assigned the stock then at what strike price are you going to sell calls at? Too close to the current market and you lock in a loss; too far OTM and the premiums are peanuts…. ?!? The large capital loss on the underlying is hard to make up with the small monthly premiums. ☹️
There are a lot of ways to tackle that problem. Each stock and situation is going to be different. It depends on where resistance is, if you already have a full position on or not, how much risk you want to take, etc. It can be tough mentally when that happens. But there are ways to fix it as long as the stock doesn’t go to $0 or continue a sharp decline. Sometimes it just takes a bit of time.
Here is a video series I made on repairing positions that have gone against you if you’d like to check it out. I’m sure you’ll find something in there that can help you: th-cam.com/play/PL3j38I2YtGw2mMZNftBUDs1Ln984R0wV9.html
Thanks for sharing Randy. Another great video.
You're welcome Mike. Thank you so much for your support! 😊 That really means a lot to me.
Randy, you should have a million subscribers! Seems like a ton of folks are following the passive/dividend strategy. Selling options in a growth portfolio blows them away! So what if your dividend champ pays a growing 3% yield? They need options. Pun intended.
Thank you so much for that! I really appreciate your support. It means a lot to me. 😊
Right?
Very solid movie again, appreciate it! By the way, can you share your excel template for option trading?
Thank you so much for that Alex and for your support! 😊 They are made available to my patrons and I'm working on making them available on Etsy. I hope to have that available in the next month. When I do, I'll let you guys know.
@@StockandOptionMyLifeOfLearning Thank you Randy! Please keep us posted when it is ready in Etsy!
Will do!
Another great video, Randy! Love the tricky trades you share with us. I'd be interested to know how you are feeling about the SBUX puts you sold now the price is below your 95 strike?
I still feel good about them and the company. We sold some at 90 and some at 95. They may end up in the money at expiration in which case we'll try and roll them out. If we can't roll them out, then we'll either turn it into a CC or PMCC.
However, if I did not have a position in SBUX already, I don't think I would initiate one right now because the daily chart is looking very weak. The weekly chart looks a little better because although SBUX pierced the 200 EMA, it ended up above that so if it can hold around 90, it might form a new support. But it's not looking very bullish right now. This is one that I would watch but wouldn't enter a position based on the charts as of the close of business Friday.
@@StockandOptionMyLifeOfLearning Thanks for your response! Great insight into your thought process. I'm still working on when to enter positions/when to not so found this very helpful.
Thanks Randy for sharing so openly about your options trades. I have a few Jan 2023 leaps calls strike $17.5 on SoFi that has gone really south is now on me. I bought them when SoFi was $20 back in Nov 2021 and it is now $11+. I am thinking of simply liquidating them and buying the common stock instead at the same day. Any suggestions on how to repair this? Thanks for your wise thoughts.
Thank you for your support! I’ve made a video series about repairing positions that have gone against you. I think it might helpful in coming up with some ideas. Here’s that link if you’d like to check it out: th-cam.com/play/PL3j38I2YtGw2mMZNftBUDs1Ln984R0wV9.html
@@StockandOptionMyLifeOfLearning Thanks Randy. I will take a look at it. Most repair positions that I could find are rolling it back and out. Appreciate your kind contribution.
@@fishphage2762 - First question you should ask yourself is IF you held stock in the company instead of leap calls, what would you do with the stock? If you think the stock won’t recover and it’s best to sell for a loss and move on then you should do the same with the leap. If on the other hand you think it will recover then hold on to the leap for now. Reassess again when there’s about 3 months left on the leap. If you still have confidence it will recover then roll the option out (I.e. sell the current leap and buy another leap a year out). Time decay starts to accelerate once there’s only about 3 months left on the contract. If plan on holding the leap, then you can sell calls against it to pick up some premium while the stock recovers. Of course when the stock has gone down that much you won’t find premium selling a call with strike above your break even so you may need to go under break even. Just make sure to pick a strike that you are confident enough that the stock won’t hit during the life of the short call.
@@seymoresmithh8908 thanks for your thoughts. Fully agree with them. In this tumultuous times, the puts are getting the premiums but not the calls. My account do not allow me to sell calls on my leaps. Anyway, I have sold most of my leaps and holding to the little cash and waiting to buy the underlying soon as the shares fell after I sold my leaps. You are right to juxtapose buying underlying instead of leaps. I lost about 25percent more due to theta.
More solid content Randy. Do you have any videos explaining how you quickly screen/scan your watchlist for viable puts? I have a watchlist of about 100 stocks and have been simply scanning the individual charts. I'm new to the game and still trying to figure out the most efficient pathways for all the moving parts involved with trading options. Thanks
In the past I wrote several hundred automated stock trading programs to help me receive alerts of potential trades. However, I couldn't quite get the programming to do what my eyes could do in a few seconds. I have it on my future to do list and have been researching potential program writers to do it for me. At this time though, I physically scan my charts. Here's a video I made on the process that I go through to find potential trades: th-cam.com/video/Q_Fl1K0-1G0/w-d-xo.html
Great video, may i know for wheel strategy, what DTE and delta do you normally go for, and also, when option expire you collect a credit, but when you get assigned shares, do you still keep the credit or no? Also, would you recommend naked puts? thanks mate
Thank you for that! Typically when I’m selling options I prefer 21 to 50 days to expiration.
I don’t look at the Delta too much unless I’m buying LEAPS call options. Otherwise, I’m not too concerned with Delta. I will glance at it from time to time but it’s generally not a factor when I sell options.
When the owner of an option that you sold assigns the option, for example if you sold a put option, you get to keep the whole credit no matter what happens, but you have to buy the shares at that strike price.
Naked puts implies that you’re using margin. I never encourage the use of margin especially for newer traders. I prefer doing cash secured puts. That means you have all the cash set-aside to buy the stock that you’re selling put options in at the strike prices you’re selling the options at.
@@StockandOptionMyLifeOfLearning so given that selling cash secured puts particularly for great companies cost a lot, example a share of 100 usd requires a collateral of 10k usd, isn’t it better to have a portfolio of 50k usd and above to be able to do a WHEEL? because I can’t see how a small account that is less than 10k usd is able to do a wheel strategy
@@StockandOptionMyLifeOfLearning just to clarify how a WHEEL work, when you sell puts, if stock doesn’t hit strike you get a credit, then you keep repeating the process of selling puts, but if stock hits below strike at expiration you will be assigned shares and purchase it at strike price but still get a credit, and then you sell a call against the shares you own and get credit again, it sounds like you are constantly making money regardless where the stock goes, is it the case where you won’t realize any losses, or the only losses you make is when stock goes far below the strike price during expiration and you have to purchase shares higher than what the stock is (Stock goes ITM)?
The more capital the better because you can be diversified. I have a smaller account I share with my Patrons in which we have approximately $29k in it. We usually have around 5-8 CSP or CC positions on in that account using no margin. So it’s possible to have some diversification in a small account but not as diversified as if the account was larger.
You described it well. Here is a video in which I show exactly how it works: th-cam.com/video/Y46QtwMu9s4/w-d-xo.html
If I've held the underlying stock less than 1 year, I hesitate to sell covered calls, since if they are called away, I would incur short term tax rate.
If I've held more than one year, then I tend to go for it.
Thank you for sharing! I totally understand and that makes sense.
When stocks entered into a bear market like now, do you pick a strike price that is below your cost when you sell a covered call?
Hey Michelle yes I do feel comfortable selling a covered call or maybe even a PMCC where the short call option strike price is lower than where I was assigned or entered a position. I will especially do that if my cost basis is lower than the the strike I’m selling, which almost always it is. Then, I will try to sell those near term call options at or just above good resistance.
There are some exceptions like when a stock is dropping aggressively. At that point, I quite possibly will sell them ATM if I believe the decline will continue.
@@StockandOptionMyLifeOfLearning
If the stock price goes the opposite way, you would need to roll the call option to a higher strike price otherwise it will be forced to sell below the cost (gets called away with losses).
Is my understanding correct?
Yes that is correct. Although, depending on where your cost basis is, you may still end up with a profit even if you sell it at a lower price than it was assigned to you at. For example in our 3M position, as of this moment, my cost basis is $111.70 per share since we allowed the shares to be assigned to us and have sold new CCs in it. I don't plan to let it get a call away from us at our current strike price but, anything is possible.
I also talk through a position that went against us in a big way in the video I'll be releasing this coming Saturday. It did exactly what you're describing here. I think you'll find it interesting.
@@StockandOptionMyLifeOfLearning
Thanks for the generous sharing! Much appreciated.
Wish you best of luck in yr investing.
I've got to think that "opportunistic" buying would be a much better strategy. That is, buy shares when they are extremely low, on your terms rather than being assigned at a price that could be significantly more. For instance, during March of 2020, I backed up the truck and bought like a bandit when I thought we were somewhere near lows. I have margin accounts that I am comfortable with so there was no issue with cash availability. Though I missed the bottom by one week, these stocks would have increased significantly. In fact, within two weeks I was already in the green. I actually bought mostly very safe securities and even they went up 45%. The growth stocks doubled or tripled in some cases.
I have a hard time thinking how I would be ahead had I held puts. All of a sudden I would have been underwater...way underwater. Then I would have had to spent countless hours writing covered calls to help me get out of a losing position. My concern would be a black swan scenario where all of a sudden I get assigned multiple securities. However, this would have meant that I had cash on hand (doing nothing) or access to leverage (not a great option for neophytes).
I just want people to understand how their positions and portfolio could change overnight ... one never knows when the next war, or worse, could break out.
Just saying.
Thank you for sharing! You make some good points.
I like to look at things from more than just a couple weeks or a couple months point of view. I like to look at investing from the point of view zoomed out to many years.
Personally, I found that all the really good, mature, experienced, and battle tested traders, even they have a hard time picking the exact bottom. I too was buying throughout the crash. As a matter fact, we take 10% of our cash every month that we generated by selling options to buy stock with it: th-cam.com/video/ucvb0ZDrR6U/w-d-xo.html
I found that is always easy to look back and say I did this or did that and I nailed it perfectly. But in the present, although we can put the odds in our favor of winning, we can’t be 100% sure what Monday is going to bring. That’s why we get paid as often traders.
I like both strategies. I love selling options and I love using some of that option premium to pick up companies I believe are beaten down. However instead of waiting for next crash, I get to do that every month. 👏😁 Going to do it again in a few days around the 1st. And boy do we have some option premium from February to pick up some of those stocks.
Most stocks trade in a range which makes selling puts and calls ideal, the strategy compliments a long only portfolio, I have many stocks I just own for years but I've also been doing the "wheel strategy "for years, it's a perfect way to put the cash in your account to work. Oh and also when markets correct I make way more money trading options then just being long. Being long is binary, selling options you are making money in a stock if it goes up sideways or even down.
Thank you for sharing Lee!
delinquense - Why would a black swan event be worse for selling puts than to buy the stock outright? In either scenario, you’d be under by a lot. But in the case of selling puts, you’d actually be under less because your cost basis would be lower. Assuming you sold an out of the money put, you’d be assigned at a lower cost than if you bought the stock outright. And you would have collected the premium as well to further lower your cost basis. To compare apples to apples, this is assuming you sold a put at the time when you would consider buying the stock. You admit you were a week early in March 2020, had you sold a 1 week put that day instead buying stock, you could have been assigned the stock a week later at a lower cost basis. No one can predict when the exact bottom is. And if you are confident on a bottom, then sell a short dated put which gives you a bit of room to be wrong on the bottom. And if you are extremely confident on the bottom then buy a deep in the money leap call. You can be “opportunistic” and still sell puts or buy leaps during those “opportunistic” times.
all options profits are taxed as ST gains right? have you done any options trading in tax advantaged Roth or T-IRA accounts?
Hey Michael I am not a licensed CPA so I can't answer with 100% certainty. However I did grill my accountant this past week for an hour and a half with questions similar to this. It's my understanding, that typically options are taxed as short-term capital gains once the position is completely closed.
In the case of selling a put option that's then assigned to you, that option might possibly be figured into the cost basis of the stock although again I'm not 100% certain on that.
Yes I do options trading in my ROTH. It's awesome because you don't have to worry about the taxes.
@@StockandOptionMyLifeOfLearning your understanding is correct on the assignment scenario. The premium you received for writing the Put option is deducted from the cost basis (strike price) of the shares acquired at the time of assignment.
You're a good man!
Hey Max thank you so much for your support! I really appreciate it. 😊
Randy, let me ask you a hypothetical question. Let’s say I have one spy covered put option expiring on March 18. The third Friday of the month. I want to buy another covered put option expiring the third Friday of April. Would you make that next purchase on Friday, March 18? Would you make that purchase the following Monday or Tuesday?
If I'm understanding what you're describing here correctly, I guess it depends on if you're OK having two of those positions out there. If you're not, then you'd want to wait until the one that expires on March 18 is either assigned or the short put expires worthless. If it expires worthless, then you could just sell a new put option because you would still be short SPY. If you're OK having two such positions on, then I guess you could do it whenever you felt comfortable.
@@StockandOptionMyLifeOfLearning Thanks very much Randy. I guess I’m wondering if there’s a day when the market is more depressed because it’s the third Friday of the month and the majority of people are selling their options are the options are expiring.?
Over the years, I haven't noticed that third Fridays are necessarily depressed, even though I have noticed that weird things can happen on those days in certain stocks. But they're not always to the downside. Sometimes they are to the upside.
@@StockandOptionMyLifeOfLearning Thanks Randy
Just curious - why did you get into a position first before sending out the alert to your members?
We will only execute orders if we get certain limit prices. However, I do post every night what orders we have sitting out there at set limit prices. But during the day, I don't know if an order will get filled until it actually gets filled because they have to be filled at certain limit prices.
Because, that's what a pro does. He preach what he does. Only fulfilled executed order shows 100% confirmation of the trade. That shows his integrity.
Thank you for that!
Thanks for the clarification. 👍
Good sharing 👍🏻
Thank you for your support Darren!
$11,000 ? is that all ? How about 11 million ? Come on Randy, you can get there mate !
I’m happy with $11,000. I’d be very, very happy with $11 mill!!! 😆
@@StockandOptionMyLifeOfLearning Its' just 3 more noughts ! So instead of 3 puts, do 3000 puts ! 🤣
Ok, I'm kidding. What ever you do, don't do that !
Great job, I own 3m.
Keep salling MMM 14DAYS PUTS at ~ STRIKE PRICE [85%]% of stock price/ cant ever loose lol
It'll be interesting to see how this 3M saga plays out. Until then, we'll continue to collect cash flow by selling options, thus reducing our cost basis.
i think making say 1500+ a year extra not that great.. you said you made the 11000 over several years.. take the 11000 and divide by 7 is almost 1600... that is not that great at all...if you can make that 11000 in a year or say in say 18 months then now your talking.. just my 2 cents....
That was just one example of one position. We generally have on about 30 to 40 of them at a time.
@@StockandOptionMyLifeOfLearning OHHHHHHHH big difference then.....lololol
Here’s a playlist that shows all our trades each month along with the cash flow and return we realized: th-cam.com/play/PL3j38I2YtGw0W9xSkNpaOw73OmuEA5xf9.html