If you need more info about when should you take profits on options, taking profits too early or how to calculate profits on options, leave a comment below. Recommended Links & Videos: Bid Ask Price Explained: th-cam.com/video/D_Xg6TZjixY/w-d-xo.html Poor Man’s Covered Call: th-cam.com/video/i31CK3Qo5PY/w-d-xo.html Wheel Playlist: th-cam.com/play/PLBa3sAx-Io2mybLLdWtbjTFqK9-BR5SJb.html Profit Taking Strategy: tinyurl.com/ydbtvuet Rockwell Merchandise: store.rockwelltrading.com/ (Previous Coffee With Markus) How To Manage Losing Trades - How I'm dealing with my $25,991 "losing trade": th-cam.com/video/bHKIdYCnUjM/w-d-xo.html Wheel Book Waitlist: www.rockwelltrading.com/wheelbook
@@rockwelltradingservices AND The PPD on the new position is greater than what you're already making on the existing position … There are other factors like whether you anticipate a big move against you and you're taking risk off, then the calculation is irrelevant! That said, I've just knocked up a simple spreadsheet to do the calculation for me Thanks Markus
Letting Mara ride for the addition 3 days doesn't make financial sense UNLESS you don't see a solid stock to sell puts on at the time. $50 per days is much better than $0
Hi, I use IBKR and was wondering can I pull up a stock like you did with Mara and look at all the activity I did with it? or can I look at a particular stock and see my P&L? I dont see that option at all in IBKR and the activity statements just show it broken up in different sections and not all together.
Great videos Markus, I've watched a few this evening I notice you don't mention commission, surely that is a factor particularly when buying your option back, as this will be the same as when selling the option but on a much smaller cost therefore commission is a much greater percent of the transaction? I also find the inclusion/exclusion of the 17th questionable logic to suit your argument. In reality if your including it in the "Remaining" then it should be excluded from the "Current" otherwise it is being double counted … when doing calculations it would be 19th - 17th i.e. 2 days not 3 otherwise we're talking about the 16th to keep the formula and calculations consistent i.e. Date Today's 17/03/2021 Entry 10/03/2021 Exercise 19/03/2021 Contracts 50 Sell Premium $0.280 Buy Premium $0.030 PPD Planned $155.55 Realised $178.57 Unrealised $75.000 What to do … Buy So by your calculation, you could have bought it back at 0.06 i.e. Date Today's 17/03/2021 Entry 10/03/2021 Exercise 19/03/2021 Contracts 50 Sell Premium $0.280 Buy Premium $0.06 PPD Planned $155.55 Realised $157.14 Unrealised $150.00 What to do … Buy And if you included realistic commission of $25.50 then it rises to 0.065 i.e. Date Today's 17/03/2021 Entry 10/03/2021 Exercise 19/03/2021 Contracts 50 Sell Premium $0.280 Buy Premium $0.065 Commission $25.500 PPD Planned $152.722 Realised $149.929 Unrealised $149.750 What to do … Buy This is a far cry from 90% don't you think? P.S. Hopefully my calculator is right but guaranteed my logic is 😅
Hi, I noticed your cap requirement is less than $17k to sell 15 $66 puts. I have a margin account but cost me $99k to do the same trade. I basically need all cash to do it. Do you know how to get around this? Thanks
Trading can be very complicated, my personal recommendation is to look for a professional trader who will explain everything to you, teach you and also help you trade. Do you need help?
Do I understand correctly, if one of these trades went sour you would be in for ~$100,000. Wow. I guess you could roll, but if one of these has some bad news...
Marcus, I tapped into your videos two months ago and they have changed my life, thank you. I’ve emailed all my friends the video’s I’ve watched and pressing them to act. I’m doing excellent on the wheel strategy and now know that I will no longer have to work for the man regardless of market movement. Thank You!!! Bonus…Let’s ride Harleys in Texas.
Thank you for another valuable seminar sir. The ones that doubt this need to understand that the market is not static, so you still need to research your companies, you may not be able to afford the ones markus is doing, but you can find solid lower cost ones, and make it happen as long as you arent looking for a magic formula or someone to do it for you. As soon as you stop wanting to work or think critically you lose your focus. These are tools to improve your success rate not formulas and so as markus says " the results may vary." Another key statement is "trade what you see not what you think." Dont fantasize about unrealistic gains, those may happen, but fantasizing clouds the focus.The results dont have to vary as long as you stay within your financial means, dont rush ahead, and really hone the strategy it will work very well. Take what hes saying to heart and apply it. Dont fantasize about retiring early, buying a mansion etc. etc. The market has no sentiment or mercy for your fantasies and so wanting something badly wont make it happen. Just slowly build and it will snowball.
Markus, when you do real estate, would you please do it under the category, Tea with Markus so I do not get confused because I associate Coffee with Markus phrase with stocks and options? (ha ha ha, just kidding!)
Hey Markus, Greetings from germany :-) Did you have any "trick" in these low Vola times (Vix below 20 and so on) in selling premium on stocks to maintain your performance halfway ?
Markus this is a brilliant video! It answered my biggest question on when to close a put trade. Thank you so much! Where can I get these notes please?... Secondly re vertical spread when do we close them & does this same formula work for them too?
JBay, great question. And yes, I would close a vertical spread at 90% of the max profits as well since you really don't want to mess with the assignment.
Hello Markus, I have watched almost all your videos took careful notes , struggling for laptop and start up capital , would you please consider agricultural stock options ?
I will take a look at that! ;) As you know, I only trade what I see, not what I think. So if it is not suggested by The PowerX Optimizer I do not trade such stocks. 😉
Thanks Markus. You are providing quality education which usually people pay top dollars to get. I would be really interested in the video on real estate investment.
@ Sharon Koh "PPD" Yup, before placing an option trade, always compare the PPD between different expiration dates. It is counter-intuitive when you see how large a premium is for a 3 month option, but the longer the time until expiration, the less Profit per day. You are usually better off selling weekly options, week after week, after week, rather than a one month option, or a 3 month option.
Please tell me how to learn about investing, I am a total Newbie. Any books, you tubes, videos etc. to learn about all aspects of the market, trading etc.
Markus I have a scenario with BFLY ... bought for 15 and sold covered call at @15 strike 16 apr now @19 stock price it is deep in the money and my call price has gone up as well.. do you think it's good to hold until the expiry or roll up the covered call
Why wouldn't you use your average running PPD to make that decision? Closing based on just the trade ppd seems odd. Unless you already have a better trade to jump in on. ?
If the stock price along with the bid and ask move up for put that you have already sold at a lower ask contrary to your example, what do you do as a next step?
Love your videos! I haven't finished video, but regarding buying back early -- do you set an alert? Or just watch each day and determine if the option has hit that 90% target? Thanks
Awesome system!!! Can the strategy purchased be improved to remove any discretionary decisions? I find lots of decisions have to be made that removed the systematic part of the process.
Hi Markus, earlier in the video you mentioned you will tell people how to get a copy of the notes at the end of the video. I watched it until the end and did not see such information.
Do you ever factor in the fees? I bought back a put that was already at 97% but the fees sucked some fun out of that one. I find the same rolling options. How do you factor that in? Letting some expire would save on fees, but I agree some are better closed earlier.
Hi I just stumbled on your channel and I'm already very impressed with your way of explaining things. I'd love to hear about your approach to your real estate investing. thanks
I've sold puts with Strike Prices BELOW the Current Stock Price. What is the advantage of selling puts ABOVE the strike price? Not sure I'm seeing the risk/reward. Thx!
@@derpsnarf4052 OK now that you’re able to recite basic information to someone whohas been trading options for years, please tell me how you would sell puts above the STRIKe price.
@@froido123456 I'm still learning, but a few months ago, I "accidentally" sold AAPL puts at a strike price of like $4 ABOVE the current price. Within an hour, the stock price was going up, so my option price started going down. I was green about $85 within that hour, so I closed for a small profit because I wasn't sure what I was doing at that time :O.
Another terrific video Markus!! I really appreciate the topic because I've struggled to figure out how to analyze this very issue. Having the PPD rule just makes this issue an easy one to know when to act. Looking forward to more videos and I need to learn more about Rockwell and the PowerX Optimizer.
Hi TheYoyozo, you can learn more about the PowerX Optimizer through our expert trader, Paul's demo of the software. Just email social@rockwelltrading.com if you want to set a schedule.
@Randy Nyc "Are you writing covered puts or naked?" In all his videos, he says CASH secured puts. They are not naked puts. If he sells a cash secured put on a stock with a $100 strike, he makes sure he has $10,000 in cash, or margin buying power to pay for the stock if it gets assigned.
I'm all in on the Real Estate video. I have learned so much from you. I literally today was just thinking about closing some positions early and wasn't sure what to do. The timing was perfect for me.
@@rockwelltradingservices what do you think about sq square for the wheel strategy ? Of course its personal opinion but im curious, would you use it for the wheel ?
Hi Markus, thanks for the video. As a beginner it was little too much for me to comprehend. Your material here is helping a lot. I have started option trading 2 weeks ago with my $5K account. In principle what you are explaining here is like a kind of PUT spread but customizing it to your profit than what the broker is offering with their App, or?. I am currently doing SHORT PUT vertical for profit/risk mitigation. Yesterday being the end of weekly options, I wanted to close some of my positions to free up BP but there were no bids and I had to just wait for them to expire. Does this happen to you as well? If it's not too much of an ask, could you please make a short video for beginners with a small account like mine who deal with Short Put Verticals, how and when to close their positions to get out of the trade with profit and free up BP. Thanks again for your wonderful work in creating this content.
When you don't close the option earlier and you wait until the option expires worthless, when do you close it? At closing of trading day on the day it expires?
Markus... love your channel. FYI re Andy's Horton's comment at 32:55 BTC means Buy to Close CSP means Cash Secured Puts CC is Covered Calls STO is sell to open Keep up the great videos...
@Joe Dable It blew me away that Markus stumbled here, and didn't recognize something as basic as btc means buy to close and not the ticker for bitcoin. He really looked embarrassed.
He is not selling naked puts. He is selling cash secured puts. That means that he needs to have cash available in this account to buy the stock if the put is assigned. For example his DKS puts had a strike price of $66.00 and he sold 15 contracts that means that he has to have 15 x 100 x 66 = $99,000 in his account to buy the 1500 shares at $66.00 per share. But don't get lost in the big numbers. A company like US Steel trades at around $22/share. You can sell a put contract for 3/26 at $22 for about $1.00 which is about 5% return on your money in one week, but you'd need to have $2,200 in your account. Hope this helps.
@ REZ Z "I have always heard that selling options is very dangerous." BUYING options with near expirations is very dangerous. SELLING cash secured puts and covered call options with near expirations is VERY profitable, and not dangerous. If you sold a call, and you let it expire itm, your stock is called away at the strike price YOU picked. If you sold a put, and you let it expire itm, you are assigned the stock at the price that YOU picked. Regardless if these options expire itm or otm, you still keep the premium you collected when you sold the option. So, HOW is this dangerous? "How do you protect a naked option?" Markus does not recommend selling naked options. He teaches to sell either a CASH secured (covered) puts, or COVERED (by 100 shares of stock you own) calls. The only way I know of to protect (reduce your risk) a naked option, is to make it a credit spread, and set a stop loss order on the short option. Say for example you don't own any stock. You can sell an otm call and buy an otm call one strike above the call you sold. Your risk would be the difference between the two strike prices minus the net credit you collected. Knowledge IS power, only IF you apply that knowledge.
I think of premium more as one lump sum payment for the contract. I suppose it might free up some buying power though. These puts can go horribly wrong.
@@derpsnarf4052 There is a lot of risk if the price keeps going below the put strike. My opinion is don't write them and don't buy them. But I am resigned to make less because of that.
@@derpsnarf4052 Stock prices don't move so much as options. Contract sizes make a huge difference. I was taught to buy calls close to the money and sell early if you get the chance.
@@derpsnarf4052 you are a pretty snarky person. Why are you tearing into people here? You act as if you are the king of traders. Honestly. Many people are fearful of puts, and rightly so. In some cases, a companies stock can take a huge hit and drop in price unexpectedly. And, as you know, options are time based. If you sell a put and you believe you are on a good trade, but after hours the company publishes a forecast of earnings a month out, and states earning will not meet guidelines, and the stock post and pre hours goes down 40% and you hold Puts, you can lose "a metric shit ton of money". If you owned the shares, you have an asset that has no time component, and as long as it was not in marginable account, you lose only if you choose to sell at a loss. Options do not offer a grace period or allow you to just hold forever. This happens more often than you think, and by listening to your comments, you sound like a book trader. If you don't know this risk, then you should not be advising anyone. Stop telling people what to do. Share your ideas, but leave people alone. Criticizing them or mocking them is not polite, and you actually make yourself look bad. There is no limit on the risk of selling puts. Unless you use advanced strategies to limit that risk, you must be very selective about the Puts you sell. There is a mximum defined risk of selling covered calls. You give the stock away and collect your premium. There is a maximum defined risk of buying calls and puts. The premium you paid. Maybe be a little more thoughtful before acting like the chatroom snark. Food for thought.
@@derpsnarf4052 You are not asking for counterpoints. You are bullying a person, and there is a difference. I am not butt hurt. LOL. Actually, I would simply force you to exit my classroom with your horrible tableside manners. So, you think that Puts are the cats meow? Really? You mentioned earlier something that to me, proves you dont know a thing about what you are saying. If a person purchases Calls, takes the trade on calls ATM or just outside or inside of that, they are not "just like buying shares". That is a huge misunderstanding on your part. It clearly tells me you are clueless to the power of Options. Lets start off with the fact that I 10x an account, with Calls. In 3 months. That is highly improbable with Selling Puts, for many reasons. Reason 1. If you sell puts, your account is restricted to the total available cash minus the value of the PUT trade should you get assigned. Reason 2. There is a CAP on the amount of money that you can make selling puts. Reason 3. There is UNLIMITED risk with selling puts. If I have to explain this, then you better warn your wife you will be broke very soon. Lets dive in a little deeper. Lets say you take a position selling puts on a company, company X. Your account value is say, 100k. You opt in to sell puts at a strike price of $10, as the company is currently trading at say $15 and the 200 day average line is 13, 20 day average is 14.25. The stock is moving up on pending and exciting information and you believe it to be true. You take 10 contracts and get paid a premium of $2.25 per share, or $2250 for 10 contracts. You are excited that you will make this in 2 weeks as the exercise date is 2 weeks out. You think there is little risk. For background, Company X is developing a new technology that will make energy free, or nearly free to generate. Everyone is excited, and the company has shared some interesting information regarding potential contracts, and other pre-order information. You are feeling pretty high. you go to bed, one night, after seeing that you are at 65% and pretty satisfied you will make the 95% hit in a day or two, and you are 4 days from exercise. You wake up in the morning, make some coffee and then start reading news. you see that after hours yesterday, when you forgot to read the paper, that Company X put out a communication indicating that Hindenbottom Reassurance Research Company sent a letter to them and to the SEC regarding proof that one of their Scientists had falisfied information on the testing of their product, and that they will need to reevaluate the value proposition that it will have as it will be less efficient than previously stated. There are suddenly a few Lawsuits, and the letter goes public. you panic and look up the value of the stock... it has dropped 50% from 15 to 7.5. you have 10 contracts in the hole. 1000 shares, @2.50 loss each. You lost all of the premium and an extra $250 dollars, and now, will be exercised to hold a company that is mired in conflict. There are 3 more days to go. The next day, the company drops another $3. you are now $3,250 in the hole. Your broker put a margin call on you that you must do something within 48 hours. There are 2 days to go... what to do, what to do... if it goes to $1, you will be another 3k in the hole for a total of 6250 lost. mostly, that would be, $6000 lost and $2250 premium lost and the total loss is 8250, on hopes of making 2250. almost a 4:1 loss. Very Sad. I invested in the same company. I invested in buying their calls. ATM call for 3 months out, at $12 strike inside the money line, at $4.50. I have $3 of intrinsic value, and paid the extra 1.50 for the extrinsic value proposition that the company might gain in price over the next three months. When the stock went down, 2 weeks later, I was out the total, of 5 Contracts at 4.5, which ironically is the same amount you would have gained. However, while your contract expires in 1 more day, mine has 2.5 months left to settle out. I still own the options and need not invest another cent, and need not purchase shares. I have 2.5 months to possibly make my money back, or a part of it, but the maximum loss I would take is $2250. Must less than you. On the flip side, lets say for the sake of it, that all the same quantities applied but the fate of the company was far better. Lets say that their public statement went a different route and it was positive, and that their product would produce 2 watts for every watt consumed. Wow the world is excited and the stock went up overnight to 20, and over the course of two weeks up to 35 on such incredulous news! I sell at 35 before the 3 months because I know that incredulous news is not always something that converts to reality. You, got your $2250, and I got $13,000. I gained 5 times as much as you. In the same amount of time. Are you with me? Ok,. Enjoy your puts. David
You don't want a commission free brokerage, you want a brokerage that routes your orders most effectively, quickly and is transparent about the costs. If you trade on a "no-commission" brokerage the transaction costs are hidden from you, so you don't actually know that it costs you.
@@rockwelltradingservices I am thinking of switching to tastyworks from RH. I trade with almost 27k of margin over there at 2.5%. But they require 100% cash down for selling puts. So I can only use margin to buy write or average down. Would it be worth the cost of 7% margin at Tasty to be able to use more of my buying power for puts? My account is around $43k so at tasty would I get 80k total BP?
@@domingodelgado3944 Don't be so quick to use margin on a small account. It can get you in trouble. BE careful . If you lose money when you are extended in margin, you lose a lot more than if you are not in margin. You are losing their money, and now it becomes a debt, and that is paid out of your cash. Be very sure not to extend margin on long trades, or any trades until you have a lot of money. Another thing. You can make money buying good calls, faster than selling puts. Selling puts has a maximum loss of 100% and a minimum vain of the premium. The premium must be earned and it usually has accelerated gains in the last week as the time component reduces the chance of reversal on a winner. However, if you buy in the money or at the money calls on solid growing companies that have catalysts in play, you have unlimited vain potential and maximum risk is the premium paid. It is opposite selling puts. You can double an account of your size in a few weeks to a few months. IN A RISING MARKET. or with a stick that rides outside of market forces. The wheel strategy is a good strategy, but choosing the right companies to do this with is very important. You wouldn't want to sell outs on a falling knife. You would be broke over night. So the PoeerX system helps identify those good stocks, and limits the risk.
I really appreciated you going through your thought process. I’m wondering when you are selling these puts and decreasing your buying power while on margin are you also incurring interest until those puts are closed?
If you need more info about when should you take profits on options, taking profits too early or how to calculate profits on options, leave a comment below.
Recommended Links & Videos:
Bid Ask Price Explained: th-cam.com/video/D_Xg6TZjixY/w-d-xo.html
Poor Man’s Covered Call: th-cam.com/video/i31CK3Qo5PY/w-d-xo.html
Wheel Playlist: th-cam.com/play/PLBa3sAx-Io2mybLLdWtbjTFqK9-BR5SJb.html
Profit Taking Strategy: tinyurl.com/ydbtvuet
Rockwell Merchandise: store.rockwelltrading.com/
(Previous Coffee With Markus) How To Manage Losing Trades - How I'm dealing with my $25,991 "losing trade": th-cam.com/video/bHKIdYCnUjM/w-d-xo.html
Wheel Book Waitlist: www.rockwelltrading.com/wheelbook
What about buying calls? This is great for the wheel, but not so helpful for PowerX.
Thanks for sharing your guidelines on closing options. "Handy dandy" video.
Great information as usual !! Thank you for sharing!!
Only if you immediately use that buying power after buying back the puts, right? Otherwise, you lost and additional $150 by buying them back early.
Yes, that is correct. 👍
@@rockwelltradingservices AND The PPD on the new position is greater than what you're already making on the existing position …
There are other factors like whether you anticipate a big move against you and you're taking risk off, then the calculation is irrelevant!
That said, I've just knocked up a simple spreadsheet to do the calculation for me
Thanks Markus
Letting Mara ride for the addition 3 days doesn't make financial sense UNLESS you don't see a solid stock to sell puts on at the time. $50 per days is much better than $0
I thought the same thing
Nope. Pickin up Pennies in front of a train will kill you. A lot can happen in 3 days.
Hi, I use IBKR and was wondering can I pull up a stock like you did with Mara and look at all the activity I did with it? or can I look at a particular stock and see my P&L? I dont see that option at all in IBKR and the activity statements just show it broken up in different sections and not all together.
Great videos Markus, I've watched a few this evening
I notice you don't mention commission, surely that is a factor particularly when buying your option back, as this will be the same as when selling the option but on a much smaller cost therefore commission is a much greater percent of the transaction?
I also find the inclusion/exclusion of the 17th questionable logic to suit your argument. In reality if your including it in the "Remaining" then it should be excluded from the "Current" otherwise it is being double counted … when doing calculations it would be 19th - 17th i.e. 2 days not 3 otherwise we're talking about the 16th to keep the formula and calculations consistent i.e.
Date
Today's 17/03/2021
Entry 10/03/2021
Exercise 19/03/2021
Contracts 50
Sell Premium $0.280
Buy Premium $0.030
PPD
Planned $155.55
Realised $178.57
Unrealised $75.000
What to do … Buy
So by your calculation, you could have bought it back at 0.06 i.e.
Date
Today's 17/03/2021
Entry 10/03/2021
Exercise 19/03/2021
Contracts 50
Sell Premium $0.280
Buy Premium $0.06
PPD
Planned $155.55
Realised $157.14
Unrealised $150.00
What to do … Buy
And if you included realistic commission of $25.50 then it rises to 0.065 i.e.
Date
Today's 17/03/2021
Entry 10/03/2021
Exercise 19/03/2021
Contracts 50
Sell Premium $0.280
Buy Premium $0.065
Commission $25.500
PPD
Planned $152.722
Realised $149.929
Unrealised $149.750
What to do … Buy
This is a far cry from 90% don't you think?
P.S. Hopefully my calculator is right but guaranteed my logic is 😅
Hi, I noticed your cap requirement is less than $17k to sell 15 $66 puts. I have a margin account but cost me $99k to do the same trade. I basically need all cash to do it. Do you know how to get around this? Thanks
Check out THIS video: th-cam.com/video/kzinSHgX848/w-d-xo.html
Does this help? 👍
Trading can be very complicated, my personal recommendation is to look for a professional trader who will explain everything to you, teach you and also help you trade. Do you need help?
Like the point of closing early once a max profit reaches maturinty early, thus entering a new trade ONLY if the premium is advantageous
Please bring the CPA to do a video for taxes and trading in an LLC. I would appreciate that!
Do I understand correctly, if one of these trades went sour you would be in for ~$100,000. Wow. I guess you could roll, but if one of these has some bad news...
Marcus, I tapped into your videos two months ago and they have changed my life, thank you. I’ve emailed all my friends the video’s I’ve watched and pressing them to act. I’m doing excellent on the wheel strategy and now know that I will no longer have to work for the man regardless of market movement. Thank You!!! Bonus…Let’s ride Harleys in Texas.
Awesome! Thank you for watching! :)
Markus, please start a small 2k account challenge for newbies. This will be a great educational video.
I am taking note of that. 😊
at the very least a 10k account which is your recommendations for starting the wheel strategy. Thanks for the awesome vides btw.
Thank you for another valuable seminar sir. The ones that doubt this need to understand that the market is not static, so you still need to research your companies, you may not be able to afford the ones markus is doing, but you can find solid lower cost ones, and make it happen as long as you arent looking for a magic formula or someone to do it for you. As soon as you stop wanting to work or think critically you lose your focus. These are tools to improve your success rate not formulas and so as markus says " the results may vary." Another key statement is "trade what you see not what you think." Dont fantasize about unrealistic gains, those may happen, but fantasizing clouds the focus.The results dont have to vary as long as you stay within your financial means, dont rush ahead, and really hone the strategy it will work very well. Take what hes saying to heart and apply it. Dont fantasize about retiring early, buying a mansion etc. etc. The market has no sentiment or mercy for your fantasies and so wanting something badly wont make it happen. Just slowly build and it will snowball.
Awesome! Thank you for sharing your thoughts here.
A real estate 'Coffie with Markus" would be wonderful!!
Awesome! I will make that video soon. 😊
Hi Markus, Thanks for informative videos. Would love to hear about your real estate investments.
I will be doing a video about that soon. 😊
Content is pretty good good good
I'm interested in the real estate trading/ selling.
Markus, when you do real estate, would you please do it under the category, Tea with Markus so I do not get confused because I associate Coffee with Markus phrase with stocks and options? (ha ha ha, just kidding!)
LOL - Great idea! Yes :-))
Hey Markus, Greetings from germany :-) Did you have any "trick" in these low Vola times (Vix below 20 and so on) in selling premium on stocks to maintain your performance halfway ?
Markus this is a brilliant video! It answered my biggest question on when to close a put trade. Thank you so much! Where can I get these notes please?... Secondly re vertical spread when do we close them & does this same formula work for them too?
JBay, great question. And yes, I would close a vertical spread at 90% of the max profits as well since you really don't want to mess with the assignment.
Hi Markus, Can you tell me what broker you made the commissions deal with. I believe you said in the video you will be getting a 90% off on the rate.
It's Tradier. You can find more info here: rockwelltrading.com/broker
Hello Markus, I have watched almost all your videos took careful notes , struggling for laptop and start up capital , would you please consider agricultural stock options ?
I will take a look at that! ;) As you know, I only trade what I see, not what I think. So if it is not suggested by The PowerX Optimizer I do not trade such stocks. 😉
Hi Markus, I am watching this video 6 months later. How can I get a copy of the note of this video?
Hi Himanshu! You can check it out here www.rockwelltrading.com/coffee-with-markus/when-to-take-profits-on-options/ . Thank you for watching! 😉
Markus, you say here you do not like to sell options on TDA. Which broker do you prefer?
Great question. I made a video in which I explain it in detail: th-cam.com/video/IisDA8LUXVc/w-d-xo.html
Let me know if this helps.
Great explanation
You did not mention anything about minimizing the risk by closing it early if I understood correctly
I thought I did! YES, you can definitely close an option early. I like to do it when I see 90% of the max profit. Does this help?
Markus please buy another shirt. You need some change in your life
I have dozen of these shirts. LOL.
Yes Markus interested in property as well
Awesome! Thank you for watching! :)
yes, please send me a copy of the notes
You can reach out to support@rockwelltrading.com 😊
Markus, I would love to hear about your real estate investments.
Cool! I'll do a video about it soon. 👍
Can you also take profit early when selling a call as well?
I will advice you to look for a professional trader who will explain everything to you, teach you and also help you trade. Do you need help?
would love to hear about the real estate
Awesome! Thank you for watching! 😊
Finally discovered the best!
Thank you!
Hearing you say “metric shit ton” made my day lol. Will the wheel strategy book be available on kindle?
It will. 😉
Thanks Markus. You are providing quality education which usually people pay top dollars to get. I would be really interested in the video on real estate investment.
Awesome! Thank you for watching! :)
..this is very educational..keep it coming..ty sir
😊 You are welcome! I am glad that this helps!
Great video! I never thought of using PPD for profit taking. Very sensible! Thanks!
😊 You are welcome! I am glad that this helps!
@
Sharon Koh "PPD" Yup, before placing an option trade, always compare the PPD between different expiration dates. It is counter-intuitive when you see how large a premium is for a 3 month option, but the longer the time until expiration, the less Profit per day. You are usually better off selling weekly options, week after week, after week, rather than a one month option, or a 3 month option.
Please tell me how to learn about investing, I am a total Newbie. Any books, you tubes, videos etc. to learn about all aspects of the market, trading etc.
Hi Nicholas. You can start with this book www.rockwelltrading.com/free/powerx-strategy-book/
Thank you, Derp Snarf. 😊
Markus I have a scenario with BFLY ... bought for 15 and sold covered call at @15 strike 16 apr now @19 stock price it is deep in the money and my call price has gone up as well.. do you think it's good to hold until the expiry or roll up the covered call
How does 15 puts at a $66 strike tie up only 16k in buying power? Wouldn't it be 1500 × 66 = 99k in collateral? Please correct me if I'm wrong
Why wouldn't you use your average running PPD to make that decision? Closing based on just the trade ppd seems odd. Unless you already have a better trade to jump in on. ?
Update on your overall goals?
@@derpsnarf4052 I am wondering about all the other goals.
If the stock price along with the bid and ask move up for put that you have already sold at a lower ask contrary to your example, what do you do as a next step?
Im working here in Kuwait with the government i want to join Tasty Work Platform can join in?
TQ sir. Great Just take 90% rule. I believe as an options beginner, it’ll help me sleep better!
Hi Markus,for calculating the annualized ROI, why do you use 360 days instead of 365 days?
Love your videos! I haven't finished video, but regarding buying back early -- do you set an alert? Or just watch each day and determine if the option has hit that 90% target? Thanks
Awesome system!!! Can the strategy purchased be improved to remove any discretionary decisions? I find lots of decisions have to be made that removed the systematic part of the process.
Yes to your real estate properties. I am interested
Awesome! Thank you for watching! 😊
Hi Markus, earlier in the video you mentioned you will tell people how to get a copy of the notes at the end of the video. I watched it until the end and did not see such information.
What is the indicator in the middle..? looks interesting
Do you have a video of when you get assigned before expiration and how to handle that situation?
In option whell how we start it weekly basse chart analyse or day base.
Why in the wheel strategy, that I appreciate a lot, you manage 5 positions and non more or less?
Do you ever factor in the fees? I bought back a put that was already at 97% but the fees sucked some fun out of that one. I find the same rolling options. How do you factor that in? Letting some expire would save on fees, but I agree some are better closed earlier.
I’m paying $0 in commissions. Therefore, it doesn’t matter to me 😎
Hi Markus, you should have wear a green shirt today.
Will the real estate video be tailored for beginners?
Hi I just stumbled on your channel and I'm already very impressed with your way of explaining things. I'd love to hear about your approach to your real estate investing. thanks
Thanks for the feedback, Karine. Yes, I will do a video on real estate investing soon. Stay tuned. 😀
New to this channel
Awesome! Thank you for watching! :)
I've sold puts with Strike Prices BELOW the Current Stock Price. What is the advantage of selling puts ABOVE the strike price? Not sure I'm seeing the risk/reward. Thx!
I missed the part about selling puts above the strike (stock?) price.
@@derpsnarf4052 OK now that you’re able to recite basic information to someone whohas been trading options for years, please tell me how you would sell puts above the STRIKe price.
@@derpsnarf4052 haha
@@froido123456 I'm still learning, but a few months ago, I "accidentally" sold AAPL puts at a strike price of like $4 ABOVE the current price. Within an hour, the stock price was going up, so my option price started going down. I was green about $85 within that hour, so I closed for a small profit because I wasn't sure what I was doing at that time :O.
But there's absolutely a deliberate reason for doing this. Likely, people aren't planning on holding until expiration...
Another terrific video Markus!! I really appreciate the topic because I've struggled to figure out how to analyze this very issue. Having the PPD rule just makes this issue an easy one to know when to act. Looking forward to more videos and I need to learn more about Rockwell and the PowerX Optimizer.
Hi TheYoyozo, you can learn more about the PowerX Optimizer through our expert trader, Paul's demo of the software. Just email social@rockwelltrading.com if you want to set a schedule.
Does Markus ever wash that shirt? 🤣
I have a million of it! Lol! 😂
Outstanding!!! very helpful explanation!
Awesome! Thank you for watching! :)
Are you writing covered puts or naked? Also it would be handy to know how you manage risk?
@Randy Nyc "Are you writing covered puts or naked?" In all his videos, he says CASH secured puts. They are not naked puts.
If he sells a cash secured put on a stock with a $100 strike, he makes sure he has $10,000 in cash, or margin buying power to pay for the stock if it gets assigned.
I'm all in on the Real Estate video. I have learned so much from you. I literally today was just thinking about closing some positions early and wasn't sure what to do. The timing was perfect for me.
Awesome! Thank you for watching! :)
I bought ride today at $14.50, thanks Markus! Chuus
😊 You are welcome! I am glad that this helps!
Is Ride safe to sell more puts?
Yes please would be interested in hearing about your real estate projects ! 👍
Awesome! Thank you for watching! :)
Literally just listened to about 5 hours of you whilst driving around in my van. So helpfull. Really appreciate your videos. Thanks from london
😊 You are welcome! I am glad that this helps!
@@rockwelltradingservices what do you think about sq square for the wheel strategy ? Of course its personal opinion but im curious, would you use it for the wheel ?
I would love to hear about your real estate investing Markus.
Awesome! 😊
Hi Markus, thanks for the video. As a beginner it was little too much for me to comprehend. Your material here is helping a lot. I have started option trading 2 weeks ago with my $5K account. In principle what you are explaining here is like a kind of PUT spread but customizing it to your profit than what the broker is offering with their App, or?. I am currently doing SHORT PUT vertical for profit/risk mitigation. Yesterday being the end of weekly options, I wanted to close some of my positions to free up BP but there were no bids and I had to just wait for them to expire. Does this happen to you as well? If it's not too much of an ask, could you please make a short video for beginners with a small account like mine who deal with Short Put Verticals, how and when to close their positions to get out of the trade with profit and free up BP. Thanks again for your wonderful work in creating this content.
Hi K, thanks for the feedback. I'll put it on the list. 👍
@@rockwelltradingservices Thanks a lot Markus.
😊 You are welcome!
I´m looking forward to your announcement
Awesome! Thank you for watching! :)
that statistic is for day traders. I have been told it many times.
Thank you for watching! 😊
Will your Wheel book be avaliable in digital format?
I'm a new subscriber btw
It will be available in kindle.
Thank you for subscribing! 😊
You are the best! Thank you Markus!
Thank you, Alla!
When you don't close the option earlier and you wait until the option expires worthless, when do you close it? At closing of trading day on the day it expires?
It automatically closes and you just keep the premium.
It will "expire" worthless at the end of trading day of the expiration date.
Markus... love your channel.
FYI re Andy's Horton's comment at 32:55
BTC means Buy to Close
CSP means Cash Secured Puts
CC is Covered Calls
STO is sell to open
Keep up the great videos...
Awesome! Thank you for watching! :)
@Joe Dable
It blew me away that Markus stumbled here, and didn't recognize something as basic as btc means buy to close and not the ticker for bitcoin.
He really looked embarrassed.
Well I hope I didn’t come across condescending.... was not my intent to do so.
No you did not. :) You are very helpful.
Would love to see your real estate videos.
Soon! :) Make sure you hit the bell but
I have always heard that selling options is very dangerous. How do you protect a naked option?
Except it is not dangerous. People saying that stupid shit are what is dangerous.
He is not selling naked puts. He is selling cash secured puts. That means that he needs to have cash available in this account to buy the stock if the put is assigned. For example his DKS puts had a strike price of $66.00 and he sold 15 contracts that means that he has to have 15 x 100 x 66 = $99,000 in his account to buy the 1500 shares at $66.00 per share. But don't get lost in the big numbers. A company like US Steel trades at around $22/share. You can sell a put contract for 3/26 at $22 for about $1.00 which is about 5% return on your money in one week, but you'd need to have $2,200 in your account. Hope this helps.
@
REZ Z "I have always heard that selling options is very dangerous." BUYING options with near expirations is very dangerous. SELLING cash secured puts and covered call options with near expirations is VERY profitable, and not dangerous. If you sold a call, and you let it expire itm, your stock is called away at the strike price YOU picked. If you sold a put, and you let it expire itm, you are assigned the stock at the price that YOU picked. Regardless if these options expire itm or otm, you still keep the premium you collected when you sold the option. So, HOW is this dangerous?
"How do you protect a naked option?" Markus does not recommend selling naked options. He teaches to sell either a CASH secured (covered) puts, or COVERED (by 100 shares of stock you own) calls.
The only way I know of to protect (reduce your risk) a naked option, is to make it a credit spread, and set a stop loss order on the short option. Say for example you don't own any stock. You can sell an otm call and buy an otm call one strike above the call you sold. Your risk would be the difference between the two strike prices minus the net credit you collected.
Knowledge IS power, only IF you apply that knowledge.
Would love to see your real estate videos.
Awesome! Thank you for watching! :)
super smart, thanks
😊 You are welcome! I am glad that this helps!
Not new to the channel.
Awesome! Thank you for watching! :)
Makes sense MH!
Awesome! Thank you for watching! :)
Excellent.
Thank you! :)
I think of premium more as one lump sum payment for the contract. I suppose it might free up some buying power though. These puts can go horribly wrong.
@@derpsnarf4052 There is a lot of risk if the price keeps going below the put strike. My opinion is don't write them and don't buy them. But I am resigned to make less because of that.
@@derpsnarf4052 Stock prices don't move so much as options. Contract sizes make a huge difference. I was taught to buy calls close to the money and sell early if you get the chance.
@@derpsnarf4052 you are a pretty snarky person. Why are you tearing into people here? You act as if you are the king of traders. Honestly.
Many people are fearful of puts, and rightly so. In some cases, a companies stock can take a huge hit and drop in price unexpectedly. And, as you know, options are time based. If you sell a put and you believe you are on a good trade, but after hours the company publishes a forecast of earnings a month out, and states earning will not meet guidelines, and the stock post and pre hours goes down 40% and you hold Puts, you can lose "a metric shit ton of money". If you owned the shares, you have an asset that has no time component, and as long as it was not in marginable account, you lose only if you choose to sell at a loss. Options do not offer a grace period or allow you to just hold forever. This happens more often than you think, and by listening to your comments, you sound like a book trader. If you don't know this risk, then you should not be advising anyone.
Stop telling people what to do. Share your ideas, but leave people alone. Criticizing them or mocking them is not polite, and you actually make yourself look bad.
There is no limit on the risk of selling puts. Unless you use advanced strategies to limit that risk, you must be very selective about the Puts you sell. There is a mximum defined risk of selling covered calls. You give the stock away and collect your premium. There is a maximum defined risk of buying calls and puts. The premium you paid.
Maybe be a little more thoughtful before acting like the chatroom snark. Food for thought.
@@derpsnarf4052 You are not asking for counterpoints. You are bullying a person, and there is a difference. I am not butt hurt. LOL. Actually, I would simply force you to exit my classroom with your horrible tableside manners.
So, you think that Puts are the cats meow? Really? You mentioned earlier something that to me, proves you dont know a thing about what you are saying. If a person purchases Calls, takes the trade on calls ATM or just outside or inside of that, they are not "just like buying shares". That is a huge misunderstanding on your part. It clearly tells me you are clueless to the power of Options.
Lets start off with the fact that I 10x an account, with Calls. In 3 months. That is highly improbable with Selling Puts, for many reasons.
Reason 1. If you sell puts, your account is restricted to the total available cash minus the value of the PUT trade should you get assigned.
Reason 2. There is a CAP on the amount of money that you can make selling puts.
Reason 3. There is UNLIMITED risk with selling puts. If I have to explain this, then you better warn your wife you will be broke very soon.
Lets dive in a little deeper. Lets say you take a position selling puts on a company, company X. Your account value is say, 100k. You opt in to sell puts at a strike price of $10, as the company is currently trading at say $15 and the 200 day average line is 13, 20 day average is 14.25. The stock is moving up on pending and exciting information and you believe it to be true. You take 10 contracts and get paid a premium of $2.25 per share, or $2250 for 10 contracts. You are excited that you will make this in 2 weeks as the exercise date is 2 weeks out. You think there is little risk. For background, Company X is developing a new technology that will make energy free, or nearly free to generate. Everyone is excited, and the company has shared some interesting information regarding potential contracts, and other pre-order information. You are feeling pretty high. you go to bed, one night, after seeing that you are at 65% and pretty satisfied you will make the 95% hit in a day or two, and you are 4 days from exercise.
You wake up in the morning, make some coffee and then start reading news. you see that after hours yesterday, when you forgot to read the paper, that Company X put out a communication indicating that Hindenbottom Reassurance Research Company sent a letter to them and to the SEC regarding proof that one of their Scientists had falisfied information on the testing of their product, and that they will need to reevaluate the value proposition that it will have as it will be less efficient than previously stated. There are suddenly a few Lawsuits, and the letter goes public. you panic and look up the value of the stock... it has dropped 50% from 15 to 7.5. you have 10 contracts in the hole. 1000 shares, @2.50 loss each. You lost all of the premium and an extra $250 dollars, and now, will be exercised to hold a company that is mired in conflict. There are 3 more days to go. The next day, the company drops another $3. you are now $3,250 in the hole. Your broker put a margin call on you that you must do something within 48 hours. There are 2 days to go... what to do, what to do... if it goes to $1, you will be another 3k in the hole for a total of 6250 lost. mostly, that would be, $6000 lost and $2250 premium lost and the total loss is 8250, on hopes of making 2250. almost a 4:1 loss. Very Sad.
I invested in the same company. I invested in buying their calls. ATM call for 3 months out, at $12 strike inside the money line, at $4.50. I have $3 of intrinsic value, and paid the extra 1.50 for the extrinsic value proposition that the company might gain in price over the next three months. When the stock went down, 2 weeks later, I was out the total, of 5 Contracts at 4.5, which ironically is the same amount you would have gained. However, while your contract expires in 1 more day, mine has 2.5 months left to settle out. I still own the options and need not invest another cent, and need not purchase shares. I have 2.5 months to possibly make my money back, or a part of it, but the maximum loss I would take is $2250. Must less than you.
On the flip side, lets say for the sake of it, that all the same quantities applied but the fate of the company was far better. Lets say that their public statement went a different route and it was positive, and that their product would produce 2 watts for every watt consumed. Wow the world is excited and the stock went up overnight to 20, and over the course of two weeks up to 35 on such incredulous news! I sell at 35 before the 3 months because I know that incredulous news is not always something that converts to reality. You, got your $2250, and I got $13,000. I gained 5 times as much as you. In the same amount of time.
Are you with me? Ok,. Enjoy your puts.
David
@@derpsnarf4052lol. Wishing you all the best.
why are you paying commissions, when so many brokerage firms are commission free?
You don't want a commission free brokerage, you want a brokerage that routes your orders most effectively, quickly and is transparent about the costs. If you trade on a "no-commission" brokerage the transaction costs are hidden from you, so you don't actually know that it costs you.
I agree. I do not recommend a "no-commission" brokerage.
Here is a video that I have about zero-commission for you to understand th-cam.com/video/aFoHzf3YcpI/w-d-xo.html
@@rockwelltradingservices I am thinking of switching to tastyworks from RH. I trade with almost 27k of margin over there at 2.5%. But they require 100% cash down for selling puts. So I can only use margin to buy write or average down. Would it be worth the cost of 7% margin at Tasty to be able to use more of my buying power for puts? My account is around $43k so at tasty would I get 80k total BP?
@@domingodelgado3944 Don't be so quick to use margin on a small account. It can get you in trouble. BE careful . If you lose money when you are extended in margin, you lose a lot more than if you are not in margin. You are losing their money, and now it becomes a debt, and that is paid out of your cash. Be very sure not to extend margin on long trades, or any trades until you have a lot of money.
Another thing. You can make money buying good calls, faster than selling puts. Selling puts has a maximum loss of 100% and a minimum vain of the premium. The premium must be earned and it usually has accelerated gains in the last week as the time component reduces the chance of reversal on a winner. However, if you buy in the money or at the money calls on solid growing companies that have catalysts in play, you have unlimited vain potential and maximum risk is the premium paid. It is opposite selling puts. You can double an account of your size in a few weeks to a few months. IN A RISING MARKET. or with a stick that rides outside of market forces.
The wheel strategy is a good strategy, but choosing the right companies to do this with is very important. You wouldn't want to sell outs on a falling knife. You would be broke over night. So the PoeerX system helps identify those good stocks, and limits the risk.
Learning a lot here
Awesome! Thank you for watching! :)
This may go without saying but I'm always ready to talk real estate investing!
Awesome! Thank you for watching! :)
I really appreciated you going through your thought process. I’m wondering when you are selling these puts and decreasing your buying power while on margin are you also incurring interest until those puts are closed?
Thanks for the honest content! Love the channel
😊 You are welcome! I am glad that this helps!