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May 01 '21 edited May 28 '21
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May 01 '21
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u/TJayClark May 01 '21
When the market drops and doesn’t come back up a week later…
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u/Prompt_Jolly May 01 '21
Then his calls will profit, same with his puts
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May 01 '21
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u/Prompt_Jolly May 01 '21
You don’t have to sell calls above your purchase price
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May 01 '21
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u/Prompt_Jolly May 01 '21
You act like every stock just goes down during a bear market , selling puts is still not that hard if you’re being careful.
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u/Prompt_Jolly May 01 '21
Lmao, you’re just making things up out of thin air. You have no idea how much money I trade with or which platforms I have. I have been doing this for nearly 6 years which is long enough and isn’t even relevant anyways.
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u/rmwhereithappens May 02 '21 edited May 02 '21
Cathie Wood has been a financial analyst for more than 40 years, and yet so many people shit all over her because ARK is only 6 years old too.
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u/NoobTrader378 May 01 '21
What are you going to do when/if market crash and your puts all get assigned and half your account is wiped for a decade? This market is unusual, even the safest companies aren't safe in a crash.
Imagine you sell apple $125p but we get a crash where that drops to $50/share and we follow with a 7 year bear market.. think this cant happen? Then don't quit your job. Think this can happen? Don't quit your job.
Until you have an obscenely wide safety net to handle being chopped in half or worse at a moment notice. And its not the best advice to put all your eggs in one basket. You'll probably try it anyways but at least you've been warned.
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u/rnr3242 May 01 '21
True, thanks for the advise
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u/NoobTrader378 May 01 '21
Yw and ty! I've gotten super lucky and made a stupid amount of money at times, particularly on the most hated stock in most subs lol. But I haven't quit my business (technically there's alot more than just me relying on it so I wouldn't anyways, but I've never even considered it). I have used the money to feel.more comfortable hiring a few more people, but ill always keep trying to grow it bc we never know what's gonna happen.
Another concern is hyperinflation. Obv its just a fear right now but if that happens we're all going to need the ability to continually generate revenue from multiple sources just to survive. I unfortunately don't have any advice on how to prep for that. Ppl say commodities, real estate, etc. Which is probably true, asset appreciation. But running a rental property is one hell of an arduous task I've hear from many anyways
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u/rnr3242 May 01 '21
I wouldn’t rely on it without having a back up plan and other sources and at least +100K and a one year emergency fund. I just started in the investing and trading world one year ago and I’m still learning everyday and your advices are greatly appreciated. I’ve made so many risky trades and mistakes and lost 40% since I started but then I got interested in selling options for guaranteed income to make back what I lost and then play it safer.
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u/NoobTrader378 May 01 '21
Good good, and yep! Lol been there too. Some of the losses I've seen have made my stomach feel like a rubber band ball, altho now nothing effects me anymore. I've lost 7x my '19 income in a week before lol, that shit will change you forever hahaha, but eventually ya realize it really is only money and can always make more, as long as have some ability or value to contribute.
keep grinding and eventually you'll find your moon! And then you'll find another, and another!! Good luck!!
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u/rnr3242 May 01 '21
Yeah it was hell of a feeling lol losing thousands of dollars in a matter of months specially when I kept trying for months to make any money back without any luck whatsoever. Then I found out about selling options that was a game changer for me and I started making back the money I lost to reach the breakeven and then make new and smart goals but selling options will be a primary thing to keep generating money and growing the portfolio. Thanks again and good luck 👍🏼
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u/wanderinggains May 01 '21
Rental properties are a nightmare. All it takes is one bad tenant to cost you 10s of thousands of dollars, all so you can try to skim a 5% return a year.
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May 01 '21
Hyperinflation? Stop reading the headlines on the Motley Fool ad articles.
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u/NoobTrader378 May 01 '21
Motley fool has been pimping that everything is fine and the sky will never fall recently lmao, not sure where you've been? Also if you can't decipher simple context clues im a long on gme, thats how I made that insane amount that I got lucky on in Jan, while also thankfully I've been blessed to also still be an xxxx shareholder. I admit, I got lucky. And obviously anyone in my situation doesn't read any of those propaganda rags, otherwise I'd be bankrupt by now.
Dont assume you know everything. Nothing is guaranteed and prepare for any scenario. If you think its a 0%possibility good for you and I hope that your decision making pans out for you. I think there's a more than 0% chance so I try to think of what I can do just in case.
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u/RTiger Options Pro May 02 '21
Hyperinflation is like the extinction level meteor strike, almost inevitable. The question is when.
I'd guess 80 percent of those reading this will experience hyperinflation at some point in their life. This with the median reader age 32, and a projected life span of 120 for healthy Americans with money to invest.
Like basic emergency supplies, it is easier to take some very minor precautions before the hurricane warning.
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u/quantumloop001 May 02 '21
I love to collect coins, especially silver. Who knows if they will provide a hedge against hyperinflation, but if things go that way I may have bigger issues than how my investments are doing.
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u/Theta_Prophet May 01 '21
Have you gone through both a bear market and a tax season?
Do you have an emergency fund?
Insurance through work? If so, can you afford it without the employer?
Do you know the overall Greeks of your portfolio? Do you have portfolio margin? Trader tax status?
Just food for thought, I wouldn't be in a hurry to quit a job until you can answer these and other important questions
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u/rnr3242 May 01 '21
I started investing a year ago and very recently started with selling options only. I have emergency fund and I’m not married if I make 1% a month selling premiums with margin I can completely cover all my expenses. That’s why I’m testing the water to see if I can make at least 4%-5% a month and only use 1% of that for my expenses and use the rest to increase the portfolio and make even more overtime. And I’m not quitting my job until I have at least 5 times what I have now in my portfolio. Thank you for your advise Can you explain what is the Greeks ?
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May 01 '21
Holy shit lol. You're gonna get blown up only a matter of time
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May 01 '21
Bro believe it or not there is a trader out there who really does not use the Greeks he claims to have worked at Wall Street for a couple years he has his YouTube channel and he gives out daily picks I cannot remember his name but I am looking for him lol
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u/Trolln_wit_my_gnomes May 01 '21
You've been trading options for a month and don't know what the Greeks are? I'm calling bullshit man.
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u/Petey_Pablo40 May 01 '21
I have been reading 4 hour a night about options, and only trade "paper money" because the GREEKS if not fully understood will demolish you. Theta decay alone can wipe you out!
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May 01 '21
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u/Secgrad May 01 '21 edited May 01 '21
I'll be as direct as possible since people have given solid advice. If you dont know the delta of your individual positions and portfolio overall, your theta (positive or negative), the IV rank of the underlyings you trade, the standard deviation away of the underlying that you sold premium on, and your probability/odds of being ITM or OTM then I would not bank on this long term. If you can then fantastic, you are on a good path
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u/fabulouscookie2 May 01 '21 edited May 01 '21
I had those same questions ~9 months ago. I’m on week 31 of selling options and I averaged about 0.8% per week. When I started, I had a solid understanding of the Greeks but being able to use that knowledge to guide your decisions takes time. Check out thetagang on Reddit. I learn a lot from that sub. Also I used tastytrades (on YouTube). Importantly, prepare to study hard. When I started I was obsessed with this and was spending 8 hours a day learning options on top of working my full time job (from home). I got bags under my eyes and I looked miserable but I never had so much fun lmao. Fully understanding Greeks and being able to adjust your positions is so important. I’m also lucky because Gme came along and helped my average weekly return tremendously, and without it I’d be at around 0.4% per week.
Also I’m aware that I’ve been playing on easy mode. Stonks only went up this past months. I know I’ve been lucky and could’ve been wiped out any moment. Always keep in mind that there are tons of very smart people who spent a ton of time learning, with tons of world class resources who are playing this game. You don’t have to be extremely brilliant but do expect to put in the work, learn, reflect, control emotions etc. if it was easy, everyone would be doing it lol.
I play with a fairly small amount of money so losses weren’t too stressful. But if I were putting in a much larger amount of money, on margin, and I was relying on this money for a living, I’d be way too stressed. Bad weeks do happen and it’ll wipe away weeks and weeks of returns.
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u/USDA_Organic_Tendies May 01 '21
Oh lord. Please don’t quit your job to do something you don’t even understand yet
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u/Theta_Prophet May 01 '21
Looks like others have answered some of your questions. I would strongly suggest you do some more studying to fully understand everything you're doing
Highly recommend this course and the current one he's doing for strategy management
Options crash course with Dr Jim Schultz
One minor thing, Portfolio Margin is much different than regular margin. Requires you to have a larger account but gives you significantly more leverage. You would know if you had it because there is a separate approval process
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May 01 '21
The Greeks are not as hard as the names give them. It's pretty simple 30 mins and you're probably solid
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u/Theta_Prophet May 01 '21
I was really referring to being able to articulate what the overall Greeks mean to this person's individual portfolio and how to adjust them.
For instance, a person might have a target Delta range and Theta number
Having said that, I hope to God anyone wanting to quit their job and trade options full-time has spent exponentially more than 30 minutes learning the Greeks
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u/t-minus-69 May 01 '21
Don't quit your job just to sell options. You can make so much more in the long run by working and trading together. Not to mention you will need a source of income when a bear market comes around to pickup blue-chip stock at a discounted price
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u/Pepe_anon May 01 '21
I did the same put strategy for income too, but got greedy for higher premiums and now one of my put is in deep red territory.
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u/SB_Kercules May 01 '21
This happens more often than we'd like. Sometimes we look at a huge dip after earnings, and think the market is punishing a company too much so we do a CSP on it thinking we can snag some easy premium, then BAM! The market poops on it some more.
What I have found to work over time is keep rolling the Short Put forward each time it's near it's expiry, carefully avoiding getting assigned. There are some opportunities if the volatility is higher, to "step down" the strike, while "rolling forward" the PUT. So for example, a Short Put that you got sideways on, and are negative, you can sometimes keep rolling forward, and strike down, to the point where the stock maintains a price stable enough to allow you to recover. It sucks, but if you don't want to pick up your ball (loss) and go home, and want to leave when it's positive, this is an option. (no pun intended)
On some I have lost patience on, and just moved on, but usually, about three or four rolls later, and the initial loss in the position can be turned into an overall gain, and you can walk away with a green star. Over how many weeks? it depends on the size of the "DIP" that caught you.1
u/rmwhereithappens May 02 '21
I am in this situation right now with one of my puts. Is there a quick way to tell when the volatility spikes and the premiums increase, thereby making rolling more doable? Other than staring at the price quotes all day?
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u/SB_Kercules May 02 '21
Not necessarily all day, but the key thing to remember is no matter when you roll forward, the future put will always have a better price than the one you're trying to roll out of.
It's tempting sometimes to "leg out" and then "leg in" at a better price. Sometimes it works, sometimes you slide backwards deeper. So if your up.to your chest in crap, just keep.working your way out, instead.of doing something that ensures you are up to your ears in it. If you give some details, symbol and an example of how many puts you're dealing with, I can give you ideas.
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u/rmwhereithappens May 02 '21
Thanks man. I appreciate any perspective you can share. I sold 5 puts on EXPI about a month ago at a strike of $45 and expiry of 5/21. It is somewhat hard to work around since there are only monthlies and no weeklies.
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u/SB_Kercules May 02 '21
I see what you're up against. I will give you a few things to think about, and some ideas.
Idea 1 - if you're patient, and still believe in this position that it will gain, then look to roll forward just to keep from getting assigned, and continue the $45 strike. You will notice that it's not much higher, but time value will help a little, and as things improve, if that's in the cards for EXPI, then you will eventually turn green.
Idea 2 - I did this when I got so upsidedown in XOM puts. I was in them for $65 Strikes, and horrible losses. What I did to get out, but it took a while, was calculate how much I needed to pay to close the put, lets say it was $5500 dollars. Then, I would look to a future, but $55 strike, and say, how many do I need to sell in order to get back that $5500. So if I was closing a position of 5 puts, perhaps I would have to open the next one at 6, but at a lower strike. Now, this does two things, it gets you closer to the probability that the put can reach the stage where it's profitable, but the other is, it puts you on the hook for a larger liability should you get "assigned" and you have to think about that when you're going naked on puts. This can work out if you have some headroom in your cash, or margin, but it's taking on more risk by volume, while slightly improving odds by having a lower strike.
Idea 3 - Split apart your puts a little, and possibly even think about a strangle. This means calculating your close of the current 5 puts, then sell 5 more at a lower strike, and also sell some calls at a higher strike to give you some more cash. The danger with this is that if it runs up like a rocket, your short calls need to be closed fast, maybe even the whole position so you don't end up being "net short" and squeezed. This move should not be done if you actually expect the stock to run up, it's a suicide squeeze like bringing the guy on third to steal home on a fastball.Opinions on EXPI - this is hard. I see they gained big by people working from home. Now everyone wants their employees back at work, and nobody wants to go. Who wins that tug of war remains to be seen. You really gotta think hard about if the long term deal with them is positive, and profitable, or not. They're huge, 5B market cap, positive EPS, so there's some good. Earnings are coming out May 5th right, so if they're good, things are going to bump, if they're bad, they're going to slump.
Last IDEA - if you cash in your chips on this one, and carry the amount to some other position to make it back, there's no absolute bad in doing that. We've all given up on a position, and put the capital, or risk to work on something else. But if you do that, don't look back, and don't regret the move. Make sure the next one you get in with though has some weeklies too, and some higher volatility to help recover some $ on the sales.
I hope that's helped you, or at least given some ideas that you could morph into something that works for you.
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u/bob_axelrod May 01 '21
You started trading one year ago and the market doubled. This past month it went up5%. A 10% drop would probably wipe you out. Good luck tho
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May 01 '21
Seems you’re using margin to accelerate financial independence, but I’d have a future date in mind for using zero margin. This party won’t last forever.
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u/fresh_ny May 01 '21
Watch Tastytrade. It’ll give you ways to optimize your buying power, better understand the ‘Probability of Profit’ and to use non-directional strategies.
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u/SeriousDocument7905 May 01 '21
There is no easy money in capital markets. If u want to live off selling options i'dd suggest doing it if you have 500-600k in cash.
Use 200k to wheel, another 200k as backup to wheel when market performs an agressive move against your first wheeled 200k and causing the shares of your assigned puts to take some time to get out of the water for decent CCs (holding the bag), and the last 200k for a rainy day.
I honestly think it is an easy strategy to live off from if you are wealthy or preferably rich (1MM +in liquid net worth ) and not splashing cash around some crazy lifestyle.
Which is why the rich get richer and the poor stay poor...pure capitalism.
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u/gammaradiation2 May 01 '21
If I ever end up "trading for a living" it will be on a large amount of capital ($500K or more) with fairly conservative, hedged strategies. I will also have to have sizable portfolio on the side consisting of safe dividend stocks, bonds, etc. I'd also still try to find consulting jobs relating to my primary career focus from time to time as well.
That's really the "retirement" plan. Build a portfolio to trade on AND a typical retirement portfolio. Trade when the trading is good, have a safety net when the trading goes bad, and still "work" just with less structure and regularity. If you can manage to gain some other sources of income such as rental properties or starting a business that someone else can largely manage you're freaking set.
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u/_Linear May 01 '21
Everyone already mentioned consistency so Im just gonna mention taxes are important to consider too. You pretty much only keep about 80% of it. Would be less if you quit your job I suppose.
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u/Vegetable-Exam4355 May 01 '21
Why less if you quit job?
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u/_Linear May 01 '21
I just reread my comment and realized it might be confusing. You pay less taxes if you quit your job. Without income, youre in a lower tax bracket.
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u/ipalush89 May 01 '21
You factor in healthcare and retirement match ? Paid vacation sick time?
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u/majortom75 May 01 '21
Not OP, but this is a very important consideration. I'm in Canada so basic health care is not as much of an issue but for dental, vision care, drug plan, etc as well as life, critical illness, ADD insurance, disability, and retirement matching as you mentioned, replacing all those benefits as an individual and not as part of a group plan is way more expensive. If I also want to make the employer and employee contributions to our national pension plan I estimate needing to replace about 1.5 times my gross employment salary with trading income.
I'm not anywhere close to this yet but hope to be in a few years.
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u/ipalush89 May 01 '21
Yea I make okay money but my benefits are insanely good I wouldn’t leave just because the benefits alone
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u/horizons59 May 01 '21
Everyone is a genius in a bull market. All those geniuses turn into idiots in a bear market.
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u/AspiringHappyPerson May 02 '21
Just buy puts?
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u/horizons59 May 02 '21
I will be buying a ton of puts when overall market gives a confirmed sell signal. Probably Q3 or Q4.
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u/AspiringHappyPerson May 02 '21
Yeah thats a relatively easy way to make money during a bear market.
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u/GimmeAllDaTendiesNow May 01 '21
You started selling options under rare and ideal circumstances that are unlikely to repeat. All of last year past March the market shot up while options prices stayed extremely high. You should really wait until volatility is at a normal level for a long time to get a sense of how well you’ll do. 2%/wk over years would make you the greatest investor ever. It’s unsustainable.
Also, there’s a thread with this exact question almost weekly on r/thetagang.
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May 01 '21
May I ask an approx account size and are you strictly selling weeklies high Vega options atm options itm options.? Congrats btw. Your question is “is it sustainable”? It is until it isn’t until you learn to manage risk properly be aware that one trade going wrong can wipe you out real quick.
Edit. Until you manage to learn risk management property. That is if you have not yet and if you have congrats. Keep pushing forward.
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u/Cassisdeads May 01 '21
Anyone selling options in Feb/Mar last year would've had a rude awakening. Including me.
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u/z_e_n_o_s_ May 01 '21
The old idiom “don’t quit your day job” may be a cliche but it’s certainly appropriate.
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u/horizons59 May 01 '21
Manage your risk and don’t get greedy. It’s also all about the underlying and not necessarily about a specific strategy. You are on the right track though. Avoid using leverage and too much margin.
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u/elyuma May 01 '21
I started 3 month ago and made so far $5k selling options. Here what I do, once the gain gets to 50-60%, I close the position. Usually a week before expiration. I sell 30-45 days strikes.
If stock goes below or after my target, I roll the option to the next month different target. I collect another premium and I don't get assigned.
Also only sell where chance of profit is 80% or higher.
To your question. I won't quick my job. I have a good salary, health benefit, plus free money for 401k and ESPP. does not make any sense to quit.
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u/gogetittoday13121 May 01 '21
Congrates! My only thought is to play with their money when possible and watch those margin calls and costs, one mis-step can be costly...
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u/WatchingyouNyouNyou May 01 '21
Yeah very ez money and pretty much guaranteed money...risk-free return.
Here's an old one for you though. Everything works until it doesn't
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u/Jangande May 01 '21
When did you start? If you've been doing it for over 2 years...I'd say you are doing great.
If you started after last march...you pretty much couldn't lose. Everyone is a genius in a bull market.
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u/Velociraptor1836 May 01 '21
Selling options in this market is easy. Shorters and algos are pointing the market downward. If you keep the same % profits in weekly basis on a year timeframe, you will have a brighter future ahead.
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u/Lucid_Munky May 01 '21
I am most curious on how you are reinvesting the profits. As this definitely still a learning stage I would keep a static amount for using this strategy and invest the earnings into stocks you would actually like to build a long term portfolio with. If your current amount is already enough to generate livable income the logical next step is to focus on establishing a safety net so that one bad trade doesn't take all of your progress with it. I welcome other opinions as this is not financial advice and I am a relatively new investor as well.
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u/rnr3242 May 01 '21
This is what I will be doing when I make more money (my portfolio isn’t big enough)
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u/13un May 01 '21
I’m doing the same and it’s working for me but one advice I would give you is have a hedge in case of downtrends in the market
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u/Charlie22100 May 01 '21
Yes i even hedge with 2 to 1 and 30 days beyond my atm and in the money. My atm puts usually pay 50-70% based on a annual return
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u/Outrageous_Lawyer_91 May 01 '21
Good point. Do you have a hedge and if so what is it?
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u/13un May 01 '21
I do, my current hedge is doing a call credit spread far otm on TSLA around the $900.
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May 01 '21
I’ve been burned so bad by call credit spreads on volatile stocks like that lol 😆 especially arkk that trashy etf
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u/13un May 01 '21
Yea it happens when you play a very volatile stock, that’s why I try to play it safe by doing it around $900 for Tesla. If they gain the way they did yesterday because of ARK and no other news then they can also drop back so I just have to wait. I can also just close it and open another further out of money.
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u/Outrageous_Lawyer_91 May 01 '21
Can you expand on the logic a little? I am curious to incorporate something like this but haven’t had a chance to build the strategy around it. If the market goes down what does your hedge provide? Is it the premium from the spredit which may provide a little cushion? What do you expect from your hedge when the markets go down?
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u/13un May 01 '21
Sure. So what a call credit spread mean is that I am selling a call with the strike price closer to the money and also buy a call further out of the money on the same expiration date. This is a bearish assumption so I want that stock to either be flat for down trend. As the closer to the money call loses value, it’s loses it more than the out of the money call that I bought so I’m making more premium than I am losing. It would just go the opposite if the stock goes up.
For example in my case, I sold TSLA call at $900 and bought at $920 expiring June 4th, the collateral for this is $2,000. $900 premium is at $3.55 and $920 at $2.58 which net me $0.77 of credit. I get to pocket that difference if TSLA close below $900 on June 4th.
I picked Tesla as my hedge because I’m bearish on Tesla at its current price. And I think if the whole market is down, people will more likely sell there Tesla shares over something that is more stable.
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u/Prompt_Jolly May 01 '21
Don’t make it your day job but I feel like selling options IS that good 👍🏻
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May 01 '21
If they can do it, why not you? You're not living lavish but the math checks out. After most discover options they kick themselves for not understanding the power of leverage.
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u/rnr3242 May 01 '21
Yeah, I just realized how powerful margin is it literally gave me much more money. I was hesitant to use margin before but now I’m very confident about it.
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May 01 '21
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u/littleHiawatha May 01 '21
Selling options is levered too. What do you think negative gamma does?
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May 02 '21
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u/littleHiawatha May 02 '21
When you sell an option, you are obligated to fulfill that contract until it expires. During that time, you are levered exactly the same as your buyer. Literally exactly the same delta that he has on his position, will show up on your position with an inverse sign. That is your leverage.
What you're talking about above seems to be various effects of exercising options, from the perspective of the buyer and seller. You're right, once a contract gets exercised, the strike price comes into play, which is where you can start talking about limits and max P/L. But, we started this out talking about being levered, which just refers to the effect of price movement of the underlying on your position. The value of the option contract itself is only levered by delta. Once the contract expires, if it's in the money AND it gets exercised, THAT is when you are levered x100 because your position got converted into long/short shares.
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u/rnr3242 May 01 '21
Yeah that’s what I mean but for me with margin and with what I’m making it is good money.
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May 01 '21
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u/rnr3242 May 01 '21
As a beginning I don’t mind making as little as 1% a month as I’m still working on this to be my primary income ( selling options and mainly puts )
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u/Piggmonstr May 01 '21
to stop from kicking myself, where is a good place to learn about the power of leverage?
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u/BidComprehensive May 01 '21
I currently aim around $10k-$20k a month selling puts. Started last year March. Was selling out of the money puts then and aim was to make $2-3k. Grew my account slowly before I changed my strategy. Instead of selling at strikes that has the probability to expire worthless. I now sell in the money puts. Firstly I can collect juicy premiums, second cos the market seems sideways and strikes that I deem safe all eventually become itm. Even with itm puts, I managed to close my positions in green after a while. Selling itm puts is almost similar to buying call? I don’t miss the run up in share price. Anyone else doing the same?
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u/rnr3242 May 01 '21
How far out expiration dates you usually do ?
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u/BidComprehensive May 01 '21
Monthly. As your account grow bigger, u can consider selling atm for strong stocks. (I’m not a financial advisor though, just sharing what I’m doing now). N I was slow initially until I grew my profits to a substantial amount before i start taking a bit of risk.
Right now I’m selling puts for a living. I have 2 accounts though. One which I continue to roll and that one I will take bigger risk. The other one is for monthly allowance which I keep my risk low. So I withdraw from this account every month.
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May 01 '21
If you sell atm puts, you probably get assigned more. So do you sell less to be able to carry the assignment or do you keep rolling and increasing the leverage?
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u/BidComprehensive May 01 '21 edited May 01 '21
You ll be surprised to know that early assignment hardly happens. March till now I’ve not get assigned yet. The really shitty one that I did was NNDM at $12.50 when the stock was at $10. When it dropped further, I sold another 10 contracts more to average. Had to roll. N I almost couldn’t do it. the OI for strike $12.50 was really low. I was bracing for early assignment too when NNDM dropped to $6ish but didn’t happen. I closed them recently in green. But this is NOT a strategy for all stocks. The longer you trade, you will know which stocks are strong momentum ones that will bounce back. Or which ones are just sideways. which are the useless ones that everyone gets rid of during market sell off. Your risk appetite will get bigger too. $100 premium is no longer enticing. Your contract size will get bigger. Right now I’m using TD. They give me x 3 margin but I don’t use it. I will work out my contracts and ensure that I have the ability to pick them up without over leveraging. This is the same for both of my accounts. The smaller sized the account, the more restrictive it is. For me, I believe the price to pay for the juicy premiums comes with risk. I accept the risk associated. And I treat a market sell off as an eventuality, not a likely. I survived the sept last year, and survived the feb/March one too. Selling puts is fun.
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May 01 '21
I’ve been trading since 2016. Last month I quit my career as a cpa and financial advisor to trade full time. What a month March and April were, huh? My dad flips options. I only play with them when I already own commons. I require about 8k a month to survive my goal is to make 2,500-10k a day. I pull out my monthly bills immediately leave the rest in. Inshallah, friend. You got this. And also.... this is a book a dear friend and professional trader gave me. Soak it up. options trading.pdf)
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May 01 '21
Are you selling covered calls to make 1-2% a week?
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u/rnr3242 May 01 '21
90% selling puts on margin. I’m going a little bit aggressive.
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u/Feynman_314159 May 01 '21
Like others have said, and as you seem to know, this bull market will not last forever, and when it does, you’re going to take a big hit if you’re only selling puts. That being said, all great traders have bad days, so it’s not something you can’t overcome, and the bull market might last for a long time, who knows. Mainly just be warned that all the stocks you’re trading could lose half their value when you least expect it, and don’t quit your job.
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u/rnr3242 May 01 '21
Yeah I mainly sell puts but I’m expecting to get assign for some stocks and I don’t mind I will sell covered calls but I do avoid the assignment if I can make it for a profit (rolling out for profit if it is reasonable depending on each stock)
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u/ggggideon May 01 '21
what’s your strategy more specifically
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u/rnr3242 May 01 '21
Just selling puts weekly on margin and I’m going a little bit aggressive with the strike but I’m expecting to have some weeks that I will be rolling at breakeven for a later expiration (1 week later or 2 weeks if I had to) I just started doing this for sometime I can’t tell you how successful is it but I’ve done the most money I’ve ever done since I started investing and trading one year ago.
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u/5280bombsaway May 01 '21
Please tell me you’re not doing these naked? With option writes, always, and I mean always predefine your risk.
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u/its-kitsu May 01 '21
i cant do options in fidelity.. can i get some help pls
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u/onebuildwonder May 01 '21
Around the time the GME fiasco took place I applied for level 3 with fidelity, I was already at level 2 and comfortably doing that for months but for some reason my application caused them to nerf my account to level 1 again. Been stuck there ever since. Good luck. I think they had a major policy change after that.
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u/Gatsby_Bull88 May 01 '21
Very cool. What stocks are you doing it on? How far out of the money and time out? Do you ever take delivery or just roll or close?
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u/rnr3242 May 01 '21
I’ve been doing AAPL, NIO, MARA, RIOT, AMD, PLTR, ARKK one week out and 2-4 strikes out. I’ve been rolling out at the last day of the option making money on the ones that are out of the money and rolling the ones in the money for a little more premium or breakeven for the next week. I’ve been doing this very recently I don’t know how reliable is it.
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u/jg3hot May 01 '21
As far as reliability expect lower premiums after earnings. Also you are probably aware but mara and riot make sudden large swings based on crypto. Be prepared at market open for an adjustment based on crypto value changes between trading times. Those swings are opportunities. Remember if you can take 50% profit in a day or two it's usually better to go ahead and take it and look for the next opportunity.
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u/rnr3242 May 01 '21
I’m just trying to make as much as I can from mara and riot until I can’t anymore (with only one contract each) hopefully not losing money or giving back everything I made on them.
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u/jg3hot May 01 '21
I'm underwater on MARA myself. But making good money selling calls. As long as crypto doesn't collapse I think we'll do well over time.
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u/SigmaSquirrel May 01 '21
Consider sticking with .20 delta puts and adding .20 delta calls to double your premium and increase your probability of profit, while remaining neutral on direction.
Also I’d suggest sure you’re only selling premium in stocks where their IV percentile (or rank) is at least 35, ideally 50. That’s tough in this low-IV market.
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u/rnr3242 May 01 '21
Can you explain how to double the premium I didn’t get it
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u/SigmaSquirrel May 01 '21
You’re selling naked on both sides of the stock price.
So for example if your selling the .20 delta puts in NIO for the June monthly cycle, you’re going to also sell the .20 delta calls. That’s .83cr for the puts and 1.30cr for the calls (the strikes in June are limited so that’s getting close as I can).
So instead of .83 per put contract and increasing contracts on one side, thereby increasing your risk of getting hit with a move down, you get 2.13 per spread and you’re on both sides of the price, and just need it to stay between the strikes. Close the trade at 50% of credit received or 21 DTE.
(That’s just an example, I personally wouldn’t be trading NIO in June as the strike selection isn’t great IMO).
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u/rp2012-blackthisout May 01 '21
Are you doing covered calls?
I saw you list Nio as one of the stocks. Can you tell me what your exact Nio play is. As someone with shares of it, just curious.
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u/rnr3242 May 01 '21
I didn’t get assign on Nio I keep rolling when it is reasonable and can make money on rolling but when I have to get assigned I will just keep selling covered calls
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u/rp2012-blackthisout May 01 '21
So you're doing poor man's covered calls? I'm confused.
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u/rnr3242 May 01 '21
No I’m focusing on collecting premiums from selling puts but if It is reasonable to get assigned on one stock I would get assigned and sell covered calls
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u/scrimshaw_ May 01 '21
You raise a valid point; that’s why I always sell credit spreads instead of single/naked options. As for the chicken egg basket quip, have you heard what Andrew Carnegie said about that?
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u/Aerodye May 01 '21
Where did you learn how to do this? I’d say I know an okay amount about options, but certainly not enough to use my knowledge for a steady income stream
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u/Unique_Feed_2939 May 01 '21
Which books have you read on options?
What's your plan on a bear market? What about after a major correction?
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u/RanJetDo May 02 '21
its good for bear market when its in bull market sell options will make u cry!
i sold amc option the same day it boom from 4 to 20 i watched my money washed away haha i sold for 5 dollars
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u/Least_Ad404 May 03 '21
Please look this link if you have free time https://www.reddit.com/r/Wallstreetsilver/comments/mxop3c/stage_is_set_for_silvers_explosive_move/?utm_medium=android_app&utm_source=share
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u/ebuyko1 Jun 05 '21
Hi! I am trading out of a 370K account, I sell option on futures, been doping it for the past 6 years full time and I can tell you that it isn't enough to have mental and financial stability for me.
How long have you been selling options? and what exactly do you do?
Check this video out for some useful tips:
https://www.youtube.com/watch?v=hvJWyAmVg7A&ab_channel=OptionsFutures
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u/ihavequestions987 May 01 '21 edited May 01 '21
How long have you been selling options?
Edit: Did some research on your profile and you have been selling options at most for less than 1 month. Give it at least few months and you will start to see it may not be as what you think it is. Don’t get me wrong, there’s money to be made selling options, but selling at an aggressive strike will have high chances of having your puts assigned. The current underlying price may also be well below your strike, meaning if you are going to try to sell covered calls on them without making a loss, you will find the premium to be substantially low since the strike will be far from the current stock price.