Options Trading for Beginners FULL FREE COURSE (4 Hours)

welcome to my multiple hours complete free option trading course for beginners yes it's a couple hours but this is going to be totally worth it because I noticed that nothing on YouTube right now goes in detail enough and explains things simply with examples with managing closing and opening positions profitably I want to make sure that this course right here teaches you everything even if you're a complete beginner to helping you understand how to make money option trading here is the full list of timestamps for everything I'll be covering in this course as well as as

you can find them on the YouTube play bar I could easily charge and I have charged thousands of dollars for this type of education and now I'm giving it away for free and this full course is especially designed to take you from a complete beginner even if you don't have anything about option trading even if you don't know what an option is to a confident option Trader equipped with the knowledge to create a safe consistent and pretty much completely passive income online this way you can retire early with options that's exactly what I've achieved after

many many years yes it does take years to actually scale up a portfolio to seven figures I'm not going to sell you a fake dream and tell you that this happens overnight or this happens on one week this definitely takes time but is worthwhile because this is something that you can do on the side it only takes about 1 hour per week to actually scale a passive safe consistent income I have 10 years of experience I started at 19 years old with just $2,000 now my portfolios sit at $2 million another $2 million and I

have another portfolio that I'm scaling with a small amount of money I went from pretty much $2,000 in my bank account to having a multi-million dollar portfolio allowing me to retire before the age of 30 and travel around full-time and I don't say this to brag I'm saying this to show you that anybody can do this so with that being said let's jump into it and learn how to actually trade options so first of all what is an option and how is it different from a stock well we all know what a stock is right

when you buy a share of a stock you're just buying a really really small percentage of a company and you ideally want that company to rise in value so say you buy a share of stock of Apple when the company you know raises its value so does that one share of stock that you bought so if you bought a stock for $100 you're hoping that it goes up to 101 105 110 that's what you want to happen with a stock now let's say that you want to buy one apple option contract yep that's right you

have to buy an option in the form of a contract instead of a share okay so an option is very similar instead of buying the shares you're buying an option and that option just gives you access to those shares So when you buy an option you are betting on the stock also going up but it's a little bit different okay say you only pay $100 for an option that option can raise a lot in value it can go off from $1 to 200 to 300 you can many times your money versus a stock it's a

very small amount of money the same amount of money but it does not rise and fall the same as an option does see an option is almost like a leverage tool okay imagine I have a l here okay if I push the lever a little bit this option value goes up a lot it also does go down a lot if the lever is not going up whereas a stock there really isn't a lever it just goes up and down so here's how it works let's say stock is trading at $50 per share and you really

like that stock you think it's going to go up a lot in the next 30 days in fact you like it so much that you want to buy 100 shares of it but that would be pretty expensive right that would cost you $5,000 now I see you looking at this stock and I already own 100 shares of it I like this stock too but I don't think it's going to go up past a certain amount in the next 30 days so I say hey I'll make a deal I think the stock will stay below 55

in the next 30 days so if it goes to $55 or higher at any point in the next 30 days I'll give you the option to buy my 100 shares at $55 per share even if it goes to 60 per share you can still will buy it for 55 and if you decide to exercise that option the broker will buy it at $55 per share for you then immediately sell that at the market price and you get to keep the difference so you don't have to spend any money and you still get the same benefit

as if you had bought 100 shares of the actual stock but if you want that option you have to pay me $200 so if the stock goes up to $60 you have the option to buy it at $55 using the broker's money and immediately sell it at $60 for a profit of $5 per share and since I have 100 shares you will make $500 but since you paid me $200 for that option you actually make 300 which is still pretty good now if you're wrong and the stock goes down stays flat or doesn't go above

55 you don't lose any money because you never own the stock in the first place but you do lose the $200 that you paid me for the option that's essentially how an option contract works that specifically was how a call option works and there are also put options where you're betting on the stock going down but we'll get into that in more detail later now let's go back to the same scenario but this time I'm going to teach you the option terminology that we use strike price so in that scenario 55 was what we call

the strike price the strike price is a price that the buyer and the seller agree on at which the buyer has the option to buy or sell shares of a stock if the stock goes past the strike price we call it in the money otherwise it is considered out of the money expiration date the expiration date is the date at which the buyer no longer has their option so in that scenario I kept mentioning 30 days that means you had 30 days for the stock to hopefully go above $55 but the expiration date can be

as short as one day or even zero days or even as long as multiple years so there's a whole lot of differences in the expiration date we'll be talking about later the best expiration date to pick exercising an assignment when the buyer exercises their option that means they're going through with the deal on the other side the seller will get assigned if the buyer exercises is their option so let's talk about the buyer and the seller okay for every option there is a buyer someone who's buying that option and a seller who is selling that

option the buyer and the seller are basically betting against each other so only one person can win that's why they call this a zero s game that's why option trading can be hard if you don't know what you're doing there are a lot of sharks out there trying to make money but the good news is Uncle Henry here has been doing this for a very long time so if you stick through this video I'm going to show you how to actually be a winner in this overall game when different things happen to the stock like

it goes up or it goes down or if it even stays completely stable this will depend on the movement of the option depending on what type of option contract that you have and there's only two there's a call option and a put option okay depending on this movement both people can make money or both people can actually lose money depending on the option that they are buying there are calls and puts which is very simple but you can also combine calls and puts together and we're going to talk about that in a little bit so

don't get confused just yet we're going to keep it very simple and we're going to build up and scale as this video goes along and we're actually going to cover even the more advanced stuff later on in this video we're going to talk about spreads we're going to talk about buying strategies like bull call spreads iron Condors we're going to be talking about a lot of good stuff as well as technical analysis as well as managing your position properly cutting your losses making more profits we're going to get all into that in just a moment

so this is a much more different from your standard stock trading strategy an option trading strategy or the option Market is a little bit different only in the sense that options move differently but the market is very similar it's still the same stocks it's still the same movements up and down on the stock just the option behaves differently if you have a lot of questions don't worry that's completely normal I'm going to answer all the questions you might have by going into my Robin Hood portfolio this is a trading platform by the way you're welcome

to use any trading platform that you want I'm just the coach showing you and if you do want to learn from me personally there is a link in the description for my personal Discord community so now that I have Robin Hood open I'm going to search up Apple and click trade Apple options okay so I'm going to go to the top here going to type in AAP so AAP once I click into that you can see I do have 7,000 shares right now I'm going to go into trade right here on the bottom right in

trade options so right here you will see right away there is something called an option chain essentially there's different expiration days and this does look different if you're using a different broker so I can go to May 17 I can go to May 31 okay and regardless of what expiration I go to it still says Buy sell call put okay so essentially it's always going to be saying buy or sell a call or put so there's only four things you can actually do now don't get intimidated by this screen I know it looks very complicated

to beginners only pay attention to the numbers I'm explaining because if you try to take everything all in at once you might get confused so as you can see at the top you can either buy or sell an option you can buy or sell a call or put option so let's talk about buying a call option on Apple if I go to buy call now I get to select the the strike price okay so I can pick a different expiration day so whether I go for let's just say we're going to go out into the

future and we're going to go for October 18 okay so if I click October 18 right here that is the expiration day this option will be good until October 18 okay that's when this option officially expires and that's it that's when you actually have your profit or loss if you hold the option to expiration now this may sound a little bit confusing but although options expire at a certain dates you're actually able to trade them before or after that experation date so let's say that I go ahead and I buy a call option let's go

to 190 okay you can see here if I click into this it will give me the option to buy Apple 190 call for 1017 expiration so the price that I picked here the 190 is called the strike price that's basically where I want Apple to go to so if Apple goes to 190 that means I'm going to break even all right if it goes above 190 that's where I can make money the expression is is 1017 that's when this option expires and that's it s r hopefully I go above 190 by the 1017 expiration or

ideally I'm way above the 190 call strike price so you'll notice a few other things on the screen right now so you can see that there is a bid there's an Ask okay if you're buying an option you will have to buy closer to the ask if you are selling an option you will have to sell it closer to the bid now we're just talking about buying an option right now so if I go to one contract and I go into this limit price and I click nine I'm picking nine because typically when you see

there's a bid and then an Ask you're typically going to get the middle price so right here it's $8.90 910 you're going to get filled right in the middle for $9 in most cases you can see here there is a Max cost in my program and my Discord Community I'm teaching people how to mainly sell options for income but for this example right here this is a buying strategy now I don't love buying strategies because buying strategies are very high reward but also a lot higher on the risk versus selling strategies we'll talk more about

that later in this video but in this example this will cost you $900 3 there's a little 3C fee regulation fee from Robin Hood now that they just recently implemented so if I go to review this order you will now see that I can easily just swipe up and submit this order and this order would buy me one call option for 190 strike expiring in October 17 2024 if you're watching this video the future by the way this is the same logic the same thought process that you can apply over and over again option trading

doesn't change in fact I've been using the same option strategies for the past 10 years and I've been very profitable now I want to go back here and talk a little bit more about mindset and how to manage a strategy just like this so if you go into the middle here you'll see that I have an expiration day that is October 18 all right now this is an option that expires many days into the future you can also trade options that are 30 days from expiration heck one week from expiration one day from expiration you

can even even trade options that are expiring on the same exact day that means that I have an option to buy Apple here that's going to be expiring in many months however I can also go to a different expiration day for example I can go for uh May 10 as I'm making this video that would be a very short expiration day you'll actually even notice here that if I click the 182 A2 call option here it's going to be trading for a lot cheaper it's only trading for $2.70 per contract see the thing is about

options the farther out you go the more expensive they get the reason why they're more expensive is a lot more stuff can happen from now until that long expiration day but if you buy options that are very shortterm they're going to be a lot cheaper and that's because the market knows and they're pricing in a proper premium to account for the risk that a buyer or a seller is taking now to have any option to buy any call option first I need to pay for it and this is what the number in the green right

here looks like so it's either 270 if I go out farther out of the money it's going to be cheaper it's going to be 148 or 71 cents even so the farther out of the money you go the cheaper the premium becomes you can see that the price is different for every single option the price of the premium is calculated based on multiple different factors one of them is the strike price the further in the money the strike price is the more expensive the premium is so if this option's in the money basically since you

see Apple's at 181 if I were to buy a call option that's at 180 it's going to be more expensive if I buy something that's 175 it's even more expensive because right here it already has intrinsic value see options are really pricey based on two two different things okay there's intrinsic value there's extrinsic value intrinsic is how much are we already in the money all right so here at 175 call option it's already in the money by $7 it's already in there Apple's already above 175 that's the intrinsic value now the extrinsic value would be

this if I go up to 190 34 cents right here is pretty cheap but why does it cost anything well there's no intrinsic value at all apple is not at 190 it's not really even that close to 190 but the reason why this has value is because there's a few other factors at play okay one of the factors is there is a chance that it'll go into the money there is a chance that Apple will go up and specifically as you see on the screen right here the Delta is2 that means there's a 12% chance

that this option will go into the money isn't that really cool there's a 12% chance you know exactly based on the Delta what the chances are of the option expiring in the money at expiration so by this expiration of 510 okay May 10th there is a 12% chance that Apple will be at 190 not that much however it's something that's why this option is so cheap because there's actually a small chance that it'll go into the money now this is one of the extrinsic values okay there's also some other extrinsic values like volatility okay if

volatility increases this option will also increase so what's really interesting is you can wake up one morning and realize that your options are worth a lot more money and that's because option volatility actually favors the option buyer so when the Market's more volatile options become better because you don't want to take the risk of buying shares you get a much better price just buying a small amount of an option and if the market is crazy this option can make a lot of money and that's why these options become more valuable with higher implied volatility in

the market to help you remember you can just think of in the money as all the strike prices that would be favorable to you where you've already made money if it were to be at expiration so if a stock goes up a lot let's say you have meta goes way past you know your strike price is let's say 500 and your strike price is 450 perfect that means you made a lot of money if you have bought a call option now on the flip side the further out of the money the cheaper the premium is

going to become because I'm only getting the option to buy the stock at a more expensive price than I could get it at the market today so if I'm going to be paying for an option I really don't want to pay that much because I'm essentially taking a bet hey this stock will go up a lot I think and I'm willing to pay x amount of dollars for it to potentially go up and if it goes past my strike price becoming in the money then I'm going to be profitable but if it doesn't I lose

whatever I put in for this option so you can lose 100% of what you pay for an option so for that to even be worth it I would need the stock to go up and be out of the money from you know being out of the money to becoming in the money and that means the stock may have to move 10 or 20% it just depends on your strike price but typically if a stock goes up by 5% an option can go up 10 15 or 20 even 25% easily and that's because with options you're

putting up a very small amount of money you do need the stock to go up a lot in the case of a call option but if it does go up a lot you start multiplying your money from let's say you know let's go over another example actually cuz I want to show you what this would look like all right so I'm going to pick an option let's say May 17 and I'm going to buy an option right here at 185 okay so you can see here that it says break even the break even is 18716

now the reason why you have this break even is you take the strike price of 185 and then you add $28 cents to get 18718 Robin Hood is kind of mispricing this by 2 cents here but at that point that's where you break even now if it goes up for example to 190 you have a total gain of 190 okay minus the 185 strike price which is $5 right you paid 218 you have a profit of five you doubled your money okay Apple went from 182 to10 it only moved up $8 but you however have

doubled your money all right if Apple went up to $200 all right you would have a total profit of $15 you have put in two so you went from $2 to $15 you have multiplied your money over seven times whereas a stock investor if the stock goes from 182 to 200 he has made 10% whereas you have made 700% so you can see how valuable an option can be also you do have to realize that if the stock goes to 184 the stock investor would make $2 however in this example you would actually lose $2

because Apple did not go into the money in this example you would be below the 185 strike price that you have purchased therefore you wouldn't make any money remember more out of the money means that it's riskier for you to buy that option therefore the premium is cheaper more in the money means it's riskier for the seller of the option and safer for you as the buyer so the premium AKA what you pay UPF front for an option is going to be more expensive the second Metro that determines the price of an option premium is

the expiration day so right now you have seen that I had an October expiration let's just say that we had an expiration of 30 days following the same principles of riskier options being cheaper premiums and safer options being more expensive premiums it's going to be way more likely that an option that is going to be more cheaper is going to expire a lot sooner and an option that's going to expire a lot later is going to be a lot more expensive it's also going to be way more likely that an option is going to become

more favorable for you you the longer the option is to the expiration date that's because there is more that can happen so the market perfectly has these options priced in and often times a lot of people do say that it's hard to trade options because a lot is priced in in fact one of my students asked me should I close a position and open up this one or this one they give me a couple different options and I usually tell them that both of these options are actually very very similar like if we go back

to the example of Apple being at uh $200 in market price and me picking a strike price of 185 AKA having an option that you know I want to buy the shares at 185 if I pick a really long expiration date like 2 years it's way more likely that apple is going to be at $200 or $250 in 2 years at the same point you know during the next 2 days it's probably not going to move anywhere so that's why the option premium is going to be a lot more expensive the longer there is until

expiration the third thing that determines option premium is how volatile a stock is now I've talked about implied volatility so basically if it tends to go up and down by very large amounts quickly compared to you know say other stocks that don't go up that much at all that stock is going to be deemed more volatile by the market okay like take Tesla for example Tesla is a pretty volatile stock because the price goes up and down a lot so the premium for Tesla is going to be more expensive than a stock which is very

stable say craft hindes you know they're selling some ketchup and the company is very stable it's not moving up and down and it's not as volatile as Tesla which is innovating it has a lot of deliveries one quarter and the next quarter you know Elon mus say something crazy and the whole Market reacts and the stock is moving up and down a lot so that implied volatility just going to be a lot higher that means the options are also going to be priced higher now that's a partially a good thing because if you're selling options

you get more premium and if you're buying options well Tesla moves up and down a lot so you could make a lot of money so it is fairly priced and the market is pricing in this extra movement to compensate for both the buyer and the seller so it makes sense for both because if we go back to an example like apple being at you know let's say 200 if Apple was extremely volatile and it went up and down by 10 20 $50 a day trust me this option would not be worth a couple of dollars

it would be worth tens if not $20 because people would be scared who in their right mind would sell an option on Apple you know right around where it's trading at right now if the stock was moving from 200 down to 100 down to 50 if it was going like this trust me that premium would be very high it would have to really compensate an investor for wanting to sell that option because again this is a game of both buyers and sellers so they both want to be correct and they both want to be compensated

fairly for buying and selling just like everyone in the world wants to be compensated fairly so does the option market now here's where options get really crazy really powerful and potentially really dangerous but only if you don't know what you're doing remember at the beginning of the video when I said the stock comes in the form of shares but options come in the form of contracts well one contract actually does not equal one share one option contract actually controls 100 shares of whatever stock that you choose but this is different from just regularly buying 100

shares of Apple stock because if I want to buy 100 shares of Apple stock that's going to be $177,000 but if I buy an option contract as you already saw it's a couple hundred you're putting up a very small amount of money to get a very huge benefit and if I up this to two contracts now I'm going to be able to share or control 200 shares three contracts to 300 shares and so on but let me bring it back down to one contract for now so if we compare the Hefty price of $177,000 Upfront

for the stock versus a total premium upfront of the option contract which is2 $0000 what is better what seems better to you it seems crazy right what's the catch how can this option cost $200 and give you the same value well that all depends on moneyness is it in the money or is it out of the money and yes I know even from the looks of it it can be really crazy risking $177,000 UPF front most beginners don't even have $177,000 to buy 100 shares even you know if they could buy $177,000 worth it might

be really scary but an option contract that costs $200 is a much easier way to get into the market and learn about trading and not have to have all that Capital to really learn with you can start scaling with just a couple hundred in fact I have many videos on this channel about scaling a small portfolio and actually specialize in taking $7,000 you know to $10,000 accounts up to 20 and even $30,000 in one year and that's in my Discord program I call that my small account scaling challenge so let's keep going the regular stock

you're essentially risking $177,000 but for the option the maximum amount of money that you can lose is the premium that you pay for that option you can't lose more than the premium if you pay $200 that $200 is gone but the good news is you can't lose more than that $200 either that option is going to make you a lot of money or that option is going to lose and you're going to lose your $200 again not more than 200 if you put 200 in because remember that you have the option to buy the stock

at that strike price okay if you buy a $200 strike call option you have the option to buy 100 shares now look you don't have to actually buy the 100 shares again if it goes to expiration the stock is at 250 the call option means that you're buying 100 shares however before right before expiration or any time before expiration you can just sell that option it's going to be a lot more valuable than buying 100 shares especially if you don't have the money to do so and now you might be wondering well what is the

catch what are the downsides of how this trade could play out that's exactly what I'm going to show you right now so let's go through some actual real life scenarios and I'll show you how they can play out all right so now we're going to go into my portfolio and we're going to look at a stock that is potentially attractive for buying a call option now I'm going to be a little bit more serious and instead of just making an example I'm actually going to show you something that I actually want to do when the

Market opens up and why I want to do it first of all you can see I do have many options here and apple is one of my favorite positions so I'm going to go through my watch list and by the way you should have your own watch list if you want to be a successful investor you don't want to look at whatever is hype you want to look at a specific stock list that you build of stocks that you really like and that you believe in so for example I actually want to take a look

at Starbucks because recently if I look at the one month chart you can see that Starbucks went down 177% in the past month they didn't do so well now some people might say oh wow the stock is going down but look nobody actually knows what happened in the past is the past what's going to happen in the future nobody knows not Warren Buffett not a billionaire really nobody but I'll tell you this when a stock goes down by 177% in 1 month that's actually a very good time to potentially use the option buying strategy of

buying a call option because let's say that this stock may have a shift in momentum okay what that means is stock is going down down down down and instead of buying shares which could be a little bit scary some people call call this a falling knife okay it's a falling knife the stock is going down you don't want to catch it you might feel that pain you might say oh I I bought it at 73 and now it's at 63 it goes down $10 more you might feel stupid you might feel that this is really

risky and in many ways it is but a call option would be very different here a call option you put up just you know a couple hundred as we mentioned and let's say that the stock reverses and it goes back from you know 73 back up to you know let's not get overly optimistic and say it's going to go back up to 88 but let's just say that in the you know not too far future it might go back up to you know maybe 83 84 something like that heck even 80 that's fine as well

so here's what you would do you'll go to trade trade options and in fact I'm actually very very interested in purchasing an option like this I think that it's a very good idea especially right after a stock has a lot of disappointment because what happens is when a stock has a lot of disappointment and the whole Market basically sells off that stock a lot of people lose confidence well that price is already really depressed people went from enthusiasm and ecstasy and excitement down to to really depression and not having any hope that's actually a good

part a good time to buy a stock or a good time to buy an option because that option is undervalued in many ways okay and in many cases people are not so optimistic and when they become more optimistic about the stock the stocks price you know will go up and the option will also go up in value so again I'm going to look at an expiration now this stock went down a lot really quickly so what I want to do is I don't want to pick a short-term expiration if I were to pick an expiration

really shortterm I'm not giving myself enough time for the option to actually make money or the stock to recover so what I'm going to do is I'm going to pick an expiration day that gives me some time so let's go for July 19th so as I'm making this video that's going to give me about you know 2 months all right so again I said that I think this stock can go back up to you know maybe $80 all right maybe $8 per share so what I would do is I would buy call as you can

see here I'm at buy call and I can have a few different options okay I can go for an in the money option so I can go for 65 okay you can see here the break even would be $74 I can also go for 70 I can go for 75 I can go for 80 but 80 wouldn't make any sense right cuz we just said that our base case scenario is that we think the stock will go back up to $80 so buying an $80 call doesn't make any sense because if it just goes to

80 we can't make any money it's not going past 80 therefore we're not going to make money since we're not going to be in the money at expiration now a common question is why don't you just keep going lower why don't you just buy something like the $40 call well the truth is you actually can you can buy a $40 call and you can see here the break event is actually pretty good it's at 73 okay now the thing is you do have to put up more money so you can see here that the premium

here is $35 which would actually be $3,500 because um each option is worth 100 you know shares so you wouldn't really want to do that you would want to pick a kind of a sweet spot so that sweet spot for me would be about 70 or 75 let's use 75 as an example so if I were to buy the $75 call here which would probably be my number one choice I would go for this this would be a slightly out-of-the money option so if I buy the $75 call and I spend $224 for it that

means that if the stock goes up to 80 here I'm going to have a $5 gain okay I'm putting up $224 so I'm basically turning $224 into $5 doubling my money so if I go into this right here I just buy 10 contracts I can put in $2,240 and my maximum gain will actually be $5,000 and I just said maximum gain I meant we will make $5,000 if it goes to 80 our actual maximum gain is going to be unlimited you can see right here the maximum profit is unlimited because if Starbucks goes to 85

90 200 a th000 you keep making money as long as the stock is going up so you don't have a cap on how much money you can make however you do have to understand that there is no way that Starbucks will be $500 per share by you know next couple of months there is absolutely no way that is actually impossible because the stock I'll show you how to actually think about this if you look at Starbucks right now you can see if I scroll down here that there's a different statistics and the market cap is

82 billion there's no way that a stock can basically double its market cap if it's already a big company so this company Starbucks can't go from 82 million billion to 164 billion that's just not going to happen so you do have to be logical with how you're trading options you have to understand where the stock can potentially go and we will talk about that in this course when we go over the tech technical analysis section so let's go over some scenarios so you understand exactly what can happen different scenarios and how they can play out

so again we're going to go to the July 19 expiration and if I click the 75 here let's go over what can potentially happen Okay so if the stock is say below 75 let's say that Starbucks actually goes down in value from the current $738 to 71 69 65 whatever all of that is going to be meaning that you're going to lose the $2 24 that you put up you're going to lose it if Starbucks is below 75 you're done you've lost the money okay that's the first scenario if it's below the strike price you

will lose money now if it hits 75 you actually still lose money because even at 75 you have paid $224 if it is at 76 you've made a dollar but you've spent $224 so you still lost $124 if it goes to $77 then you have made $2 but you paid $224 so now you lost4 so you see you need the stock to go to $772 to break even and then you are making money from that point on so if the stock goes to 80 you made $5 you paid $224 if it goes to $90 you

have made $15 okay and so on and so forth you can use this basic math to understand how much money you make so we just had gone over how to buy call options but there's a whole another side of it which is selling call options so the option seller is the one who writes the contract in the first place for the option buyer to choose from okay so the option buyer is choosing a strike price and that seller is also picking a strike price and expiration date and all that stuff to you have to pick

the strike price that you're comfortable with selling the shares of stock so when you're buying a call option you're saying hey I want to buy shares of this company at 200 okay but when you're selling a call option you're saying I'm ready to sell shares at 200 your strike price okay so when you're selling call options you can't just sell a call option the reason why you can't just sell a call option is because you do need the shares with the buying a call option you don't need the shares just buy the call option you're

good now when you're selling a call option you do need 100 shares this is a more amount of money that you have to invest so covered calls are I wouldn't say they're more advanced they're very very easy however you do need more Capital to write or to sell a covered call when I say write a covered call or sell that's a synonym okay so writing and selling is the same thing you're selling a call option now if you were just to sell a call option option to the market you'd be at very high risk cuz

remember the call option buyer who buys the call option has unlimited upside they can make as much money as they want so if you were just to sell a call option that'd be risky you would be potentially giving yourself unlimited risk which I would never recommend I would not recommend you do that plus you're not going to be able to do that anyways your broker won't allow you to if you're a beginner you must have a very large portfolio size like myself to sell Naked call options it's called naked call option selling okay don't recommend

it unless you're Advanced unless you been coaching with me for over six months so let's talk about now how this looks like okay again you need 100 shares to sell a call option if you own 100 shares those shares rise in value and you have a a covered call or you've sold a call option that's okay because if that call option goes up in value and that person wants to basically get shares they want to exercise their rights the buyer of the call option you're covered you're covered you have the shares to give to him

okay if that stock goes up a lot that's okay because you have the shares to give to that person whereas if you just had a naked call option you don't have the shares so if he wants to buy to exercise his rights you're in big trouble the another different thing about selling options is that you get paid Upfront for selling the option that's right instead of having to spend money you actually get paid get to collect income instead if you remember the premium that the buyer had to pay up front and how the premium goes

up when the option is more likely to be favorable for the option well that's also true for the seller as the premium gets higher it's more attractive for the seller to actually get paid that premium that premium is what you're getting paid Upfront for for the risk that you're taking because the risk is for a covered call or selling a call that you may lose shares of the stock NOW the good news is your risk is actually losing the stock at that strike price so for example if you buy a stock for 100 and sell

a covered call for 110 well you risk losing the stock at 110 but the thing is that could be a good thing what if you want to sell the stock for 110 anyways that's why selling options can be very favorable because you get paid to sell an option and then you also get to pick the strike so you have full control you have so much control as an option seller you know exactly the strike price that you want to sell at whereas the option buyer you have some control of course you know what strike you're

going to buy at but you don't know where the stock is going to move and the other scenario of selling options if the stock doesn't really move anywhere it just goes sideways that's fine if it goes down well that's not great but if you were to own the stock anyways well now you're still losing the same amount of money but you get the option premium so you have collected income regardless if the stock goes down you have income if the stock goes sideways well that's fine you got paid income and if the stock goes up

you still get paid but now you just have to give up your stock so for example if you pick a really far out of the money option and you pick a really far out of the money strike price and this case of a call option that means that the strike price will be way above the market price so we'll be very unlikely that the stock will shoot up that high meaning that is actually not very valuable option for the option buyer that means that the premium upfront that you will be getting is actually pretty low

however it's also very safe and consistent it's actually just some income in your pocket and most likely you won't even lose your stock anyways so in this scenario you can collect some income every single week every single month or every couple of months by selling options and not even lose your stock that's actually the way that I like to go about it and we can see that if if we look into my Robin Hood app right now I'm going to pull up some examples and show you how collecting income actually works and how much money

you can actually make on a consistent basis all right so we're going to be looking at palen here this is another example I do have some shares of palent here right now I have currently a little bit over 3,000 shares which makes up about 4% of my portfolio value so if I go and trade Palance your options actually you can see here this is actually a perfect example because I'm currently running a covered call strategy you can see here how I have sold the $25 call options so right here you'll see that I have sold

$25 calls and they're currently worth $18 cents but let me just show you an example from scratch so if I go to trade trade options okay and now I'm going to show you what selling a covered call looks like so let's just pretend we have 100 shares of P here so now if I wanted to I can go out about a week so let's go to a week out and I go to sell call this time so instead of buying calls now I am clicking sell call so if I wanted to sell a call let's

say I want to sell with a strike price of 242 I'm going to sell here 24/2 now you will notice that if I click continue and I go for one contract I can actually make $132.92 or basically $133 by selling one call option at 242 that's for one week so I can start making $130 per week just from 100 shares of pound here which wouldn't be too expensive buying 100 shares would be about $2,000 something dollar the further into the money that I go the higher that I get paid you can see right here that

makes sense by you know going down 24 232 23 the premium is increasing and also if I did want to increase the expiration days so let's say that I wanted to go out all the way to January 2025 you can see here how the premium is actually really really big so you can buy 100 shares of pounds here and then you can sell a $25 call option you would actually get paid here over $400 and you're only putting up about $2,000 so you know you're getting 400 you're putting up 2,000 that is a percentage return

that is over 20% for one year if I choose a longer expiration day like 2 years out the you know the premium is only going to go up and you know the stock is more likely to basically go up to that strike price so you are more likely to make money when you do go farther out that's not as exciting but that is more consistent if you want to sell options that expire way into the future you will get paid as the option seller because well you're getting paid for the risk of potentially losing your

stock but again losing it is not that bad because here it doesn't mean that we lose any money on the stock itself we're still buying the stock for $24 per share and then we're selling it for $25 per share and we're getting paid to literally sell the stock for more money so the only real risk here and this is not really risk it's more opportunity cost if paler or whatever stock you're running the strategy on go goes up a lot well you don't necessarily get to make all that money you get a predetermined price so

here you get $25 plus the $4 which would be the $29 um as your break even it doesn't mean that you start losing money when it goes up it just means that you can't make more money the reason why you can't make more money is you will get a sign for sure someone will want to buy the shares from you you will lose your stock and when you do lose your stock well you basically lost it at 25 and then you got paid $435 for this trade so you have a basically guaranteed exit if the

stock goes up now this is the fun part let's see what happens to me as a seller in different scenarios I'm going to be using some real numbers here because I want you to understand exactly what will happen in different scenarios so if it goes up to just 25 exactly my profit would still be the difference which is 25 and the 2416 so I'll make $86 $84 excuse me plus the premium of4 $135 so while the stock investor only made you know $80 you know $5 or so I've actually made the same $85 plus $400

so I have gone way better than just a regular stock investor if the stock goes up to 26 or 27 or 28 I'm actually better off in all of these scenarios until 2940 which is our break even price from there I won't be better off than a stock investor but I will still be pretty good off because I'm still going to be ending up with a good return that means that you as the option seller basically are agreeing to sell the stock at a certain price you're getting paid for that contract and then you pick

the expiration day so you pick how long you want to wait so if you want to go really short term in expiration you can do weekly option trading and make you know $100 a week or so based on $2,000 which would be an insanely High return it may not seem like it's so much money but at the same time if you're consistently making that amount and you scale your portfolio you will get into the retirement Zone you'll be able to replace your income and you'll be like many of my students who you know I have

a student named Denny he was in my program years ago but I like to bring him up because he was a one-trick pony he had one option strategy he had $300,000 and he was making $6 to $110,000 per month consistently every single month for basically 12 months per year now he does have some hiccups here and there and that's because basically the market does go up and down and you know sometimes we don't have winning months if I told you every single month was a winner I'd be a complete liar but in the example of

Denny he's doing really good consistent income just based off one strategy so this option trading stuff you may think it's hard but it's really not as long as you master this stuff which doesn't take that much time you just need to master the fundamentals the basics basically the simple math you don't have to have any high level of mathematical ability you just have to sell for example a covered call you can make $5 to $10,000 per month now for this example and for basically collecting premium what you want to consider is that collecting more premium

is better in most scenarios however you don't want to go for in the- money options because here with the covered call it's a little bit different when you go for an in the money option you truly are cutting away some of your opportunity to make more money because in this scenario if I go to let's say 23 my break even here is 25 which is okay but it's not really giving us that much upside you always want to go for a slightly out-of-the money option so what I would do is I would go for 242

I would go for 25 I would go for 26 I would give yourself some room for upside because not only do you get the premium but you also get some upside for the stock itself now in this scenario that the stock goes down again you will lose money but that is just the basic laws of how the market works if the market goes down you will lose money regardless of what Market you're trading not even option trading in any Market even if it's used cars you will lose money when the stock market goes down and

that is just something that you have to deal with and the way I get through this is I'm always dollar cost averaging which means that I'm always buying more when the market goes down or I'm simply being patient and waiting for the market to recover I do have a story where I actually got my father into investing and I have been telling him that he needs to dollar cost average and he didn't really listen to my advice he said I'm going to wait and see if it recovers but the thing is with dollar cost averaging

if you buy a stock at 100 and it goes to 90 it is really really smart to buy more at 90 because that way you are reducing your cost from 100 to9 5 well if you buy one share for 100 and you buy a second share for 90 your average price is now 95 so all you need to happen is the stock needs to go back up to 95 for you to have a break even but if you don't dollar cost average and your average price is 100 and just goes down to 90 now it

goes back up to 96 in the first scenario of dollar cost averaging you would actually make a dollar the second scenario of not dollar cost averaging well you didn't make your money back however it's totally okay not to dollar cost average if you just don't have the money it is okay because the market does go up on a long-term basis and option trading the way I do and the way I teach it to my students is that I want to go for safe passive consistent income and even in the worst case scenario I just have

a simple matter of time to break even so if the market is down actually options are really good because they're hedging your portfolio so when you're doing a covered call strategy you're actually more hedged than the average stock investor so when the market goes down you're actually losing less money than the market so it's actually very beneficial the way that I trade options is actually safer than Stock Investing it's safer than really any form of you know crypto or futures or any other investment vehicle I prefer options because not only can I make good high

income I can also do it at a relatively low risk now this isn't as low risk as just putting your money in the bank and just getting a you know one or 2% return but also who cares about 1 or 2% we're after 20 30 50% per year I've had years in my trading account where I have 7x my money where I've taken $100,000 into $700,000 I did take a lot more risk I was a lot younger but that is very very possible to scale a small portfolio very quickly so look as a buyer if

you're buying options you just need enough cash in the case to basically buy that option so if I were to be an option buyer and I go to buy right now you see nothing really changes I mean just a little bit it goes from a dollar on the 25.5 call to basically A1 and4 that's just the basic bid ask spread price so if you look right here I clicked in here you will see that there is going to be a bid at $1 and an ask at 104 and that's what I mentioned in the beginning

of this trading video is that if you're going to be buying you're going to have to be buying closer to 104 and if you're going to be selling you're going to be selling closer to one which is the bid price now you might be thinking as a seller if I have the chance to be forced to sell 100 shares of a certain stock in the case of the covered call option that we are talking about or selling call options then what happens if I don't own 100 shares of stock which would be really expensive you

know in the case that a company goes up a lot like apple do I need to have 100 shares the answer is yes in covered calls you need to have 100 shares and selling calls you need 100 shares in buying options you never need the shares you can buy options all day whether it's a call or a put as we will talk about shortly so it does depend on the type of strategy that you're using but in almost all cases you don't need 100 shares unless it's a covered call option the other scenario with would

be selling a put which we'll talk about later but you still don't need the share so you can basically get the idea of needing shares out of your mind and just treate options as a standalone vehicle aside from the covered call strategy so you know what we're talking about the covered call strategy is you do have to own 100 shares of stock and that's because you are covered that's why it's called a covered call because in the worst case scenario you are covered to not losing money if you don't have the money to buy 100

of your shares of stock you can also borrow money from your brokerage that you're trading on this is called selling a call on margin and yes you can also buy options on margin as well it can be very very risky to trade in margin because you're using money that is not yours that means if you lose a lot of money on a trade you're going to be in a really really bad spot for this reason I don't recommend that you use margin unless you have a very high level of trading ability and you also have

a bigger portfolio I do work with many clients that have a biger portfolio and we do lots of margin trading in a safe way without even paying any interest that is in my Discord program again feel free to join that in the first link in the description if you want to learn more now I want to mention a few more things that you really need to understand on some platforms you can sell Naked calls which means you can sell a call without actually owning 100 shares of stock this is very rare because Robin Hood won't

let you do that and many other brokerages also won't let you do that based on your account size as well as your level of trading ability so if you have a level one option account level two trading account you won't be able to do this you need the high highest level of permission in your brokerage account now I'm not an expert on thirdparty brokerages but you can always call your broker and ask them how to get that I personally prefer to focus on much safer really consistent option trading strategies myself because I want to go

after consistent income I really want to rely on option trading to fund my lifestyle I am traveling a lot and I'm renting and really living a life based on my option portfolio so it's really important for me that I have a consistent source of income for me U making over $80,000 per month trading options however you know in the beginning my goal was just to make $2 or $3,000 so I could pay for my rent and that brings me to a really good income right now but it wasn't always like that it has to start

somewhere so hopefully I'm part of your journey of starting option trading and really opening up your mind to the potential to making a lot of money with this one day even if you start off with making $100 a week that's a fantastic Place to Start never feel shy or embarrassed about your starting point because we all have to start somewhere so I'll show you more of that process later on in this course so hopefully now you're starting to understand how both sides of a call option works whether it's buying and getting that unlimited upside or

selling a call option which means that you do have to own 100 shares of stock and you're still both in both scenarios picking a strike price where as a call option buyer you're picking a strike price to you know purchase then hopefully that stock goes up and as the call option seller you have a strike price that you kind of Hope does not hit you hope this stock goes up toward WS that strike price but you hope it doesn't really go too much past it because if it goes past it then you have to lose

your shares if it goes towards it you're making money on the stock and you make money on the premium that is the perfect case scenario so again let's say that you have a stock at 100 and then you sell a covered call at 110 you want that stock to go up to $109.99 if it ends there you're going to be a very happy camper because your stock went up by $9.99 but it didn't hit the strike price so that call option buyer he lost everything as a call option seller you've already been paid when you

sold that option so you're in the perfect case scenario and the seller receives a premium up front but has to sell 100 shares of stock at the strike price if the buyer chooses to exercise it which they will if the stock goes up into that strike and this all has to happen within the expiration date if the option expires without the buyer exercising it the seller gets to keep the premium and their 100 shares cool so now that you know call options let's talk about put options how do put options work well a put option

is essentially the opposite of a call option there's still two sides there's a put buyer and there's a put seller there's always going to be a buyer and seller in all option trading scenarios the buyer is buying an option to sell the stock at the strike price that they choose so unlike call options a put option bets on a stock going down so when you buy a put option you want the stock to fall this is why options are so awesome because as a stock investor basically only make money when the stock goes up okay

with options when you buy a put you want the stock to to fall as it falls you actually end up making money so remember with the call option the buyer is buying the option to buy 100 shares of the strike at the strike price and with a put option the buyer is buying the option to sell 100 shares at the strike price since a seller of the put option is selling that option to the buyer if the buyer decides to exercise their option to sell their 100 shares that's fine that is how it works so

the buyer of a call wants it to go up the buyer of a put wants it to go down and they want to sell their stock so in one scenario they want to buy the stock in the other scenario they want to sell the stock so the seller of the option must buy the stock from the seller just reversed so just think about it like this when you buy a put option it goes down you make money when you sell a put option when it goes down you do get income but now you have to

buy it from the buyer now as you may have guess the price of the put options premium works the exact same way as it does with call options the more favorable it is for the buyer the more expensive the premium is going to be the less favorable it is for the buyer AKA more risky the cheaper the premium will be so let's go through some examples right now A put option gives the holder the right but not the obligation to sell Starbucks at the price that you choose the strike price within a specified period of

time this means that if the price of the underlying asset decreases below the strike price the holder can still sell at the higher strike price thereby profiting from the decline in the asset assets value I'm going to give you an example right now so Starbucks stock price $73 and you buy a long put option with a strike price of 70 okay you pay a premium for the put option let's just say you pay $1 hypothetical example as Starbucks Falls to $65 per share here's what it's going to look like with the stock price dropping below

the put option strike price of 70 the put option becomes in the money so for a put option it's in the money when the stock drops below the strike you know for a call option it's in the money when it goes above the strike so for a put option you want it to go down when it goes down you are making money so this means that the holder of a put option now has the right to sell Starbucks shares at the higher strike price of 70 so if Starbucks comes Crashing Down You're perfectly fine with

that because you get to sell it at 70 no matter what because you own that put option even though the market price declines and it goes down to 65 that's perfectly okay so the put option holds can buy shares at the market price of 65 and then he can sell at a higher price of 70 realizing a profit of $5 since each option contract typically you know in all cases represents 100 shares the total profit would actually be $500 the $5 time 100 shares so deducting the premium paid for the option which we said was

$1 or $100 that means we have $500 of profit minus the $100 that we paid which gives us $400 of profit that's the first example and the first scenario I have two more for you about how a put option works if you're buying them by the way before I get into the second and the third example I want to say this is a really good time for you to subscribe I would really appreciate it plus it will really help you out because I have a lot of videos that are coming out on a frequent basis

teaching you how to make money option trading that's all I really ask let's do another example another scenario the long put option in the prior example that we just did was you know basically making us $400 but in this example what I want to go over is going to be a different stock so let's take apple okay let's say that apple right now is around $175 and we're going to buy a long put option with a strike of 170 okay so we're at 175 and we're going to buy a 170 strike okay we think that

the stock is going to fall down we're going to pay $2 for this okay a little bit higher premium here and let's just say that the stock does fall down but it only falls down to 171 okay so here's how the scenario unfolds since the stock price is above the strike price the put option remains out of the money the holder of the put option doesn't exercise the right to sell the stock at the strike price because well it's not profitable to do so in this scenario the put option expires completely worthless as its holder

wouldn't really exercise it there would be no point there's nothing to exercise there is no intrinsic value and there's actually no extrinsic value either when the option expires there's no more time left so it is a complete loss when the market price is above the strike price in the case of buying put options the loss would be the premium paid for the put option but good news is you can't lose more than what you pay when you're buying options therefore in this case the net loss per contract would just be the $200 that you paid

the $2 time 100 shares for each contract so $200 would be your loss Apple stock price fell from 175 to 170 however it did not reach our strike price of 170 so this is an example of a put option that you can buy where you know whether you want to hedge your portfolio whether you just want to make money on the put itself right that's fine there's two different ways you can make money when buying puts you can make money by the put option going down or you can save money when the stock goes down

you actually hold the shares and you're able to get out of the shares with your put option you're able to actually exercise a long put option and get rid of your shares but um in most cases you will probably be just buying a put option so if you're just buying a put option you would experience a full loss now I want to go over another scenario scenario number three we'll just pick any other stock maybe Chipotle $3,000 okay you buy a long put option strike price okay and you buy a put option for $2,900 so

the stock is at $3,000 you buy $2,900 put and uh you pay $100 for the rights basically of buying this put option okay now let's say that the stock does fall below your strike price it falls from to 2850 okay so the stock was at $3,000 you bought a $2,900 put and now the stock falls down to$ 2850 so you're in the money by $50 but here's how the scenario unfolds with the stock price falling down to 2850 and act actuality you are in the money by $50 however because you have paid $100 in premium

to get into the option right you bought the option for 100 even though it's in the money by 50 you actually still end up losing because the premium you couldn't compensate for you couldn't make enough money on the downside to compensate for the premium so in this scenario when the stock goes down from 300 to 2850 and your strike price is 2,900 yes you're in the money by 50 but because the premium pay was 100 okay the 100 per share the net profit here would actually be a loss of $50 because you have $50 in

profit but you paid $100 in premium per contract since each option contract is 100 shares that means that this would be a net loss of $5,000 so buying put options can actually be really expensive and you can lose quite a lot of money so you want to be very careful to have proper position sizing and risk management in place which I will talk about very shortly in this video actually let's talk about it now now that we've learned how to buy put options well you can just start buying them right but you know it's really

not that simple as you saw in the scenarios you can not only make a lot of money but you can also lose a lot of money so you want to be very careful about how you go about buying options with a put option it's just like a call option if it doesn't reach your strike you lose the amount of money that you pay for the option the good news is that again you can't lose more money than you pay for it and you can recoup some of your loss or some of that premium if it

goes slightly or partially in the money so you can make varying amount that's where actually risk management comes into place that's where taking profit comes into play you may not want to hold the option until expiration often times when a stock moves towards my direction towards an option that I'm buying I will almost always typically pick an exit point so for me an exit Point may be when I have a 50% gain when I have a 75% gain or maybe even when I have doubled my money so let's say that I spend $1 on an

option contract so $1 on a buy put if that put option now becomes worth $2 in a short amount of time now a short amount of time just depends on the total amount of time so for example if I'm trading a onewe option then a short amount of time might be a day or two but if I'm buying an option for 6 months out a short amount of time may be 1 month so a short amount of time is really relative to the holding period in general so this is really important because this is how

you risk manage this is how you take profits properly is for option buying you almost always want to close this position and have an exit plan as soon as you have an entry plan so it's really important to understand hey I want to enter at this price okay so you want to buy a apple 170 put you think Apple's going to go down that's good but if Apple goes down to 170 as we saw in our scenario we may not have a profit because there's still a lot of Premium at expiration however before expiration if

it's only one week in and there's still three more weeks left that's a really good move and if it goes into 170 you're not really in the money yet you're at the money you can even be a little bit outside of the money on a long put option option you can be at 17050 which is 50 Cents out of the money however this put option might already have a gain if the put option already has a gain of 50% or even more than that you may discuss with yourself and say hey self I think this

is a good time for me to take profits I'm very happy with the return that I have so far and in this case I would say that that's fine to take your profits you can take profits early and often there's never anything wrong with that so I do want to dive into some techniques that can help you limit potential losses as well as looking at a stop loss or a stop limit order all right so we're going to jump into my Robin Hood right now and I'm going to show you an example of how I

would run a buy put on Starbucks okay so I'm going to go to trade options and what I'm going to do right now is I'm going to pick a put option for the future so let's say that I'm going to just go out for something like July 19th let's say that I think Starbucks is going to fall further for whatever reason let's say that I think that people are going to drink less coffee I think that the balance sheet isn't looking good they have a lot of debt whatever the case is you want to find

a stock that you are bearing SE it's also really good to find stocks that have bearish momentum on the downside so talking about technical analysis which you know we'll get into a little bit later all right so let's go to buy put so we're going to go buy put and then I am going to pick something like the 70 okay so if I click right here you will see that I have a highlighted and the premium is $144 so I have to pay $144 to hedge 100 shares of Starbucks now remember when you're buying put

options you can either make money on the option itself or you can also hedge your portfolio if you're you already have Starbucks stock let's just take scenario number one because in almost all cases you're just buying to speculate you're buying to make money you're not buying to really hedge your portfolio although you can use this and I do have some training on this but let's just focus on scenario number one you're buying a put option to basically make money on the option itself okay so if I go right here you can see here how at

the top right I have a few different things I have a limit I have a stop limit and uh basically that's it for uh for this position so what I can do with a stop limit right here is um I can trigger a limit order if the bid price Rises to the stop price so if I click right here you can see here now that I can set a specific stop price okay so um in this example I can go and and I can type in let's say 1 Point U 1.42 and then for the

Stop price I can say hey I want to be stopped out at X price now I'll be completely honest with you stop prices and um just in general let me go to another limit order so you can also do a limit so you can buy order at a maximum price or lower so you can say hey let's say it's at 140 I want to buy it at 130 I don't want to pay more than 130 in that case when you set a limit you actually won't get executed on this trade at all until it reaches

that 130 so you can say to yourself well I'm only willing to pay x amount of dollars you can set a limit order you can also set a stop limit basically saying that hey I made x amount of profit I want to stop here and Robin Hood or any brokerage can trigger a specific order to actually get executed at a different time based on a on a price that you pick now I'll be honest I don't typically uh do this and you can do good for day you can do good till cancel you can basically

have these orders um automatically making money for you say that you're at work you're busy you can say hey I want to get in at this price I want to get out of that price so you can set predetermined prices for yourself in the future however I will say that my typical risk management strategy is to not necessarily use stop limits or uh stop-loss orders but more so limit my position sizing so position sizing is the most important thing you can have some losing trades if the position size is small it doesn't really matter and

if the position size is really big that can be the end of your portfolio so you really do not want to do that and you can take an example like losing weight you can have a little cheat meal here and there you can have a you know cookie a snack but if you end up eating if you end up going on a binge eat and you eat a whole cake worth you know 10,000 calories that's going to set you back the same thing with trading if you end up making one bad trade it can set

you back quite a lot so you want to make sure that you have proper position sizing which for me can be anywhere from 1 or 2% of your portfolio for option buying now when you're option selling it's a whole different game I have lots of videos on this YouTube channel talking about option selling which is primarily what I do to make currently around $80,000 per mon selling options so that's what I do but when it comes to buying options you want to be a lot more conservative a lot more safe when buying a put option

you honestly want to have a small position size like I said but you also want to like really limit it to one two or three contracts or if you want a protected position that you already have a put option can perfectly get you out of a position you already own because you get to pick a strike price and basically exit a stock at that strike price however many shares you have so if you have 200 shares you can buy two contracts again this gets a little bit more complicated and that goes into the hedging territory

of using put options you can simply just make money by buying a put option and selling a put option as it makes money selling puts is by far one of the best safest and most consistent strategies to make weekly income and option trading this step-by-step guide will help you better than any other video and I'm going to be showing you proof if you know the right time to sell puts you can collect a ton of money from premiums with very little risk so first I'm going to explain to you very simply how selling put options

works then we're going to get into the stocks and indicators that I look for when I'm about to sell some put options and lastly to show you real life proof trading so you can get examples and see how I do it in my own portfolio I'm going to be doing some live trading and collecting income and you'll be very surprised how much money I can make in just 20 minutes I'm going to be selling puts live I'm going to see if I can make $5,000 or ideally even more than that in this video let's keep

track on the bottom right somewhere here and let's get educated on consistently making money option trading so get ready let's flood your pockets with some money firstly there are two reasons why you're going to want to sell put option contracts one to generate income and two to buy shares of a stock at a a cheaper price than you can normally get them on the market imagine that a stock is trading for $165 you can buy that stock cheaper than the current price of the market my ebook talks about selling puts in detail and I'm going

to give you the number one secret to this strategy which is actually my number one strategy a put option is simply a contract between the buyer and the seller the buyer of the put option will have the option to sell 100 shares of stock to you as a seller at the strike price and of course you can pick any strike price you want to potentially buy the stock at that strike price if you do get ass signed so keep in mind that you want to be comfortable with buying 100 shares per option contract of a

stock that you get to choose you are in full control but you must make sure that you do like the stock because if you get ass signed you will own 100 shares so selling puts can be expensive because this is one of the strategies where you do need to have 100 shares of capital ready to go so if you have a small portfolio you will have to icted cheaper stocks such as Hy paler Neo under $5 of course American Airlines and well other stocks that meet your portfolio size so you have proper position sizing and

you don't hinder your risk management and the best part about this strategy is that you'll get paid to sell the option to the buyer at worst you will buy the shares for cheaper in either way your cash will grow in your account remember the buyer has to pay you a premium to have the option to sell shares to you at that strike price the option buyer is paying to have that right here's an analogy to help you out puts are basically like you're an insurance company you are charging a premium for the risk of the

stock falling down and you having to buy that stock at that strike price you are becoming a mini insurance company that can print your own money in the form of Premium that you are collecting the way it works is you collect a bunch of money up front when you sell a put option and some of the trades you will lose again we can't be perfect here I'm not perfect I make mistakes all the time and just in trading if you have a high win ratio you win more trades than you lose you will come out

profitable so in this example what you want to do with this strategy is you will be collecting money up front some of the trades you will lose but your winners will far exceed your losers if you follow my step-by-step instructions as well as learn from the live trading that I'm going to do shortly so let's use some real numbers to help you understand Microsoft is currently trading at $410 per share right now let's say that you think Microsoft is at a low right now and you don't think it's going to go much lower in the

next 30 days so what you want to do is you want to sell a put option contract on it you picked the strike of $45 which means if Microsoft does happen to fall below 405 you have to be comfortable to buy 100 shares at that price but you won't mind that because you think Microsoft is going to be going up you love Microsoft long term you think that it's at a pretty good good low so you will be happy to buy it at 405 it's currently at 410 so you're going to get paid to buy

it for $5 cheaper than where the market is at right now seems pretty much like crazy right like why would someone do this well someone else out there in the world thinks that the stock might go down a lot lower they may be right or they may be wrong either way you are happy making this strategy in this trade and let's open up Robin Hood and see what I would actually get paid if I decided to sell the put option so let's pick a strike price of 405 all right so I'm going to go to

trade options as I usually do trade options and then I will go for something very short term so I'm going to go very short term here we'll go actually to you know we'll give it a little bit of time so let's just go to the end of the month which is just a couple of weeks so if I go to 405 right here you will see that the premium collected is $480 or $480 so right here I can actually make a 1% return now I know this is 1% because I'm putting up 405 and then

1% of 405 is going to be about $45 so this actually over 1% return I'm getting paid over 1% and under 30 days to buy a stock that is going to be a very good buy at 405 in fact this is actually under 30 days if I were to go to about 30 days I would be a lot closer to actually almost 2% so you can see right here that uh it's actually $75 so if I were to execute this option one contract here would give me about7 $15 actually you will see here that I

was actually on buy a put option but I need to be on sell so actually the price will be a little bit different it's going to be $65 which is still amazing I noticed that because I saw there was a Max profit and that was a bit weird and this strategy actually has a max loss although the max loss here will look extremely scary you might be thinking just oh my goodness why would you ever collect $615 with the max loss of$ 39,000 this Max loss is actually you know it's not really correct in theory

it is correct but what it means is if Microsoft went down to zero you lose $339,000 you know I don't know about you but Microsoft is not going to go down to zero I think the world has to literally end for the stock to fall that much there is no way a company decides of Microsoft will go bankrupt there's actually almost no way that stock will even fall 50% yet Al loone and most years it doesn't even fall 10% or it doesn't even fall at all the stock is rising right so although the max loss

is very scary this is the equivalent of you getting into your car and the max loss says well you may not live today so you know yes that's scary but most people still have to drive to work we still have life to live and we still take that very very small risk to go into a car every single day it's the same thing here so it has a very big Max loss but you know in all reality this is a very very safe trade that I've been doing for the past 10 years you know I've

you know worked for Goldman Sachs as well as a couple other hedge funds I have a degree in this I've sat with many experts on this I've talked to many financial advisers I've talked to hedge fund managers this is a very standard easy strategy that basically every single person in the world does I've seen billionaire portfolios as well this is just a typical strategy that they are using so basically let's do some scenario analysis if Microsoft goes up to say 420 you're totally safe you're going to be making money if Microsoft goes up to anything

really if it goes up at all you're going to be making money if Microsoft actually goes down a little bit towards 405 you're still actually going to make money as long as Microsoft stays above 4 now at 405 if Microsoft were to hit 405 you would now be in assignment territory meaning that you will get assigned at expiration if it's in the however you still made a gain because you are collecting $65 here okay so we have 615 so really if it's at 405 you're good if it's at 404 you lose a dollar but you

still collect the 615 so you are still positive 515 in fact your break even here would have to go 405 minus the premium that you collect so the break even here would be 3.99 or actually 39885 I'm doing the math in my head so at 39885 that's your break even Point okay you will be buying Microsoft at 405 or below but at 39885 that's actually your break even so if it goes lower than that you will be at a slight loss even considering the premium that you collected which is totally okay because you may deem

to yourself that I want to buy Microsoft I'm very happy and by the way this is the truth this is not just an example this is exactly a trade that I would make and as you'll see shortly I'll make trades that look very similar to this so you know if Microsoft goes down past 405 you'll have to buy 100 shares of Microsoft but it's not even that bad because you want to own the stock anyways but how do you know if a stock is not going to go down and that's by using some simple things

called technical analysis technical analysis can make or break your trading success it can make you either very profitable or it can make you a loser in option trading or any type of trading really so technical analysis is simply just analyzing the price movement of a stock using multiple tools that I'm about to cover and show you real examples of so many great option Traders I've worked with many of them have used technical analysis to a great extent including myself I use technical analysis to accurately predict where the stock price of a stock is going to

go now this isn't perfect nobody really knows where a stock is going in fact there's a famous book out there called random walk down Wall Street which discusses stocks being completely random and not having any clear Direction where they're going now that book is not completely correct but it's also not completely correct to understand or to say I know exactly where the stock is going to go that's a complete lie and almost nobody can do that so I'm somewhere in between I think that technical analysis is very very helpful gives a very good sense of

where a stock is trading at and where a stock is likely to be in the future now short-term trading is very difficult which is why I personally prefer monthly income strategies but I'm going to show you all the strategies that I know around technical analysis and I've said this many times on my channel before my favorite three technical analysis tools are RSI moving average and bowling your band the first one that I'm going to teach you is called moving average all right so now we're going to be looking at Amazon stock I'm going to be

using Amazon to give you some technical analysis the first thing that I'm going to do is I'm going to go to the charting feature on Yahoo finance Yahoo finance is free and I absolutely love it so I'm going to get rid of currently what I have going on here and we're just going to analyze the stock looking at it without anything without RSI without Binger band without moving average I'm also going to clear up the drawings just to give yourself some understanding of where the direction is headed so if I look at the six-month chart

right here starting off with actually some lines you will see that the hardest bottom here the hardest low of the 6 months is right here at around 100 $44 so if I click right here you can see that that trend has actually been very consistent with going up now typically I like to go for another bottom so you can see here that this was another strong bottom see there's a very good strong momentum okay momentum is really important because when I was working on Wall Street one of the analysts that I worked with which was

a quantitative Finance expert he was looking at mathematical models he simply told me that momentum is one of the strongest factors and if you look at a six-month chart if the stock is moving up it's likely to continue moving up it's crazy how simple invest thing is when you really think about it but that predictor right there the 6mon chart was actually explaining 80% of his returns so basically this one indicator right here will give you 80% of the potential returns that you can get from all indicators out there and once I teach you the

rest of the indicators you're going to be in a really good position so right here you will see that you can go from a bottom to another hard bottom here like there was a big bounce here at the 155 level or you can even go longer term and go for another hard bounce here which happened at 173 so you can see how Amazon is in a very strong trajectory going up and that's why right here this would have been a very good indicator to buy the stock because you know we had a double bottom here

okay this was a very good indicator you can see there's a double bottom you know bottom and bottom and this is basically a flat this is basically flat right here okay so Amazon tried to go down jump back up tried to go down couldn't jump back up that was a sign to buy okay even though this was a uh tough time if you had bought at 180 for a little bit it has proven to be a very good entry signal okay so I would have probably bought right here cuz as this was bouncing up I

would have bought somewhere in between somewhere maybe around 175 area I would have had a signal to buy now I'll show you the other indicators I would look at but this would be a really good purchase based on this you know this is actually a triple bottom pattern now this is some simple line charting that you can use to understand where a stock is heading the next one that I like to personally use is I like to go to indicators and the most simp Le one is moving average now you can use different moving averages

you can go for a 30-day moving average you can go for a 60-day moving average you can go for a 90-day moving average I actually really like to use Yahoo finance default the reason for this is because the most common default is 50 on Yahoo finance that's what a lot of other investors are using since so many people are using Yahoo finance so I like to keep it at 50 days gives me a really good understanding of where the stock is so if I go to clear the drawings you will see that this purple line

right here is getting giving me the average 50-day price so in the past 50 days on average where has Amazon been trading you can see here how it's consistently moving up and that's because Amazon as a stock is consistently moving up as long as it's staying above the moving average this tells me two things if the momentum is strong I want to be in this trade I want to ride momentum I want to go with the wave okay I want to move with the motion it's much easier you probably heard this Co before but a

rising tide raises all boats okay it's really easy or it's just how it works when the tide goes up the boats go up okay that's what you want to do when it comes to stock market investing when the market is trending upwards it's a bullish Market you want to ride that bullish momentum and make money and that's actually where I prefer buying call options now if it goes below the moving average this is really interesting because this can tell you that momentum has shifted but although momentum has shifted there was two hard stops right here

so this should tell you actually Amazon is going for a good value because historic Ally it is above in the past 50 days it's above this price and now we're currently below so 173 would have been a fentastic entry point if I zoom out right here you can see that basically Amazon has been completely trending up so we're going to go over a different example when it comes to technical analysis but I want to show you a couple more of the tools that I use okay next one I use is going to be a RSI

okay this right here I'm going to use for 14 days this the relative strength index this is basically telling you based on volume based on how much people are buying up this stock where is the stock on an overbought or oversold basis okay at 20 this would be oversold at 80 this would be overbought we're currently sitting at 61 50 would be very neutral 61 means that this stock is heating up a little bit it's heating up there's a lot of people buying it maybe it's becoming less of a good value stock to buy right

now before I go into Binger band I do want to look at a different scenario so I'm going to look at a stock like at Tesla because Tesla has had some volatility and I have actually bought it very recently so you can see here how Tesla is actually now consistently below the moving average if I go to let's go to three months here Tesla is below the moving average here it had a really sharp Decline and here you can actually see on the RSI it actually became very low it almost hit 20 it almost hit

oversold but you can see here how it was 24 and because it was so low this was a fantastic time to into the stock because low RSI says that the stock is oversold too many people are negative there's too much skepticism out there this is a fantastic time to do the opposite to be a you know conservative investor to go against the grain and to make a decision to buy so this right here at 140 was actually a price that I didn't get it at 140 but I started buying it at 150 I had 150

sell puts by the way so you already know right now what a sell put is so I've sold puts at 150 and that's because I wanted to buy Tesla for $150 so now I'm actually very happy because I got ass signed for $150 and currently the stock is at 184 so I ended up making really really good money like 20% return in like a month so it was a actually phenomenal decision to sell puts so yeah so what I would look at right here is we're below the moving average and now Tesla has popped up

above the moving average so now we have strong momentum I would still jump into the stock right now and I would use some option strategies and I would use a bull call spread which we will talk about later in this course because when it comes to buying options there's some really interesting strategies that you can use you can put up a very small amount of money get a very big return so I would use uh some different spread strategies on Tesla actually how was able to go one year from $100,000 to $700,000 back in 2021

was I was using a lot of spreads and a lot of small account strategies which you will learn about on Tesla I saw there was a lot of momentum I traded Tesla very heavily and I made you know 100K into $700,000 I made $600,000 that year it was a fantastic here and it was mainly it was a lot of Tesla trading as well as other technology companies as well so with with that being said You Now understand the simple use of RSI you understand that towards 20 is a good time to buy towards 80 is

a good time to sell you understand that moving average just gives you a general idea of where the stock has been in the past 50 days by the way you can also change moving average from 50 days you can change it to 90 days so for example I can click 90 and you will see here how this is a much more smooth line because now it's taken a 90-day average instead of a 50-day average the next thing that I want to talk about is the bowling your band so if I go to indicators and I

go to bowling your band you will want a period of 20 days which means that Binger band is going to predict the next 20 days and the standard deviation is two okay you'll see here two is fine okay so how this works is this is a statistical model it's very simple okay so if I click save you will see here that we have an idea of where the bowling or band where Tesla will trade within what range okay you can see that the top of the band is going to be 196 the bottom of the

band is going to be 139 two standard deviations means about 95% of the data one standard deviation would be 68% two standard deviations is 95% three standard deviations would be 99% it's a bell curve okay the way I explain this is if you are a man you are 5' 10 and you have a sun your sun will be about 5' 10 that would be the middle that would be the average your sun would be about your height okay that would be very high certainty okay now if your son was 6' tall and you're 5' 10

that would be towards this area you would have maybe one standard deviation move if your son was 6'3 this would be a two standard deviation move and for your son to be 6'5 this would get into the territory of over three three standard deviations above normal so it' be very unlikely although possible extremely unlikely that your Sun is going to be a lot taller given your genetics okay so bell curves are are done with weight with a lot of physics a lot of statis statistics height Nutrition a lot of different areas use bell curve it's

just a very easy statistics okay so that's what this means so if I go to Binger band right here and I change this to one you will notice that this got a lot smaller okay cuz now we have some unusual movement cuz this is a little bit less usual than a one standard deviation move now if I do a three standard deviation move which gets into really rare territory okay you will see how now the Binger band has expanded it has expanded to 210 on the upside and then 124 on the downside I SED two

standard deviations because that captures 95% of the data it gives me 95% certainty that an option will be in that price range okay so if I go back to two now I'm going to show you how I pick strike prices when I trade options so if I click two you'll see here that if I were to do a covered call I would sell a call option at 196 if I were to sell some puts I'd probably want to go down a lot lower now obviously I can't go down to 139 here in the bowling band

because that would be just too low there's no premium there that's too far out of the money but I would certainly want to go at 167 I would pick 167 to pick the middle of the bowling her band so use the Binger band to understand the different scenarios where a stock can go whether it's up or down and then pick the appropriate option strategy based on the Bowling band So for me I like to keep it as simple as possible because you know I am working with a lot of beginners and I focus on helping

beginners get into an intermediate or Advanced option Trader territory where they can leave their 9 to5 job and actually do this for a living and have a lot of flexibility in their life like I have all right so now I'm going to teach you some metrics that you need to pay attention to when looking at what option contracts to buy or sell all of these things that I'm about to teach you are going to be extremely useful when you're analyzing how safe an option is the first thing that I want to talk about is called

implied volatility implied volatility is usually expressed as an annual percentage and what percentage reflects the magnitude of how much a stock is expected to change in either direction for that given year up or down and people get confused over this term because it can't can look confusing but it's actually very simple we know that volatility means how much a stock price moves up and down if it moves up and down a lot that means that it has high implied volatility if it doesn't move a lot then it has low implied volatility so ask yourself do

you think Coke has high or low implied volatility well the answer is Coca-Cola has low volatility if you look at something like a GameStop or AMC when things were going crazy and parabolic during those times those were high volatility stocks implied volatility just refers to how volatile we expect a specific stock to be and to measure that every stock is assigned an implied volatility percentage this can get really over complicated and all you really need to know is that anything above 50 is a high implied volatility generally speaking and anything close to 100 is extremely

high implied volatility meaning the stock is expected to shoot up or down a lot typically stocks with extremely high volatility these may be biotechnology companies that have some big events coming this may be really hype meme stocks that have some news coming this might be stocks that have had a short squeeze of some sort so for example if you remember what happened to GameStop back in 2021 it had a really high implied volatility right before the stock skyrocketed and then it plummeted back down so how does this apply to option trading well stocks with higher

implied volatility are going to have higher premium so even if there are two different stocks at the same exact price the premiums on them could be very very different different and if one is expected to be more volatile the premium on the more volatile stock will have more premium implied volatility is also very interesting because when you're screening for stocks and you're looking for good stocks to buy so for example I do use a software called options FY when I'm using a software like options FY they're screening for high implied volatility stocks the reason why

I like high implied volatility stocks is because I'm typically an option seller so when I'm looking to sell options I do want higher premiums if I'm looking to buy options then I want lower premiums the next thing I want to talk about is is the Greeks so the Greeks are very important it sounds a little bit confusing but the Greeks basically explain how an option behaves okay so if you have no strategy when going into an option trade or you do very little analysis and and wonder to yourself well how would I lose money here

what if the stock goes up by $1 how much will the option change the Greeks actually explain this so the Greeks and option trading consists of really five of them you don't need to know all five I'm going to go over them very briefly but the first one is the most important one which is Delta okay so Delta actually explains a couple things okay first of all if you you look at Delta it explains the chances the option will be in the money so if you look at an add money option let's say a stock

is at 100 you look at a $100 covered call or $100 put it's going to be 50 Delta because there's a 50/50 chance that the stock is going to be about the same price as it is right now if you go for an out ofth money option okay it's always going to have lower Delta cuz it's lower chance than 50% so it's going to have a lower Delta we use the five Greeks basically to help measure and predict the price movement of an option premium now as I screen record my phone really quickly you can

see on Robin Hood that we're going to look at some of these Greeks and we're going to go over them and uh what they mean and how to actually use them okay so I'm looking at Microsoft sellp put 415 for June 14 the previous example that we were um looking at earlier in this course so you will see here that the Delta is 48 that means that this option has a 48% chance of expiring in the money now Delta also means that if the stock moves by $1 this option will move by 48 C so

that's exactly what it means there's two definitions for Delta those are the two okay gamma just changes Delta okay you know it's not as important as Delta cuz you can see here how the gamma is really small Theta is kind of important Theta tells you how much this option is decaying per day so you can see here that it says1 177 this means that this option is losing about $11 per day in value if you're an option seller that's a good thing if you're an option buyer well that's not really a good thing Vega also

it is somewhat important but honestly it's not that important because Vega just measures volatility so if volatility changes then the option will change by you know 0.53 cents if it moves up in implied volatility by um 1% but you know typically implied volatility is changing but not by too much although Vega is more important than gamma it's not necessarily more important than Theta they're about the same row is interest rates which are completely useless cuz interest rates are not changing by much at all so if I were you and you want to look at the

Greeks just simply focus on Delta so Delta is the most important one Delta measures how much the premium price of an option will change for every dollar the underlying stock price moves so for a call option this can be anywhere from 0 to 1 and for a put option this can be anywhere from 0 to ne1 again not a big deal basically think about it as if it moves up by a dollar then your option will move up by0 50 cents towards the direction of the option so if an option costs $3 and has a

Delta of 0.5 well if the stock moves up by $1 then this option will increase by0 50 so it'll be from $3 to now $3.50 if it moves up by another dollar then this will again move up by 5050 now like I said Theta is really interesting because when you're an option seller you can actually take your Theta and see how much money you're making per day so let's say that your Theta is 10 well then you're making $10 per day on that option contract being open so if you have many option contracts you have

10 contracts and then your Theta is 10 then you can make $100 per day consistently just through Theta as long as the stock doesn't have any crazy moves and that's exactly how I trade options is I have a bunch of positions open I have maybe 20 positions each of them might you know have a Theta of 30 to 50 and voila making well into the five figures or the multiple five figures per month in option premium when options are closer to the money they tend to have much more higher rates of theta Decay because they're

right at the edge of either being valuable or being completely worthless depending on the Stock's price the strike price so you know when options are close to the money the Theta is going to be higher which is kind of fun and kind of cool but also more dangerous because the Delta will be higher and when the Delta is higher that means there's a higher chance of you getting ass signed whether it's selling a put option it's closer to the money or a cover call it also is closer to the money so with that being said

let's just get into some real examples and let's show you exactly how I'm going to make some money in this video all right so now is the part where we see how much money I can make by selling options we're going to keep track of it on the bottom right or the bottom left as I make every trade we're going to be adding this up so let's see exactly how much money I can make in the next 10 or so minutes all right so the first thing that I want to do is I want to

look at Google Google is one of my favorite stocks I'm very bullish on Google Now in the past 3 months the stock did go up about 15% I am going to be looking at technical analysis as well I'm going to be showing you what I'm looking for Technically when I am placing a trade like at what strike do I pick it why and all that whole process so this is going to be like the most valuable thing that you can see because I've been doing this for 10 years this exactly how I make my decisions

so if I go to Google I go to charts you can see right here I'm going to get rid of these quick lines these were drawn so if you can see right here actually the stock has gone up I'm using something called the Binger band as well as the moving average both of these are very important for me and I like to look at the six-month view so here you can see that Google is basically at the more higher end of its range it did have an over reaction here and had a pullback however you

can see that the Binger band right at the middle is 161 now the RSI is not very high but it's also not very low it's at 63 which is a little bit higher than average so this is actually a perfect candidate for selling a put option not that it's perfect for selling a put option because it's a little bit higher but it's perfect because I don't know when Google's going to pull back and if I want to invest in Google today selling a put option is much better because I'm getting a cheaper price than what

the stock is at currently Stock's at 168 as I'm making this video I'm going to sell a put option that is going to be towards the middle of the bowling band of 161 162 so I'm just going to go for 162 and a half now I am going to pick an expiration day that's going to go out at least 30 days this strategy is a little bit more boring it's a little bit more chill it's a you know a bit more relaxed of a strategy the whole goal was just to collect some income be hands

off and be very passive with it as well as safe so I'm going to go for June 21 so it's going to be about you know 5 six weeks from today making this video I'm go to sell put and I am going to sell a put option for the 162 so I don't want to be too heavy on my exposure so I'm going to probably go for contract size of about five so I'm going to risk quite a bid here and I'm going to collect ,500 on this trade I'm going to go for a bid

price of 305 now I will be honest with you I could put in 3.1 I can start playing around and waiting but for time purposes I want to be very efficient with this video I want to respect your time I'm just going to go for 305 but if you want to make some extra money you can play around with the bid app ask I could have asked for 310 and I may have actually gotten filled for 310 so that's kind of up to you so so far we've made $1,525 so far by selling a put

option on Google Now one of my other top plays is American Airlines this is a much cheaper play specifically because American Airlines is about $14 per share now this is my top plan my Discord but right now I'm a little bit upset cuz as I'm making this video I'm literally like 2 hours too late because the stock is skyrocketing I have Shar I've have covered call I have sold a put option but it's a little bit frustrating to see the stock go up because basically when a stock goes up the put option premium goes down

they become it becomes less valuable because you know as the stock goes up it's becoming further out of the money so right now what we're going to do is we're going to go a little bit riskier I'm going to show you a little bit shorter term of a trade I'm going to go for the 14 and a half again my goal is to actually get assigned I do want to get assigned if I don't get assigned that's fine I collect income if I do get assigned that's also fine with me because I still get to

collect income but now I have the shares and I can run something called The Wheel strategy which we will cover later on or you know check out my channel for the wheel strategy this is a very powerful strategy so I'm going to go for selling a put option right now I'm going to go for uh since this is very cheap I'm going to go for 20 contracts here okay so I'm going to go for just $17 per contract and this is hopefully going to get filled for me since I did go towards the bid price

there you go I got filled so I made a dollar so we're going to add that to the bottom of how much money I have made so that is the second trade which is going to be American Airlines by the way the reason why I like American Airlines so much I didn't show you the technical analysis I've been literally trading this since I started my program back in 2021 so it's been three years since I've been running Discord and I have been literally trading American Airlines since the very beginning it's because American Airlines has some

of the most consistent Returns the stock doesn't actually move up or down a whole lot so over the past one year you can see how it actually started at 1402 now at 1461 so over a whole year period it has gone nowhere it's still at exactly where it has been which means that there's lot of volatility but really no Direction so when there's no direction that makes a perfect candidate for selling options in general because options love volatility and when you're selling options you hope that there isn't any big big moves typically so this is

a very profitable strategy that I've been running from the very beginning and the reason why is because right here we're right in the middle of exactly what American Airlines has been historically valued at so it's unlikely to get a whole lot cheaper it's also unlikely to get a whole lot more expensive so selling options on American Airlines is my top play right now that's why I decided to just sell 20 20 contracts now I do have some more contracts actually in my portfolio I have 35 contracts 30 more contracts here so keep in mind I

do already have some of this position now we have done Google we have done American Airlines I'm also going to go ahead and do Apple Apple's having a little bit of an intraday move where Apple pulled back and I really quickly want to sell some put options on Apple now I already have a pretty big position on Apple but I'm going to sell some put options and show you that it is okay to have big positions on big high Quality Companies especially companies that you have a lot of belief in for me Apple is my

top play I was just listening to Warren Buffett have his discussion on Apple they had a little bit of a cut they had some sale at uh birkar hathway where they did get rid of $100 million worth of Apple but he had stated that that's just because of rebalancing and other things that are very normal he doesn't he didn't actually lose his confidence in apple now what I'm going to do is on Apple I'm going to go out for June 21 actually I can also go really short term so again if you're watching this in

the future just go for something short term it's fine you go for shortterm or longer term you actually get compensated in proportion to the amount of time that there is s expiration so whether you get paid $1,000 a week or $4,000 a month it's basically give or take the same thing so I'm going to go for a sell put I'm going to go for the 1775 strike price my average cost right now is 182 intraday actually Apple was above my um average cost and now it's you know it's a little bit below 177 and a

half is perfectly reasonable for me because I'm actually going to be dollar cost averaging and getting a better price I'm going to be reducing the price that I'm paying per share that I paid in the past so for me it's a good decision I'm going to go ahead and sell 10 contracts right now so I'm going to go for 10 contracts and I'm going to execute this for a112 so I'm going to collect $1,120 right now and boom we just got filled so that's amazing right there so we got filled for Apple so we're going

to add that to how much money we have made now the next stock that I'm going to trade is going to be Amazon I already have Amazon it's actually above my current average cost by quite a lot I'm up 37 7% on it I do have some covered calls and I would not mind having a little bit more Amazon so I'm going to double down this is something that I should have done a very long time ago but I'm going to finally double down on Amazon and I'm going to sell some put options now we

take a look at Amazon technical analysis is going to be important I've actually shied away from selling put options on Amazon because I was a little bit concerned that the stock was kind of hot so indeed I was kind of R we had a pretty decent Siz pullback however what I was wrong about was I you know not that I'm the timing no one's really good at timing the market if anyone says they're good they're completely lying I didn't time this well so I you know kind of missed the boat at 175 and the Stock's

now back at 186 but what I can do is I can sell a put option closer to 180 so what I'm trying to do here is I'm not going to get 175 and I already know in my head right now if I were to sell 175 options they are completely worthless they're worth you know 30 cents that's not that much so what I'm trying to do right now is I'm trying to bridge the gap between where the stock is right now and 175 I'm not going to get to 175 I also don't want to buy

at 186 so I'm going to find the middle point I'm going to go for 180 so this right here is not going to be a whole lot of money but it's a pretty safe consistent trade and the worst that can happen is I get to buy more Amazon I think this would be a pretty good price for Amazon anyway so as you can see this is a non- losing strategy you really can't lose I'm collecting some income I just got filled made $49 85 we'll just call it $410 the next stock that I'm going to

trade actually had snapshot of $9 and that was really really bullish and the stock actually did end up exploding up after earnings now is a little bit high so it's a little bit hard actually for me to sell put options because psychologically I have sold $9 puts I mean myself my Discord we made a lot of money we made $1,650 by selling 50 contracts here and now it feels really bad for me to sell a put option at 16 at 15 that's going to feel awful because I have sold a put option at 9 so

now selling at 15 16 I have to spend more than 50% from what I have you know before sold some puts on so this is psychologically very difficult but at the same time after this option expires I really don't have a position anymore so I don't really have that much of a choice besides selling some put options I'm not going to sell that many but I'm going to mix it in right now and I'm going to sell some May 17 actually I can go for some really short yeah we'll do a May 17 I'm going

to go for the 16 strike now why am I going 16 and why don't I need technical analysis on this play well for me I really don't have an option here check it out I can go for 15 there's no money there there's no money literally it's $8 I can go for 15 a half it's a 1% return 11 days not bad but you know Uncle Henry wants more money than that more than 1% in 11 days so I would like to go a little bit more aggressive here and this is a small position no

I'm not going to put in 10% of my money I'm not going to put in 5% of my money I'm going to put in very small amount I'm going to go very small here and start to potentially get into Snapchat I don't know if I'll you know I'll get into it or not but if I do I'll be pretty happy actually and if I do get you know assigned on these 20 contracts I'm just going to go 20 more I'm going to go 20 more 20 more and 20 more so I'm going to go three

times for a total investment of you know quite a quite a lot but in relative proportion to my portfolio is going to be about 5% if I were to get assigned three times in a row on this type of size okay so I'm going to review this order I'm going to submit it and I'm going to collect hopefully yep I got filled for $539 40 so this time we'll round the down we we'll save $539 so we'll add that to the amount of money that I have made so far now let's go to another stock

where I can make some money I do have pounds here I am currently um doing pretty well on pounds here $113,000 on the stock I'm down a little bit on the options it's a little bit difficult for me to trade this right now it's up 7% so I don't think I want to sell puts as well as they do have earnings as I'm making this video so selling puts before earnings can be smart but often times there's a lot of volatility before earnings so I typically don't like to sell options into earnings I typically like

to actually buy options buying options is better we see American Airlines completely exploding up towards the upside now that's interesting so we'll see what happens there now I do want to make another trade I think that I would love to make a PayPal trade I think that the stock is going for a really good valuation however I will say that I currently do already have a decent size position of 99.69% and for that reason selling puts would not be smart because then I wouldn't have proper risk management I would be way too invested in one

stock which would be very dangerous so instead what I'm going to do is I'm going to look for other stocks so looking through my watch list I'm going to take a look and I could also easily do something pretty short term on QQQ I don't always do this but I can show you something kind of like a Zer DTE trade my Zer DTE trade is something that's going to expire in the same day this takes a lot more work but you know long story short I would like to show you that you can sell puts

really short term spy and QQ both have expirations in the same day let's see exactly how much money we can make so I'm going to go to sell put option and I can scroll down to something that's L out of money I'm going to show you Delta right now so if I go to uh 43 7 you can see how the Delta is4 that's really good that's a sweet spot that means 14% of the time that this option will go into the money that means about 86% of the time that it is not so this

is going to be pretty safe I'm going to go for this right here and I'm going to click continue now I'm not going to make this too big I'm just going to go for three contracts this is going to be you know an interesting trade I just want to mix it up and show you all the ranges of possibility and give you as much education as possible so on this trade right here I'm actually collecting a very small amount of money and I'm risking quite a lot of amount of money but it's also a very

low probability trade that can go against me it's also a very short-term trade of just zero days okay so we're going to add about $33 from that trade okay now I want to look at something like potentially like a Starbucks Starbucks did pull back quite a lot here so this could be a good trade to make I want to see what other stocks I may have here that I am very bullish on in the longer term because right now I gave you a very short-term trade I want to go for a very longterm trade so

a longer term trade would mean that I am very bullish in the long term I'm actually pretty bullish on chipot however Chipotle I do know on the top of my head is a bit more expensive so I can go for something that you know what I have actually traded meta quite a bit and meta seems to have a really strong bounce here you can actually see how I'm up about $11,000 on a sell put that I already have on meta so I can just go for that again I can go for future expiration here I'm

going to go to sell putut I'm going to go for I'm going to go for something a little bit longer so we have already showed you guys that I can go for a zero DT trade now I'm going to go for an August trade it's about 100 days out you know it's not too bad at all I'm going to go for about 100 days out and I can go down to say 410 this is a 22 Delta it's a little high for me you can go 40405 20 Delta it's about you know it's about right

I think this is fine right here check out the bid ass spread it's 1180 12 by the way the reason why I'm not always looking at technical analysis and you know is because I'm following these stocks on a very regular basis I'm very close with all my stocks on my watch list so I'm paying attention to the stocks and I know that meta has really really good support around 400 so you can see here how this is 405 but my break even is 393 so my break even is below the support line so if it

hits support I'll actually get exercised I'll actually have to buy shares of meta but I'll be pretty happy because I'm going to be buying shares below what is support so I'm actually going to be owning shares and still be in a profit because 393 the average uh cost here is going to be below what the stock will trade out so so if the stock goes down to 400 I'm going to get exercised but my break even is 393 so I'm really not going to care okay I'm going to be in a in a positive so

I'm going to go ahead and sell the 405 here and I'm going to go for a probably decent Siz position going go for five contracts and um I will go ahead and execute for um 1180 and just if you guys weren't sure I wasn't sure how much money I have made I don't see it on the screen at the moment but yeah this trade itself is going to bring in $5,800 so I think I'm going to pass the trading check challenge that we just had so there you go I submit it so we're going to

add $ 5,899 185 or 5900 to our trading challenge here and there you have it we have made a grand total of this amount of money on screen right now by selling put options now some of these puts didn't expire yet some of them will expire pretty soon but as a beginner put option seller you might be thinking well those option premiums are nice but how do I actually manage those options how do I go about closing positions taking profit and now to make make sure that I really don't lose money afterwards doing these strategies

and that's exactly what I'm going to cover in this part of the course managing your positions until expiration is extremely important because if the stock shoots way below the strike price you choose it's not that ideal for you to get ass signed and it may actually be scary you want to manage that position make sure that you're on the winning side of the trade and if you're not on the winning side of the trade how do you minimize the risk associated with owning and getting assigned 100 shares and that really shouldn't be happening in the

first place most of the time time if you're picking the correct Delta if you're picking the correct Greeks also as a beginner you should be okay with the worst case scenario before you make a trade before you sell a put option ask yourself am I okay buying this stock however many you know X shares if it's one contract am I okay buying 100 shares at the strike price so if you're selling a 55 strike price M okay to own 100 shares at $55 per share if the answer is no then you shouldn't make the trade

unless you really like risky trades and you're trading more as a Speculator rather than an option Trader that's looking for consistent income and on top of that you should be selling cash secured puts which means you should already have the money set aside in your account that you'll need if you do get assigned this is called being cash secured so if you sell 55 you will need a $5,500 cash balance to potentially get assigned and buy those shares so with all those factors there shouldn't really be a losing situation for you when you're selling puts

you should be happy to get assigned or happy that you don't get assigned however I understand that sometimes the market can be very unpredictable and things do change and they don't always go as plan so right after you collect premium you need to keep a close eye on the stock and just when you sell a put option you need to understand hey is this really going against me is the momentum too strong here has something fundamentally changed about the stock maybe there's some news or maybe there's an event in the market that changes your overall

outlook on the stock remember there are only three things that can happen when you're selling a put option the stock can go up that's perfectly good you should be happy in which case you're good you don't do anything okay the buyer can't exercise it it's out of the money it makes no sense for the buyer it can stay at basically any level above the strike price and you are good if it goes towards the strike price that you have sold you may be a little bit worried however I will tell you there is absolutely nothing

to worry about before expiration if the stock is still out of the money from your strike price I know a lot of people get anxious they might be thinking to themselves well is this going against me should I cut this position I would say that in most cases you want to relax because even when I was working at Goldman Sachs we did some studies and we saw that many options will actually dip into the money and over 40% of the time I think the statistic might be even higher than that the option will come back

out so if it even dips into the money you may not want to close you may think about closing you may decide to yourself that I may be looking to close potentially if continues to go down but that doesn't mean that you want to close just yet it's totally okay for an option to go into the money and for you to hold that position in fact for me I typically hold positions up until expiration even if they do go into the money because I've noticed that I get higher raw returns which means that I get

more returns more money by holding until expiration however it is very difficult so this is a mental game this is a very emotional game that you have to be very aware of that if it goes into the money that's okay unless something has fundament mely changed or on the technical chart as you will learn very soon has completely shifted then it's okay to continue holding the only thing that you actually need to watch out for is if the stock starts to go down completely breaks down goes way into the money and the RSI is still

high so if you want to look at the RSI I look at the 14-day period if it's still above you know 50 and the stock is coming down that is one bad sign as well as if it's going down but it's still not at the bottom of the bulling band that's also a negative sign so if it does go down and let's say that the company that you are trading with is below your strike price you just want to make sure that you have the cash available so once you get resigned then we will actually

run a different strategy which I have been teaching for a long time called The Wheel strategy which we will also cover shortly if you are just trading puts and you want to open and close them all the time you will be losing money if the stock moves down and yes when you buy it back if the stock price is now close to the strike price it will cost you more money to buy it back so you won't always be able to win by trading put options but you will basically be almost always winning if you

just sell puts and you wait until expiration even if the stock plummets again you're not going to be in a bad situation if that's already a good stock that you want this is a way that you can minimize your losses when selling put options you don't really want to close them you just get assigned but that's not it after that you can do what's called rolling options if you wish you can actually roll a put option lower rolling the option in the case just means that you're buying your put option Back and You're simultaneously entering

a new Option trade with a much better position or a much better strike as you will see examples I do this all the time sometimes it's for a net credit and sometimes in the case of covered calls I'm very happy to even roll for a net debit don't worry rolling can be confusing but once you see the examples you'll see how easy it really is so when you rolly position just know that the new Option trade will have a better strike price because you're going to be going down in the case of selling puts in

the case of doing covered calls you will be going up you're always going to go in the direction that is more favorable to you so you can make more money in terms of expiration date you will always have to go out you'll always have to have more time because time will fix your position time gives you the ability to collect more premium and to fix things and to adjust things so I've actually had a trade where I was down $31,000 on my portfolio which isn't necessarily that much money in relative to how much money I

have however the $ 31,00 was you know pretty difficult for me and I really wanted to recoup that loss and what I did was when I rolled an option I actually made back the $31,000 and $5,000 more within a single month by just rolling and adjusting a position so this is one of the most powerful strategies the most powerful techniques that you can have in Your Arsenal in your portfolio in your toolbox if I'll say of option trading so you know the strategies but then also this is a very important use of managing each and

every single position and you'll see different scenarios where where sometimes you will want to decide for yourself this is a very experienced game where psychologically you get to decide yourself what is better for you do you want to roll a position do you want to get a signed how far do you want to roll you don't have to follow the dog strategy of you know 30 days out and down by five you may decide that you only want to go down by one you may decide that you want to go down a lot more by

10 in the case of selling puts you may decide that you want to go 60 days or 90 days into the future now not only have you basically minimized your losses by Rolling or adjusting but on your new position you can actually make huge amounts of money by collecting more income when you are rolling it sounds amazing in theory right but of course I understand that you as a beginner will not always know what to look for when rolling your position so to help you out I'm going to show you an example of a sellp

put position that I will roll and the key point is that I'm going to be making more money I'm going to show you different scenarios of maybe I'm going to lose some money I'm going to get a much favorable strike price maybe I'm just going to move the strike price by a little bit and get a good net credit and actually collect income so let's go into some examples right now I'm going to show you exactly how rolling Works how I think about rolling how I think about adjusting and the good news is since I

do this so often I have many positions that I'm very positive that I'm going to be rolling right now I'm going to show you some live examples all right so here's my portfolio um currently sitting at $2.1 million I am frequently taking money out of this portfolio as I am making income so you know typically stays around $2 million CU I use this portfolio to fund my lifestyle let's just go into some trades that I currently have you can see here that I have a trade on American Airlines that has already made money now there's

no point of rolling a position if you've already made money in most cases if you're making money I wait until expiration now sometimes I will close a trade out early and I will take profit that is a little bit complicated of a situation because when is it best to actually close a position well in this case as this option expires in just 3 days as I'm making this video If an option is expiring in 3 days then there's really no point of closing it's just three more days to wait you can see the option is

up 94% I have 5 more per that I'm going to be making from the option premium the next 3 days that's perfectly fine now right here if I actually change the view from Total return to last price you can see how it's 2 cents yeah 2 cents is not that much it's basically $2 a contract but I have 35 contracts here so if I were closing this trade right here I would basically close and have to pay about $70 now for me I'd rather just wait the three days make the $70 not a big deal

I'm going to wait okay now if this trade right here was expiring in 2 weeks and I had to pay $70 to close this trade and then I had two more weeks of my Capital that was freed up this is quite a bit of capital by the way because it's 35 contracts of about $11,000 each so if I can get $35,000 and I have to pay $70 to kind of clear up my Capital obviously I'm still making money here it's still for a gain because if I go to the total return you can see how

I'm still well above $1,000 in collected income then for me that's going to be perfectly okay because I have two more weeks but three more days not so worth it okay so that's how I think about when I can even close a position and take profit and it depends on something called the annualize return I go over analiz returns during my coaching sessions if you're interested it's just the first link in the description analiz returns can be really boring so basically you can just do the simple math in your head and see if it make

sense for you based on how you feel if you get enough days like I said 2 weeks maybe that's enough time whereas you know 3 days there's no point of actually closing the trade all right so the next trade that I want to look at is going to be something like an apple which I'm also up on so let's look at something where I'm am down on because typically when I'm rolling I'm looking for a trade that I'm not making money with because the whole point of rolling in most cases that is that basically you're

trying to fix something you're trying to compensate and make money back from a losing trade however I will say that you can also roll a winning trade to make more money for example let me actually go to a winning trade first I'll show you what I mean by that so if I look at this apple put option it's a 177.52 puts here you can see here I've sold 10 contracts and so far I'm up just a small amount about $110 actually you can see my simulated return right here is that over time this option will

actually continue to gain money so at expiration I'm going to just make over $1,000 if Apple stays at the 183 stock price the reason why this is going to make money is if Apple stays at about $183 which is the current stock price this 177 put option is going to be out of the money however if this starts to go back and it's starts to go lower you will see that the simulated returns are slightly changing I still make my full amount at expiration because it's still out of the money but in the meantime I

will have less returns so as I go down you can see how even in the short term if Apple were to go down to 180 then this option right here would be in the red currently however it would still be in the green at expiration again because it's out of the money and if I keep going down you can see how this option will show a net loss so when you make a trade when you sell a put you may have a net loss you may look like this option is losing money but the fact

of the matter is it's only losing money right now if you were to close the position but if you wait like I said if you wait until expiration you will still see a green profit so although it can be scary when a stock is going down it's really not an issue as long as the stock is still out of the money even in a more extreme case scenario right here you will see that I made the stock price 17770 you will see that basically we're going to be in the red up until almost the last

day of expiration the last couple of days then this will start going into the green okay now if this is actually below the price of 1775 then yes this sellp put option will be losing money however again this is not a problem if you want to get assigned you'll get assigned you will have a small loss but then you just start running the wheel strategy so what would happen if Apple went down below 177 and you don't want to get get assigned and you don't want to run the wheel strategy is you would roll the

position so we can go to roll this position and although this won't be a perfect example because it's currently above I'll show you what rolling looks like in this case scenario how I can roll this position so what I do is I clicked roll the position now I can pick a future date so you can see how this option currently expires May 17 I have 10 buys to close okay cuz I'm going to be closing the current position that I have right rolling is closing one position opening up a new position so I'm going to

be closing this and I'm going to be opening something into the future so let's go for June 21 all right so this is about 30 days okay and now what I can do is I can get a more favorable price for myself so although the 1722 isn't available so I can't roll this by five I can roll this down by 2 and A2 I can go down from 1772 down to 175 improving my cost basis improving my strike price going down in the case of a sellp put it's good to go down you have less

risk so I'm moving down by 2.5 the time change here you can see is 35 days so I'm increasing by 35 days that's the time I'm moving down by 2.5 okay and actually I'm collecting a credit of $1.39 so I'm collecting $1,390 so rolling is really amazing because not only am I going down from 177 to$ 175 improving by $25 I'm collecting income to do this and the only thing that I'm paying for this is by time I'm not paying any money I'm actually making money but I'm paying with 35 days more of time so

this is a good example of how you can roll an already winning trade and make it more of a winner by moving down and by collecting income now let's actually go to a losing trade and I'm going to show you what a losing trade looks like in the case of selling a put option So currently I I sold some put options I don't see any losers most of them are actually winning so I actually don't have any current losers in my portfolio when it comes to selling put options so I may have to show you

another trade where it is a winning trade but I'm going to roll for more profit so what we can also do is I can show you how to roll a covered call because I do have some covered calls that are losing so currently don't have any sell put are losing you know it's a strategy that's working as you can see but we can go for a hypothetical example as well let's go down and use something like paler so let's say that right here paler is losing okay so right here you can see it's it's winning

but you know since I don't have any losing trades let's just pretend that this is losing so here's another example and this is already expiring quite a bit out into the future and by the way I can actually show you my history the reason why it's probably expiring in July is most likely that I have already rolled this so whenever you see expirations that are kind of far out into the future that's typically because I rolled okay so I did not roll pounds here but let me find a position that I did roll because I

do roll all the time we will want to see this through an example all right so you can actually see here that I have had some difficulties with apple with a $33,000 loss again it's not really a loss because I've been rolling quite often so let me just show you a covered call example okay this will be a covered call example since I don't have any cell puts that are actually losing right now this is my biggest position right now which is Apple at the current time I'm making this video I have two portfolios in

this portfolio it's a lot of apple and I think there's nothing wrong with having low diversification once you get really good option trading and you have a big bet that you want to make on a big safe stock like an apple it's really not an issue to put in more of your Capital especially if you're going to trade something like spy which is an index fund so s S&P 500 spy is an ETF as well as QQQ QQQ is the NASDAQ ETF it has a big basket of a lot of stocks so for me spy

and QQQ are two ETFs that you can put 100% of your money into and just trade those two things without even having to trade stocks and option trading works the same way on those two they're basically like stocks but within those stocks there's a lot of different companies inside of them okay so Apple um we're going to have to switch our mind a little bit and with a covered call you want the opposite to happen okay so when you're selling puts you want to go down you want to get a lower price okay cuz you

know like I showed you if Apple was in the money I would roll it down from 177 to 175 now in the case of a covered call we actually want to move up because remember a call when you're buying a call you're betting on a stock going up when you're selling a covered call you are making income on a stock that you own because it's covered but if it goes above right it moves above you will lose your shares for me I do not want to lose my shares of Apple I'm actually making money on

Apple and if I were to lose my shares I don't want to lose them for a couple reasons one of them is taxes I do not want to pay taxes now when I say I don't want to pay taxes I mean legally if I don't sell the stock I don't have a gain that means I don't have to pay taxes okay so that's really important for me cuz I am in a very high tax bracket so what I want to do is I want to roll this position up therefore I do not lose my shares

and I don't get assigned on this position so you can see that apple is currently at 18290 whereas my covered call is at 175 so what I'm going to do is I have a loss here I'm going to click roll this position now now keep in mind later on in this course when I cover spreads when I cover iron condors when I cover other strategies you cannot roll other strategies in Robin Hood with one press of the button like I just did you will have to close the position yourself manually and then open up a

new position Robin Hood though gives you the ability to roll both selling puts and covered calls these are the only two things that you can roll on this platform now other platforms which I'm not an expert on on do probably I think many of them do let you roll in one transaction even if it is a spread because some of those platforms are paid platforms whereas Robin Hood is free it's not necessarily free there are some other issues but that is a topic for a different video so what I'm going to do right now is

I'm going to show you how I can roll this option that's expiring on May 24th okay in Just 2 weeks I can roll this into the future so I can go from let's say may um 24th I'm going to go to Ju July 21st so again I'm running the dog strategy the strategy that I basically came up with and called the dog strategy I can move out by 30 days and by $5 so right here you will notice that I can move from 175 to for example 180 now this right here will cost a debit

so we're going to go over a couple examples right now this right here is a debit I still have to pay money why why do I still have to pay money well in this scenario I moving up by $5 which is actually a lot of money because I have 70 contracts 5 * 70 * 100 shares each option contract is 100 shares this is going to be $35,000 in 28 days I'm going to improve by $35,000 and the total debit here I'm paying is $88,000 so I'm paying $88,000 to make $35,000 that's why in this

example example it will be actually somewhat expensive to close out this position and roll it it'll cost $8,000 however if you don't want to pay at all what you can do is if you increase the time so if I go to 73 days away and now I pick a 180 covered call you will see now due to time due to the extra you know 30 days or so now going from 1 month to 2 months you will actually notice that I'm now collecting a next credit of $2,800 so I went from spending $8,000 to making

$ 35,000 to now collecting 2,800 to make $35,000 that's how rolling works and you can play around with different strike prices so let's say that you want to move up by $10 because when I move up by five I'm still in the money so if I wanted to move up by 10 my total debit would be very big right cuz I'm moving up by a lot so now my debit would be 16 okay if I wanted to roll up by a lot lot more my total debit would be 46,000 okay it does not make sense

you want to make small adjustments that's why when a stock does go parabolic it moves up a lot it falls down a lot rolling is not your get out of jail free card it's not going to get you out of every single situation at the end of the day if a stock moves against you completely you will have to wait patiently to actually make your money back you won't always be able to roll and fix every single position however I will say that rolling for me fix fixes 90% of positions so as long as the

market isn't crashing as long as you're picking high quality companies you're going to make money rolling and in this example with the covered call I've already made money it's already above my average cost and I've already collected income as a covered call the only thing that I'm really paying for here the debit is to not lose my shares and to step up in my cost basis and by the way I advise well not a financial adviser of course I'm just the guy in the internet but I advise or tell my clients my students and my

Discord that they can roll unlimited times guys you can roll indefinitely month after month after year after year forever for the rest of your life without ever having to actually pay money for taxes you can keep stepping up in your cost bases is actually one of my unlimited profit potential strategies that I use with rolling I just roll indefinitely forever all right guys so we've talked a little bit about techn analysis we use my three main indicators which is RSI Binger band and moving average now what I want to talk about is fundamental analysis okay

from one perspective you can look at the charts and see where a stock is historically and where it is today so you can see where the stock was trading at so if a stock such as PayPal which is a really good example if I pull out PayPal PayPal was a $300 stock it has pulled back tremendously and that is the reason why I bought the stock so if I go to the Chart right now you can see here that in the past 5 years the this is a very interesting chart the stock went up all

the way to $38 if we take a look this happened in 2021 and then since then the stock has absolutely gotten decimated and has crashed down to just $66 now taking a look at the past 6 months the stock has really not done a whole lot which is really interesting that means the stock was trading at very high levels has pulled down tremendously now it's going sideways which means that this is a very interesting stock for a selling strategy such as a covered call a sell put specifically would work very well here because it's very

unlikely that PayPal is going to fall lower for example if you look at the Binger band The Binger band low is 61 um the Binger band high is 68 so this stock is trading in a very specific range so this sideways action is actually very good for covered calls selling puts it's also very good for an iron Condor strategy which we will talk about once we go over spreads so this is very interesting from the perspective of technical analysis because you can understand where the stock was trading at and where it was trading at right

now now that's a technical perspective now I want to talk about fundamentals okay so when you couple technical analysis as well as fundamental analysis together you really get a good picture of the stock and you get to understand the company a lot better so here's what I would do if you want to understand fundamental analysis so I like to go into the statistics tab of Yahoo finance now you can also use your broker you just need this data it doesn't really matter exactly what platform you use to understand this data so first of all the

market cap here is 68 bill billion dollar that is a pretty big company which is good for option trading I don't recommend people trade options on companies that have lower than a two billion valuation typically those options are very IL liquid meaning that there's not a lot of volume and when there's low volume that means that the bid in the ask spread I can go over an example of this real quickly the bid in the ask spread is going to be very wide okay here's what I mean by that a bid and ask is exactly

what you're paying for or you're collecting in terms of when you're buying or selling options so for example if I go to trade PayPal options and I go to buy a call and let's say that I just buy a 70 call here you can see that the bid is 5 cents and the ask is 6 cents that's amazing that's very good that means they're very very close and when you're trading you don't really experience any slippage no costs you're getting a good fill rate you're going to get filled on this right and the volume is

very high now let me show you something where the volume would be really bad and the bid ask would be really bad so if I go to like a you know different expiration day let's say December 20 and then I picked something like 72 and a half you can see right here that this is still actually a very good bitas spread just in general because PayPal is a very actively traded company and it has a good market cap I'm going to show you in just a moment a bad example but this is a little bit

wider but still really really good but if I go into a stock let's say I go into you know Oatley or if I go into something else like I could go into an expensive stock like Chipotle but let's just go to Ole okay I haven't traded this stock in a very long time let's go to sellp put and let's go to a future expiration day let's say we're going to go for January 17 all right so if I were to go to the 0.5 here this is an awful option like this is absolutely really really

really bad this is what I mean by a company that's smaller is going to have bad options so the bid here is zero okay so if you're trying to sell this you'll literally probably get nothing for it you won't even be able to get filled and if you want to buy it you have to buy it at 15 okay so this is really bad and also there's zero volume so literally nobody in the entire world has traded Ole today the volume is zero the open interest is kind of high though 944 contracts have been traded

historically in the past but you can see here how the bid and ask is just really really bad now if I go to Chipotle this is a stock that I really like however it is very expensive so I do look to trade spreads on it however I can't even really trade spreads on it and I'll show you exactly why again talking about the bid ask spread and this really important tip when you're trading options on market cap size which has to do with fundamental analysis so if I go into let's say I want to sell

a put okay if I were to sell a put and this is very similar to selling a put credit spread but let's just go for a put let's go for July so if I were to go to I don't know even something like near the money you can see here how the bid in the ask is so bad look it's 73 and 79 that's a $6 Gap that's $600 so if you were to get filled for this you're probably going to get filled somewhere in the middle and that Middle Point is $300 away from the

bid and $300 away from that ask give or take so you're literally losing $300 now granted you are going to collect a good amount of money here you're going to collect $7,000 if you were to make a trade like this but the bid ask is absolutely terrible and the volume here is zero and the open interest is five so this right here would be an example of a really bad option and you know I'll give you some foreshadowing right now for what a spread is but if I were to sell one put and then if

I were to buy another put right below this wouldn't even make any sense all right so this is going to have a really really hard time getting filled look at the bid it's negative 380 and ask is 750 so this is so bad in terms of bid ask that you want to be really careful and chipotle is actually a big company but this is an example of when volume is low and when bid ask spreads are very wide that does not make a good stock for trading options now the next thing that I want to

cover after this market cap is uh looking at the PE Ratio both the trailing and the forward PE okay so the trailing PE just means what is the PE Ratio right now the PE ratio for PayPal right now is 16 that just means that when you take price of you know $66 and you divided by the earnings okay you get a ratio of 16 let me make it more simple for you if a house were to cost $100,000 and per year you were collecting $10,000 in rental income all right you have a price to earnings

of 100 the cost of the house 10,000 the cost of the earnings or the earnings that you get 100 divided by 10 is 10 so in this example that I gave you on a house that cost $100,000 and a return of $10,000 in rental income per year the price to earnings ratio would be 10 so here what this is saying is you're paying $160 for $10 worth of earnings that is kind of interesting because in real estate you collect more but the thing is stocks can appreciate a lot more than real estate and this is

what I like about option trading is that option trading can make a lot of money and then stock trading can also make a lot of money typically in a given year um the stock market go up 10 to 12% with option trading you can have some insane results like I was saying earlier in this video that I turned $100,000 into $700,000 so but you still want to understand fundamental analysis in the perspective that sometimes it can be really high if it's really high for example if I go to a company like Nvidia it's very high

because Nvidia is an AI company that's pricing in a lot of future growth a lot of investors are very bullish on it and you will see right here that the trailing PE ratio is 77 which is pretty insane it's really really insane so to get $10 worth of earnings you are paying $770 so if you put up $770 this company will earn you $10 per year so that is a pretty bad return when you look at it at face value but the thing is you can now see the next metric which is forward PE ratio

you can see here how Nvidia goes from 77 to 38 now how does that happen or what does that mean well that means the trailing PE ratio right now is 77 again video is making let's say $10 and it's trading for $770 in all reality it's trading for $899 which means that it's probably having an earnings of $12 13 or $4 or so give or take right now in the 4p ratio means one year from today what will the PE Ratio be based on estimates based on analyst estimates so what's really interesting here is that

Nvidia is going from 77 to 38 what's crazy about that and what's really cool is that means that analysts are literally predicting that Nvidia will double earnings so if it doubles earnings then the PE Ratio will be 38 and in the future as these earnings come in investors will say hey this company is growing so quickly I think 38 is a very cheap PE ratio I'm going to buy it and this is actually what drives stock prices up they go up because the expectations of the market are that the stock is going to continue to

earn more money and investors are willing to pay more money for the stock price and as they're buying up shares this increases the value of the stock so the stocks value goes up so as you can see the forward PE ratio here is 38 maybe in another year it will be 19 maybe in another year it'll be 9 and A2 maybe in another year it'll be 4.5 4.5 would be a steal so if this price of the stock were to stay the same and this stock kep doubling its earnings then in 1 year 19 in

2 years 9 and a half in 3 years 4.25 who doesn't want to you know put in $425 and get $100 back you're basically having a price earnings ratio of four by the way if you flip the ratio the p is the four if you flip it you get 1/4 earnings over price so you're going to get $1 for every $4 that you put in or a return of 25% now I don't know about you but the banks are not paying 25% bonds aren't paying 25% nothing in the world gives you a guaranteed percentage of

25% per year so technically speaking in just a few years Nvidia if it were to be doubling would be an amazing value at 25% now another year after that it would go from 25% to 50% % per year in returns now what does that mean does that mean that you're going to get 50% returns not necessarily all this means is if Nvidia were to keep doubling the PE Ratio would continue to go down and become so cheap it wouldn't make any sense the only way it would make sense is if the stock price Rises because

that makes the P bigger therefore the valuation continues to stay stable maybe it's not going to be 77 maybe it's not going to be 38 but as it keeps doubling in my example it will go to four but let's say investors think it should be 20 PE ratio so the PE Ratio here could go down to 20 and that means that the stock would 5x in the next 4 years in this example if it were to continue doubling now with that being said Nvidia is not going to continue doubling because if you go to the

financials it's very unlikely to do so so you can see here how and I said it's unlikely to do so but it is it went from 16 billion in 2021 in 2022 I'm under the financials tab by the way in 2022 went to 6 billion which is almost a double 2023 actually it just made slightly more but in 2024 we had a Skyrocket of more than double so if you take the growth rate here it's not quite doubling but it is going up and it can double but it's unlikely to continue to double all the

time as you can also see here Nvidia has beaten earnings over and over and over again that's typically a positive sign of high momentum on the technical and the fundamental aspect this is kind of somewhere both that many earnings beats is a very positive sign for a company so this is a very good thing and as you can see here the annual revenue just continues to Skyrocket and the earnings have actually skyrocketed as well actually the earnings went from 4 billion up to 29 billion so analysts think that the earnings can double again meaning that

the price to earnings ratio is going to continue to fall if you want to know what the average price to earnings ratio is it's between 20 to 30 that's what the S&P 500 General stock market index is is give or take roughly so you want to look for a PE ratio around 20 to 30 however if you see a high PE ratio that isn't necessarily mean that it is a Bad Company it just means that the company most likely has high growth and investors are predicting that the stock will go up and that's why it

is trading for expensive levels next we will look at price to earnings group ratio that's what Peg stands for and that is the 5year expected peeg ratio so this just takes into price to earnings divided by growth now this is an interesting metric because typically it's around one or two so here you can actually see that Nvidia is actually around 1.24 so when you take into account growth it actually has a fantastic growth rate now if we take a look at Tesla just to give you guys a different perspective of other companies and how expensive

they are you can see here that Tesla has a very interesting scenario Tesla actually has a PE ratio of 47 right now but in the future because actually it looks like analysts are expecting their earnings to actually slow down and because they expect it to actually slow down you can see here the forward PE ratio is actually more expensive this is a signal that Tesla can actually be a very bad stock if Tesla doesn't experience enough growth this could be a stock that has to go down in value because the PE Ratio is just way

too expensive now also the PEG ratio is also very expensive the PEG ratio here is 3.27 NVIDIA seems very expensive and it's going up a lot and and Tesla is going down a lot but the fact of the matter is it actually looks like Tesla is a worse value it actually looks like this stock that's falling is worse and Nvidia is better because in the future envidia is likely to grow more based on analyst estimates whereas Tesla looks like it's going to slow down and because it's slowing down the PEG ratio here is actually worse

it's actually a lot more expensive to buy Tesla now they taking a look at the next metric is price to sales price to sales is simply how much is the price of the stock how much revenue do they have and those two numbers are divided so for example you can see that the market cap for Tesla is $580 billion and let's say that their sales is 100 billion so if it's 100 billion you take the market cap of 5.89 divided by 100 billion you get 5.89 here we have a ratio 6.8 which means that Tesla

has just probably under about $100 billion do worth of sales per year this is an awesome metric because it lets you kind of stabilize and compare an apple to an Apple because if you look at earnings earnings are not always that relevant I mean if you look at something like an Amazon as they were growing their earnings were negative for a very long time earnings can be negative for quite a long time and I'll actually show you that that was also the case for Tesla and they can quickly go into the profits so here you

can see that they were actually in 2022 broke you know $721 million and you can see here how the earnings are actually going up but if you take a look at something like we were just looking at Nvidia I believe that the earnings were actually negative so no the earnings here were also positive that's because a lot of these companies are um you know they're already mature if we look at a company like rivan which I don't like at all I've never recommended rivan this is one of my more hated stocks I don't think the

brand is too good you can see here how they lost a billion they lost four they lost 6 billion they lost 5 billion Okay so although the revenue is certainly Rising it certainly does look you know good the earnings are really really bad so I would really steer away from a stock that has these type of elements like the PE Ratio is non-existent cuz they're not making any money price earnings group ratio is non-existent and non applicable because well they're not really making any money they're losing money price to sales is two but that's expensive

if they're not making anything this company has a high chance of going bankrupt you have to pay two times more than sales you know this is lower than Apple and Tesla but you know still I'm not really bullish at all on this company so you know let's continue on and look at other I'm going to skip price the book it's not as important although some of these metrics can be somewhat important but I don't look at these as much now take a look right here you can look at the share statistics you can see how

much uh is held by insiders as well as institutions now an important metric that I look at is short percentage of floats so this just means out of all the shares outstanding and floating how many Shares are being shorted and here it's 22.98 which is incredibly incredibly high now if I look at a different company like uh Disney Disney is down a lot today if we take a look at the short you know the short is 1% so there's a whole lot of people shorting which just means that they think that the stock will go

down they are bearish so they believe that the stock will fall in value percentage short is a good metric to really look at because it also tells you how hated is a stock how many people hate the stock and if it's a really hated stock I would recommend that you not touch the stock and maybe you can buy some put options but you would uh generally want to stay away from the stock because it's most likely a very lowquality company now there are other metrics that you can look at for example like profitability like the

profit margin this is a very interesting ratio however it depends on the industry so a company like Amazon or Disney may have a very small profit margin because they're doing a lot of volume however if you look at a company that is more of a software play you know something that comes into my mind might be like snowflake if you look at something like a snowflake it may have a lot higher profit margins here actually it has - 29 so this is not a good stock to look at now let's take a look at data

dog I'm trying to find a traditional business in in software that is just cranking out a high amount of of money again here is 2.28 and as you guys can see big companies have a lot of expenses so there a lot of them are really running on tight margins which is why you do see you know sometimes companies laying off a lot of people so let me go to Microsoft for them you know when they can save money it is a big deal Microsoft should have some really good profit margins actually meta has good profit

margins yep so here's an example of a beautiful business this is something that Warren Buffett would look at something that he would own because you know the profit margin here is is really big it's 36% on large volume because it's a big software company profit margin is 36% you can see here how the share short is very very low I mean you'd be kind of silly to short Microsoft on the long-term basis because you know when I was working on Wall Street one of the analysts told me stocks just like to go up and the

longterm they're always Rising so any 15-year period 99% of the time stocks are going up so it's really kind of a bad idea to buy put options on large stable companies in the long term maybe in the short term you can gamble with that but I would not recommend it you can see here how the shares short is very low the price of sales ratio here is 13 which is very high and that's because the market knows that Microsoft has a very stable good business and then they're willing to pay a higher price for the

sales and you can see here how the p ratio is actually 30 so it's not bad that means that you put in $30 you get $1 worth of earnings or an earnings yield of about 3.3% so in general 3.3% per year what I'm doing how to get that 3.3 is I reverse 30 and I reverse it I put 30 on the bottom one so 1 divid 30 the earnings of $1 for $30 that you're putting in is about 3.3% so why would would you settle for 3.3% well that 3.3% is going to be growing every

single year so Microsoft is improving its business and earnings are growing so the 3.3% will get more as time goes on and that's why people buy stocks they want those earnings as well as dividends there's a lot of dividend paying stocks especially the bigger stocks they will pay you an annual dividend so here you can see that the Ford annual dividend yield is 73% so it's not really high you're not really going to get rich off the dividend but hey some stocks can pay you 3 or 4% dividend so that does add up you get

the dividend plus you get upside plus if you're doing something that I call the double dividend strategy which is dividend paying stocks two covered calls you get a double dividend you get paid dividends from the stock as well as you get paid from the covered call you can do that on a quarterly basis basically collect two dividends there and that's a really good way to retire that's a really good way to make you know $110,000 a month $30,000 every quarter $120,000 a year you can get into that retirement Zone pretty quickly with option trading of

course you need some Capital it'll take you some time but you know I've been able to achieve that and basically get into the retirement Zone by you know just simply doing strategies like covered calls selling puts as well as some other small account strategies of course so to go over some more of the statistics you can look at Revenue to understand how much money are they making you can also look at quarterly Revenue growth year-over-year that's why y y stands for year-over-year so year-over-year how is this quarter to last quarter and they grew by 177%

and you can see here how quarterly earnings are doing very very well so the revenue growth is growing 17% and the earnings are going by almost 20% all right so now we're going to be talking about the wheel strategy so to do the wheel strategy you need to know what a covered call is you need to know what a cash secured put is which I covered earlier in this course so go back to that if you don't fully understand them the whe strategy involves a covered call and a cash secured put at different times to

start off the wheel strategy all you want to do is sell a put option once you get assigned you start selling covered calls to generate income on the position that you got assigned the will strategy is my very favorite stry because you can make $5 $110,000 a month pretty easily especially as you scale your portfolio I also like the wheel strategy because it's a safe consistent option income strategy that honestly is my number one strategy because it's just so consistent it's really easy so first you start by selling a cash secured put a cash secured

put means that you have the cash that if that put were to get assigned then you have the cash to purchase that put option if you do get a sign so say that you sell a put option at the $100 strike of a you know different stock let's say it's Apple then if you get ass signed at $100 that's basically $10,000 position you can also sell a you know put option on something cheap like American Airlines that would be $1,400 if the strike is 14 so a covered call means that you already have the cash

set aside in the account as well so whether it's selling a put option you do need to have the cash set aside or a covered call option you need to have 100 shares of stock so again this is a capital intensive strategy so you will want to have a stock 100 shares of so like that could be pal here that could be anything that you can afford 100 shares of or vice versa if you're just going to sell a put option to get into the strategy then again you need to have that cash laying around

if those are too expensive for you you do have to look for the cheaper strategies that I will cover later on in this course the point of the wheel strategy is that you're never afraid to get assigned you are never ever afraid to get assigned so if you sell a put option you're perfectly happy to get assigned 100 shares if you you know get assigned and you have those shares you sell a cover call if the covered call gets assigned you lose your shares you're also perfectly happy you're just generating income on both sides you're

Genera income from puts you're also generating income from selling covered calls so you should never be frustrated or upset if you sold a put option you get a signed yes it can go very into the money and that could be difficult to run the wheel strategy but in like basically 90% of cases it'll be very easy to run the wheel for consistent passive income so I wouldn't really worry about it especially if you're using high quality companies once you've chosen the stock that you like now you have to pick a put contract with a relatively

safe strike price with an expiration date of 30 to 40 days you can use shorter term expirations you can also use longer term expir ation I prefer to go for monthly income so I will pick an expiration date that's 30 days out and also my sweet spot Delta will be about 30 as well so after working for Goldman Sachs looking at lots of research reports what I realized was that selling options is way more profitable than buying options I also realized that if I'm going to be selling put options this is fantastic for having safe

passive income it's fantastic for growing a portfolio selling put options to run the wheel strategy is specifically very good in volatile markets because when volatility is high selling options is better when the market goes down you make more more money than an average stock investor does using the wheel strategy because selling puts to get into a stock already gives you that margin of safety as well as cushion because when you're selling a 30 Delta put option or let's say you can also sell 25 Delta anywhere between 20 30 Delta is a really good sweet spot

you'll actually get assigned about three out of 10 times on a 30 Delta if you're doing a 20 Delta you'll get assigned about two out of 10 times obviously the less out of the money your strike price is the higher premium you're going to collect but in general and especially for beginners the wheel strategy is not about getting greedy it's about safe consistent returns so you generally want to pick a strike price kind of far out of the money you can also go under 20 Delta you will get paid a lot less if you have

a bigger portfolio this will favor you now if you have a smaller portfolio you may even decide to go a little bit higher than 30 Delta because you get paid more the most important thing isn't how many dollars it is out of the money but How likely it is to go into the money so again you can go $1 out of the money that could be really good for a cheap stock like American Airlines that could also be not that far out of the money for a more expensive stock like Tesla so it's not necessarily

how many dollars you got of the money it's how far away you go as a percentage basis the risk and option trading is that in the short term you may get unlucky but in the long term if you're using the strategies that I'm teaching you are going to be very successful over a longer period of time just like in a casino if you were to go to a casino and you were to make one big bet that's actually very scary for the casino because the casino could lose in the short term however if you go

to the casino and you just keep doing $10 bets over a thousand times you are virtually guaranteed to lose because the casino has a small Edge so what I'm teaching mostly on my channel is actually option selling because option selling makes you the casino you become in the power seats where you're making consistent income using the strategies and the techniques that I'm teaching you because I know that they work so when you sell a put option that option is going to dek every single day you can buy it back at any point because there is

Theta Decay that option is becoming less valuable and because it's becoming less valuable that's a really good thing for you because you're able to buy back that position for a gain as long as all things stay even that data will be kicking in of course if that stock goes down then your put option may be at a slight loss which again is fine if you take assignment you have 100 shares now and you're in the perfect seat to do covered calls okay to explain the expiration day 30 to 40 days is a pretty normal expiration

anything much longer than that and we're starting to get into the risky territory because so much can happen past 40 days the thing is you can sell puts that are Beyond 40 days this really depends because if you're picking a high quality stock you really don't mind so you can do longer term options and you will actually get compensated more so when you go out that's 60 days 90 days or you know multiple months the compensation to you comes faster because you have to take all that upfront risk right away however I will say that

the most profitable trading is between 1 to 6 weeks that's because that's when Theta really kicks in you can see a chart right now on the screen Theta really speeds up up towards expiration so as expiration approaches the Theta is becoming more and more this means the option is decaying in value again if you're an option seller which is what the wheel strategy is about and this actually benefits you if you're an option buyer this is why buying options is better to go out longer term because there's a lot more that can happen however I

will say that one of my strategies is to buy shorter term calls but that's a more advanced lesson than this course anything shorter than 30 or 40 days in the premium isn't going to be that good how however the expiration is so short so you can do that many many times you're going to want to experiment with this again for me it's 1 to 6 weeks and there's much more that goes into it I also like to really understand the stocks that I'm paying attention to and my list of stocks is only about 25 or

30 stocks that way I can make really good decisions and keep trading the same stocks over and over again so once you find a strike price with a Delta around that range in that expiration date it's time to sell the put option this is of course the most fun part where you get to collect your premium up front and then as soon as you collect the payment you should be watching your position to see if the stock price starts getting close to your strike price in most cases it's really not going to do anything when

you sell an out-of-the money put most stocks just typically go sideways because most days stocks are not really moving that much sure they might move half a percent 1% but if you're selling a 3 or four or 5% out of the money put option in most cases you actually don't really need to do much you can monitor the trade every few days but you do not have to look at it all the time in fact I have so many students that are doctor doctors dentists lawyers software Engineers they're very busy professionals they're already making a

high income so even when they do make $10,000 per month doing option trading they still have a very busy life so they don't necessarily want to look at their portfolio and I always tell them that's completely fine you're not going to get better results by being obsessive over your portfolio the fact of the matter is actually really good to set a position and just completely forget about it you can check on it every couple of times per week it's also not really worth rolling this type of position because since your goal is to get assigned

I typically would not roll a short putut position or a sellp put position because I'm happy to own it unless I for some reason change my mind about the stock or I slightly want to have a different entry point then I can roll it using the dog strategy but in most cases this is not necessary at all because once you get assigned you can do covered calls and by the way I would also do covered calls around a 20 to 30 Delta I have just found that that is a sweet spot for me so after

that if the option goes into the money again on the covered call you do have a decision here you don't have to lose your shares because often times you'll be generating a lot of money with the wheel strategy and if you're up a lot on the stock then you might not want to get rid of it you may say to yourself hey I want to hang on to this that's where rolling comes in you can roll the in the money covered call you can roll it up you might not roll it up to become out

of the money but you can roll an in the money option up up up until it becomes out of the money you can do that on a weekly basis you can do that on a monthly basis or you know you can even go farther than that the whole goal is that you're going to be stepping up and rolling up if you don't want to lose a stock if you're okay losing the stock that's perfectly fine as well you're going to be making money regardless some really successful option traders that I know literally only use the

strategy they want to have a very boring strategy for whatever reason whether they're retired whether they already have a big portfolio and they're just doing this to generate extra income they're very lazy with it and that's perfectly fine I'm also a lazy Trader myself I don't like to trade too often because overtrading is a very big issue so if I had to pick one strategy to recommend to people who are looking to retire safely I'd always recommend the wheel strategy because it's so good and it has such big results the last thing I should mention

about the wheel strategy is that when you're about to sell your covered calls you need to take into account your cost basis and to explain what cost basis is I'm going to show you an example let's say that you sold a 165 put option for one week and you added you know 30 cents in premium so now your break even is 16470 that's because when you have a put option that's at 165 you collect 30 now you have 16470 so when you get assigned you can count your cost basis minus the pre prum that you

collected and in theory as you keep running the wheel strategy you can basically get your average cost down to zero why well let's just take this example let's say we go back to the 165 put so you sell a 165 put you get paid a dollar nothing happens you don't get assigned next week you get paid again a dollar you do the same 165 put nothing happens the stock goes down but it doesn't reach 165 and so on and so forth let's say the following week it's more volatile you get paid $2 the following week

you get paid another $1 okay now if you were to get assigned you've already made $5 you made one one and two and then another one so now you've gotten paid $5 and let's say you do get a sign at 165 well in theory your cost base is not 165 it's 160 so once you get assigned let's say that you sell a covered call and you sell a covered call for $5 you don't get assigned let's say the stock just goes sideways you sell another covered call you get paid $3 so that can keep happening

and your average cost can keep going down every single time you collect premium So in theory you can actually have a position that you pay nothing for because you've collected so much premium over time to basically compensate your average cost to become zero that means that you know basically you're in a really good position and you can do anything that you want with that stock that also means that when you get to the second part of the wheel strategy where you have to sell covered calls you want to pick a strike price that is above

your cost basis so if your cost basis is 160 then you probably want to do a covered call that is above 160 otherwise you'd be selling your stock for less than your cost basis which is not going to feel really good the covered call is best used on really high quality companies so for me that's Apple that's Google that's Microsoft that's other highquality companies that are in the S&P 500 I typically like to go for Blue Chip stocks that have a good reputation good brand that way they are very predictable and on a predictable stock

running the wheel strategy is fantastic because you're collecting income on the puts you're collecting income on the covered calls and the stock is typically bouncing up and down there is some volatility but not a huge amount of volatility and that's what makes the strategy so good for retirement in fact I would say that once you have an account that's you know 50k $100,000 then you can basically run a majority of your portfolio just using this strategy hey guys I hope you're enjoying this course so far as you can see I'm filming in a new studio

because this course is being filmed over many days so if you can please share this with a friend or at least one person that you think could benefit from this that would be greatly appreciated so continuing on now that you understand covered calls cash secured puts and how one type of option works by itself you're ready to learn how you can combine different types of options to create what we call spreads a spread is simply two or more option trades placed simultaneously usually you buy and sell an equal amount of option contracts when you combine

two or more types of option trades together you can form all different kinds of strategies that benefit in different market conditions once you understand these few basic spreads I'm going to teach you it'll open up the doors to literally 90% of option strategies and I want you to pay special attention to this in this part of the course because spreads are absolutely awesome and they're really good for scaling a small portfolio they allow you to take a limited amount of risk with a small amount of capital and to get a lot of money back with

a high probability of winning each trade they also allow you to actually make super consistent income for me spreads is literally like the ultimate way to growing a small portfolio and when I started out with just $2,000 I Grew From $2,000 to $7,000 in a given year that year was pretty difficult I didn't really know what I was doing but spreads were a huge part of that and then I took $7,000 to 17,000 and then from there over a number of years I finally got it past the seven fig amount and spreads were literally one

of my biggest components for doing that in fact back in 2021 I turned 100K into $700,000 that a 7x return and a big contributor to that was spreads I was using spreads on Tesla to multiply my money quickly although Tesla was one of my biggest contributors I've also traded many other stocks Apple Google Microsoft I personally like to stick to technology companies because using spreads on tech companies gives you the best of both worlds it gives you high implied volatility which means the stocks are moving up a lot you can make a lot of money

quickly gives you good risk reward ratio which is also very important for me and honestly like I really love the limited risk that I have with spreads so first of all I love taking a limited amount of risk because well nobody wants to risk everything that would be completely silly that's not proper risk management and many people you know they have just one big position or they have too many small positions none of those are actually going to give you the big results you need balance in your portfolio that's where spreads really come into play

if you have a small portfol folio you can use spreads to just put in $500 per position and now you can diversify while also having a high returning position which is a spread so let's start off with the most basic type of spread and that's called a vertical spread okay a vertical spread consists of either two calls or two puts in a combination with each other out of those two calls or puts one of them is a long position and the other one is a short position basically you sell one call you then go ahead

and buy another call you sell one one put and then you go ahead and buy another put okay and just for those who aren't familiar long just means you're buying and short just means that you're selling also the long and short positions have different strike prices but the same expiration date you'll be able to see that on the screen here I'm going to pop up an image of an option chain and if I buy one strike price and short another strike price you will see that this creates a spread visually you can see why it's

called a vertical spread now within the vertical spread there are multiple kinds of spreads that you can do and I'm going to make this as simple as possible for you to understand I'm going to go through each one very slowly the first one is called a bull call spread you can remember that because it's made of two calls and it's a bull strategy meaning that you want the stock to go up you should also know that some people call it a call debit spread because you pay a net debit so when you pay a net

debit you are paying money because you expect a certain outcome to happen and you can multiply your money you're making a bet you're paying and then you have an outcome okay in other words you pay let's say $50 on the spread but you can make up to 500 so you can 10x your money so let's visualize it to help you understand a bull call spread starts with buying a call option but before I show you what the whole spread looks like let's first compare if I were to just buy a call option by itself for

$8 at a strike price of 1885 and say that the market price of the stock is currently at10 your potential profit and loss chart for this option is going to look like this as you can see the vertical access represents your profit loss low to high and the horizontal access represents the stock price low to high if the stock price goes below 185 the maximum amount of money I can lose on the option is $800 which is what I paid for the contract remember that an $8 cost is $ 800 because it controls 100 shares

now my breakdown aka the price of the stock needs to go for me to make a profit is going to be $193 your break even for the calls can be easily calculated by adding your strike price and the premium that you paid together and lastly my maximum price is infinite in theory because the underlying stock can keep going up higher and higher making my option more valuable and the higher goes the more money my option is going to be worth so that's what buying a call option is going to look like by itself to make

this a bull call spread I need to also short a call option at a higher strike price so let's take a look at how everything changes when I short another call option at say 195 for example and let's say that for selling this call option I get paid $2.50 per contract this is obviously going to change how our profit and loss chart looks like as you can see on the screen my Max loss is what I paid for the spread in total and on most Brokers you can easily pay for the entire spread in just

one transaction on Robin Hood At least you need to be approved for level three option trading to trade spreads because it's considered an advanced strategy but it's really not that complicated if you follow through with this anyway in this case that the total spread price is going to be what you paid for the call option minus the premium that you got paid which is $250 so now your max loss is $550 instead of the original $ 800 you see you actually reduced your cost you subsidized your call option by selling another call option and this

is not including if you get a signed on the option that you're selling I'll cover assignment later in this video so I reached my Max loss if the stock price is at or below my lower strike price of 185 because both of my calls would expire worthless at that point and not only is your maximum loss less but your break even is also less now instead of 193 I would only need the stock to go up to 19050 to break even however there is a trade-off for a lower loss and break even of course all

things in life have trade-offs which would be that your maximum profit is now capped it's not unlimited however I'm going to explain to you why this is actually more advantageous you can easily get your max profit for any spread by just seeing how wide your spread is in the case my long call is 185 and my short call is $15 making my spread $10 wide that means if the spread expires when the stock price is above both of my strike prices they will make a maximum profit which will be $10 which you need to multiply

by 100 to get a real maximum profit of $11,000 so we can assume that the width of our spread will always be equivalent to our maximum profit and just in case that this doesn't quite make sense to you let's prove it by going through a quick scenario let's say right as the spread expires the stock price is above $ 196 so $1 over our top strike price then my long call would expire $1 in the money and my short call would expire $1 in the money and since options always lose all of their extrinsic value

at expiration that's exactly why and how their total value would be as well so to close out this spread and exit our position all we would have to do is sell our long call for $11 and buy our short call for $1 so we would make a net profit of $10 and of course most Brokers let us do this all in just one transaction and from here you can assume that you can't make any more than $10 because even if the stock goes up by more than $5 we'll make $5 more on the long call

but we're still going to be losing $5 on the short call but realistically you're going to want to exit your bull call spread before expiration so it's even if the stock goes past the short leg of your spread it's not going to be worth $10 because the extrinsic value of the short leg is going to be more options that are closer to being at the money are always going to have more extrinsic value so since your short leg is closer to the stock price you're going to be paying more to buy it back so realistically

if the stock goes up above both strike price expirations depending on how much time you have left your spread might still be worth something like $7 or $88.50 but it's not really going to be worth the maximum of $10 which is completely fine because if you end up closing a position early say that you opened up a position that's a month out and if you ended up closing a position in like a week or two weeks and you made8 out of $10 that's really good that's fantastic that's pretty much my exit point I either wait

until expiration or if I can get $7 or $8 or 70 or 80% of the bull call spreads value then I'm going to do that if I can do that early and it's important to know your maximum value because once you start to see the value of your spread getting close to its maximum you should be taking profit there's absolutely no reason to risk losing at all just to get the extra dollar or 50 unless you're really close to expiration in that case sure it makes sense for me I do close bull call spreads quite

often and quite early if I can see even a profit of 30% in 3 weeks to be honest I'm really happy or 30% in 3 days it just really depends for me I look to close an option before the 50% Mark so if it's a month out I Look to close it at 2 weeks if it's two months out I Look to close it at four weeks okay only though if I have made a certain amount of profit that profit isn't specific sometimes for me it might be 30% 40% or 50% you need to set

this goal before you enter the position because coming in with the plan is going to make you a lot more successful than trying to figure out in the moment because what happens and I've seen this over and over again from coaching 4,000 students they typically get greedy and if you get greedy in the moment then you're too much into the situation to really understand logically what has happened so you need to zoom out have a plan when you go into the situation and then when once you're in the middle of the situation don't get emotional

use logic and take your profits early if you see a really good return in a short amount of time lastly I know some people are going to have this question in their heads what happens if I get a sign on the short call part of my spread because if the stock goes above my short option technically the buyer has the right to exercise so usually the buyer will never exercise on you when there's still time until expiration because it is just really it just doesn't make sense they would just be throwing money out of the

window into the TR can by not selling the option instead of cashing it in on the extrinsic value I mean if you even look at it right now nobody's going to be exercising options early because the value of an option is usually a lot more than exercising that option so it actually doesn't really make sense a lot of people are afraid of exercising or assignment but typically that doesn't happen especially in the spread example the only reason that it happens is if the option is very close to expiration let's say there's only one or two

days left that option is in the money then yes your chances do increase and I do recommend closing at a spread that's in the money by a lot in the last few days but that's actually not true for buying spreads so in the example of a bull call spread you don't have to worry about that you only have to worry about it in the case that we talk about selling spreads which we will talk about shortly so most of the time you won't have to worry about early assignment but yes it's very unlikely but still

possible the only time it might be likely that you got assign early is if your short option is super deep in the money but at that point it will have so little intrinsic value that you should have already closed your position and taken your profit anyways cool so now that we have covered the bull call spread which is the first out of the four types of vertical spreads also two vertical spreads are categorized as debit spreads meaning you have to pay to enter them and other two are categorized as credit spreads meaning you get paid

to enter into them since we just covered the bull call spread which is a debit spread the next one I'm going to be talking about is the bare put spread which is also known as the put debit spread and there's a reason why I'm covering the debit spreads together first because as you're about to see the barep put spread is the same exact thing as The Bull call spread except you want the stock to go down hence the word be being in the name so again let's show the graph on the screen now a bare

put spread starts with buying a put option but before I show you what the whole spread looks like let's first compare if I were to just buy a put option by itself for $4 at a 58 strike price expiring in a month and say the market price of the stock is 55 your potential profit and loss chart at expiration is going to look like this if the stock price goes out of the money and above 58 strike I will lose 100% of what I paid for the contract which is $4 so the maximum amount that

I can lose is$ 400 my break even price for this put option is going to be my strike price minus what I paid for the option so $54 meaning I need the stock to go below 54 to make money at expiration and lastly my maximum profit can technically be quite a lot in close to infinite but of course the stock can only go down to zero it can't go below zero so you can make a lot of money up until zero that's IR relevant because most of the time it's just not going to happen to

make this bare put spread work I need to also short a put option at a lower strike price so let's look at what happens when I short another put option at 52 and let's just say that for selling the put option I get paid $1 so a real amount of $100 so now my Max loss is 300 and instead of$ 400 because well I just got paid $100 I reach my Max loss if the stock price is at or above the higher strike which is 58 because both of my puts would expire worthless at that

point now let's talk about our new Break Even instead of 54 I would only need the stock to go below 55 to break even because this time I didn't spend the $400 I only spent $300 because I again get subsidized when I sell a put option it actually pays me $100 and lastly let's just go over our maximum profit which you basically come to the point of noticing that you would have a very high maximum profit again you would be capped if the stock were to go down to zero but here everything under the break

even is going to be pure profit if you remember from the last spread we can also automatically know our Max profit from the width of our spread so here in this case it wouldn't be unlimited because now we're not just buying a put option so our spread is $6 and to reach that maximum profit the stock just needs to go down to $52 by expiration that means we're essentially risking $300 our Max loss to make a potential $600 our maximum profit in this scenario for me personally I prefer bull call spreads the reason for it

is because Market typically goes up I personally almost have never bet that the market is going down however if you spot an opportunity of a stock that you think has for whatever reason a bad business bad management or just technically has bad negative momentum it's going down you think it's going to fall this would be a good time to use this strategy for me I follow also very similar rules here if I made 30 to 50% in just a couple of weeks then that's a really good opportunity for me to take profit and close out

this position if the stock continues to go down then I'm going to keep holding the position it's really on a case-by casee basis and you do want to use intuition the most important thing is you want to make sure to use a strategy on a bearish stock so those were the two debit spreads now we can go over and talk about the two credit spreads these are actually my favorite strategies to growing a small portfolio and making consistent income meaning you actually get paid to enter them the first one is called a bare call spread

it's also made up of two call options except it is different from the bull call spread and that you want the stock to go down or the stock can even go sideways it's also known as a call Credit spread as you might have already guessed by now with the spread you generally want the stock to go sideways it can go up a little bit and you prefer it to go down okay the good news here is that you sell a call option first you sell the closer to the money call and then you buy another

call option that is farther out of the money the one that you sell is more expensive that means you collect income and the one that you buy is less expensive so it gives you protection but it costs a lot less money so you actually end up having a net credit you end up collecting income with the spread generally you will be making money as long as the stock price stays below both the strike prices of your spread but it can go even up a little bit you can also go down a little bit you can

still see a full profit so first you're going to want to start by shorting a call option closer to the strike price then the long call option you're going to buy later for selling the $102 call option I will receive a premium of $11.50 and to buy the call option at 106 the option I'll have to pay0 50 that gives me a net credit of $1 so I'll actually get paid $100 to even trade this spread in the first place and $100 is also our Max profit that means my break even is going to be

$103 so I need the stock to fall or stay below at least 103 to make money this is really good for a range-bound stock or any stock that even goes up you just make sure that it doesn't go past your strike price so that's why when I trade a call Credit spread I always pick out of the money options I go further away for that reason there is a less likelihood that the stock will go up to that level so I do pay attention to technical analysis for that but the ultimate goal is that both

of our calls expire worthless and that we get to keep the entire premium that we collected and we don't have to close out the option we don't have to pay anything to close it out we don't even have to do anything as long as the stock stays below the strike price we're in good shape we just wait until expiration now to calculate our maximum potential loss at expiration we need to find the width of our strike and our width here would be $4 then we just need to subtract what we got paid in the first

place so our width is $4 but we got paid $1 to enter this trade that leaves our maximum loss at $3 or a real max loss of $300 you can see that the way we calculate our Max loss and Max profit is actually the reverse for a credit as it is for a debit so the stock goes up a lot is going to be really bad for our short call but our long call is there to protect the downside and cap our maximum loss with the spread we're essentially risking 300 to make a potential 100

you might be thinking to yourself well why would I want to risk 300 to make 100 just to give you an example what if the chances of winning the 100 were 90% but the chances of losing 300 were 10% so that would be a profitable position to make because you would win well over to make a positive profit on your hands if we compare this to the last debit spread we went over it seems like the debit spread is actually better because we're risking 300 to make 600 but the thing is it's more likely that

the stock is going to stay below a certain price for the credit spread and it can even go up for the cred credit spread and you can still end up making money whereas with the debit spread the stock has to go up it like has to move up to a certain price for you to make profit if it doesn't do that you're not going to make any money so that's why it's actually really beneficial to have a credit spread because you actually need something not happen okay it's really beneficial because most of the time you

win whereas with debit call spreads to be honest it can be pretty hard sometimes to win but when you do win you hit really hard so it just comes down to risk and reward if I'm going to be choosing a strike price for a call Credit spread basically here's what I would do I would just go out of the money I typically like to go for a Delta around 15 yes that's a low Delta but that also means that I'm going to have a very high chance of success I mean if I pick a 20

Delta that means the chances of this option going into the money are 20 20% which means that if it doesn't go to the money which again for a call Credit spread you don't want it to go to the money then you end up making 80% so it's really fantastic you win 80% of the time and 20% of the time you have a loss and that's really important how you manage your loss and we'll be talking about rolling options adjusting options and how we manage those positions shortly now the last vertical is called the bull put

spread as you can probably tell it's a bullish strategy using puts and the alternative name for it is called a put credit spread because you're going to get paid to enter it generally you're going to be making money as long as the underlying stock stays above your put spread but you can still make money if it goes down just a little bit so first you're going to want to start with shorting a put option closer to the strike price that the long put option you're going to be buying later on so we're going to start

off this example by looking at a short put option at $98 and I'm going to be buying a put option at $94 for selling the 98 put option I will receive a premium of $1.50 and then I'm going to buy a put option at 94 strike and I'm going to be paying 50 that gives me a net credit of $1 so I'm going to get paid $1 to trade this spread and that's going to be $100 and that's going to be our maximum profit that means that my break even is going to be at 97

so I need the stock to stay above or at least at 97 to make any money but we want both of our puts to expire worthless so we get to keep the premium that we collect to calculate our maximum potential loss at expiration we need to find the width of our spread which is $4 then we just need to subtract what we got paid in the first place to put on this trade which is $1 that leaves our maximum loss at $3 or a real max loss of 300 so if the stock goes down a

lot it's not going to be good for our short putut but our long put is there to protect us on the downside and cap our maximum loss and just like the bare call spread we are essentially risking $300 to make a potential $100 pretty simple right so for me a put credit spread is literally one of my favorite strategies and I'm going to go over example right now and show you how the put credit spread Works how much money you can make put credit spreads and we're going to go into those details right now all

right let's talk about put crit spreads so let's go over an example right now I'm going to use Apple stock so I'm going to click apple right here and then I'm going to open up a put credit spread actually you can see right here how I'm up 380k on the stock and it does make up a significant portion of my portfolio again if you want to see all of my picks I do have a link in the description where you can actually check out my community where I post every single trade that I make now

let's go to trade Apple options the first thing I'm going to do is I'm going to sell a put option now the best expiration date really varies but anywhere from 1 to 6 weeks is going to be perfectly fine the reason is because options actually expire the reason is because Theta or time Decay actually kicks in very heavily in the last 1 to 6 weeks specifically in the last week but going 6 weeks is also perfectly fine now I'm going to pick an expiration date that's going to be in the future let's go for an

expiration date that's 1 month month out now what I'm going to do is I'm going to sell a put option I'm going to sell an out-of-the money put option on Apple and what I'm specifically looking at right now is Delta I want to sell a low Delta the lower the Delta the lower the chances are that the option is going to expire in the money which is a good thing if you're an option seller going to move up right now to the 220 strike and you can see right here that the Delta is9 which is

pretty good that means that I'm going to win about 80% of the time and 20% of the time this option will go into the money so that's perfectly fine with me I'm going to go sell put option and then I'm going to click right here now if I were just to make this trade right now you can see here on the top right it says cash secured put so I'm just selling a put option but to actually make this a spread now we have to go ahead and buy a put option so first we sold

a put option now we're going to buy a put option for me I like to buy a put option one leg down typically I really like the width of $5 a $5 width is pretty much the best I'll tell you why if you're doing spreads that are $1 worth it's not ideal because every time you're trading you are actually losing a little bit of money because there's something called the bid and ask spread here the bid is 1.3 and the ask is 1.35 that means every time that you're trading there's a little bit of a

difference actually a couple of dollars that you're losing out on so if you're doing many a lot of quantity of you know $1 $2 spreads that's not ideal I'd rather do a $5 spread and do a little bit lower quantity but lose less money when I'm making the trade there is implicit cost and explicit cost this is going to be an implicit cost because it's not really factored in but you could Factor it in yourself because now you know so I'm going to go ahead and buy this 215 strike price and now you will see

something very interesting so now it says put credit spread and the difference is $5 you can see here I have a net credit of $75 or roughly $75 to $80 that is actually going to be my Max profit my Max profit profit is what I collect on this option trade right here so let's just say $80 is how much I'm making and I can lose $420 now why is it$ 420 and not 500 well when I'm making a $5 with spread that means I'm risking $500 but because I'm collecting $80 that means that the difference

is going to be $420 so at most I can lose $420 my Max profit is 80 my Max loss is 420 now let's talk about risk management risk management is super important if you want to Prof properly make money on a put credit spread now let's be honest if you make $80 and then you lose $420 obviously you are in the hole so how do you end up actually making money well there's several ways first of all this spread right here has a very high chance of being out of the money or has a very

high chance of you profiting by using technical analysis and by using good intuition picking the right stocks you can tilt the odds even more in your favor that's exactly how you make money trading options this is actually a very hard game to play because everyone in the world wants money and everyone is playing this game but if you want to tilt the odds in your favor you're going to pick high quality companies you're going to use out of- the- money options and you're going to use proper technical analysis now in terms of closing this position

early if this position goes into the money you can think about closing out this position so for example if Apple goes down to 220 from the current stock price of 235 then you can start thinking about closing out this position for a loss and managing your risk okay so if it goes to 220 you can ask yourself do I think is going to go lower if yes then you can close out this position if you're still bullish on the stock and you don't have to use apple you can use any stock then you should basically

not close out this position I have noticed that the biggest raw returns that I get I mean the biggest returns period is by holding the option until expiration and that's why I teach in my community because I like Simplicity I like to do the least amount of work and make this income as passive as possible however there are people out there especially many of my students who are Engineers that want to system they want to know exactly when to close well the bad news is is that option trading isn't really a science it's much of

a science as it is an art form so for me every situation is a caseby case basis sometimes I will close and other positions I will hold until expiration for the majority I hold until expiration and I've had situations where I was down like $155,000 only to wait until expiration and be up like $155,000 so $30,000 difference just by waiting and being patient so it's not always the case that doing more makes more in fact an option trading doing more sometimes makes less now for the best stocks that you should use for a put credit

spread again you want to use highquality Blue Chip stocks and something that you don't want to do is for example I'm going to show you CMG this is just as important to avoid as it is to trade properly now Chipotle has had a stock split so this isn't as good of an example but before and I'll show you what I mean by this but before when this stock was really expensive um it was extremely hard to trade for example the bid and ass spread was very wide now check this out this bid and as spread

is actually 15 cents off which is $15 off very different from Apple Apple was like $5 off this is 15 that means every time you trade although your brokerage could be free this is still going to be an expense of like over $5 $7 $8 potentially so this is really really bad especially if you're opening up multiple legs now check this out this is going to be completely what you don't want to do all right so let's say I want to sell a put I'll show you exactly why do $5 worth so these are really

weird because of the stock split so check this out let me go for uh 62 let's do 62.3 all right I'm going to sell this and then I'm going to buy let's say 62.1 let me show you how whack this is going to be this like look at this you see it doesn't even show you a risk because these options are so illiquid they're so bad like you see 460 and 730 that is so bad in fact it's so bad that Robin Hood is telling you that there's a maximum profit of $50 and no no

Max loss but that's incorrect you're just not going to get filled like if I click continue here you'll see that the bid is- 230 and the ask is 330 like literally it is going to be very very difficult for you to get assigned or even like place this trade you're just not going to get filled on the trade that's really really bad so it says 0.5 here and um you know if I were to enter 05 the chances of this actually getting filled are very very slim to none so I mean if I were to

put in 0.2 yes maybe maybe maybe this would work point2 but still uh this would be an example of a very bad uh bid ask spread to trade so it's really important to pick the high quality companies and it's really important to pay attention to bit out spread so let's talk about how to use all four of these vertical spreads when would you want to use them and what Outlook are you looking for in the stock so specifically what you want to do for the bull call spread is that you're expecting the stock to go

up so you're looking for a stock that's bullish when a stock is bullish using the bull call spread will give you money you'll make money and that's a specific strategy where you're buying a call option that's closer to the money so you're going to have a net debit but you have a whole lot of money to make if it goes up this is literally the best strategy I've made so much money on Tesla by doing bull call spreads next we have the bare call spread or the call Credit spread so a call Credit spread is

basically betting that the stock won't go up you want it to stay lower because if it goes up then you're going to end up losing money then if you talk about the put debit spread which you're paying for a put debit spread you're paying for a put if you're paying for a put that means you think the stock will go down okay I usually don't use this strategy but you can use it for a stock that is going lower then a put credit spread which love it love it love it love it you just saw

an example of how a put credit spread can make you a lot of money debit spreads are for high volatility expecting strong price changes and credit spreads are for low volatility experiencing or expecting little to no price changes in the underlying stock for me the best vertical spread that I typically do is going to have a $5 gap for me $5 is very simple you can also use a $10 Gap and for some small portfolios if you're selling po red spreads you can go for a two or $3 Gap now we're going to get into

the horizontal spread horizontal spreads are the opposite of vertical spreads because a vertical spread here is basically just two options that will have the same expiration date but different strike prices with a horizontal spread your two options will have the same strike price but different expiration dates the different expiration dates being the key characteristics of this type of spread is why it's also referred to as the calendar spread so if you hear the term calendar spread or horizontal spread just know that they are the same thing a lot of different strategies in option trading have

multiple names which can be really confusing but don't worry I'm going to explain to you as simple as possible anyway there's a long horizontal spread AKA buying a horizontal spread and a short horizontal spread AKA selling a horizontal spread and with this spread you can buy the calls and sell calls or buy and sell puts however I won't be covering short horizontal spreads because they technically have unlimited risk and I think it's probably not necessary for a beginner course we're going to start with the long horizontal spread and we're going to use an example of

specifically buying a horizontal call spread to help you understand this strategy is generally used when you expect the underlying stock to stay relatively stable or to only move slightly in your favor in order for you to buy a horizontal spread or pay a net debit to enter the spread the long call that you're buying needs to cost more than the short call that you're going to be selling if we know that only the expiration dates can be different you can assume from what you've learned about the expiration dates affect the price of the option that

the long call has to have a longer expiration date and the short call because the longer expiration dates are more expensive let's say that Visa is trading at $280 which it is pretty close to that at the time of this recording of the video and let's buy a call option at$ 279 and 60 days until expiration now let's sell a call option also at $279 but with only 32 days until expiration and for that I'm going to receive $6 in premium so in total to enter this horizontal call spread I'm paying $4 or a real

price of $400 now as time passes and my two options start getting closer to expiration I'm going to want the stock to stay relatively close to my strike price of $279 I'm also going to need to watch the stock pretty closely so keep in mind that this strategy does require some management to close this spread I just need to do the reverse of what I did to open it and that's true for a lot of different option trades in fact all of them to reverse any trade you just buy back or you sell back the

trade that you opened up to begin with so I need to buy my short call back and sell my long call in order for you to make a profit you have to sell your long call for more than you buy your short call for and the reason why you benefit from the stock staying close to your strike price is because the Theta Decay will destroy the value of your short call much faster than your long call since your short call has a shorter expiration date let's say in 32 days at expiration of your short call

Visa stays at the same price of 280 and your short call is now only worth its intrinsic value of $1 but it's lost $5 of extrinsic value and your long call still has about a month until expires so it only lost $4 of extr transic value and now it's worth $6 so to exit I'll make $600 from selling my long call and pay $100 to buy back my short call that means I made $500 but we will have to subtract what we paid to enter which was $400 so my net profit for the spread will

be $100 overall this is a decent strategy that I don't use all the time but it can be really good for small portfolios because it's a really inexpensive strategy where you can make 20 or 25% per month all right now let's discuss early assignment in option trading basically when someone exercises their right to buy or sell the underlying asset before the expiration date so why do does early assignment happen well there's a few different reasons first there could be dividends option holders May exercise call options early to capture an upcoming dividend there's also interest rates

so changes in interest rates can make early assignment also happen and could be more advantageous however I really wouldn't worry about interest rates because that's not something that's very common in the market the most common is going to be intrinsic value if an option is deep in the money the intrinsic value May motivate early exercise however I'm going to show you an example how it really doesn't make much sense for someone to exercise early because the option itself is always going to be more valuable to trade than exercising it unless it's the very last day

in most cases you do not have to worry about early exercise but it is smart to avoid Decay option holders might exercise to avoid further time Decay on an options value however again that's going to be really rare because it's much better to close out an option and buy it back than to exercise it you do need to be aware of dividend dates if you're going to be writing call options because for someone that doesn't have the stock they may decide to exercise a call option so they can own stock and collect the dividend now

that is something to watch out for but again it's not going to be an issue unless you're in the last month then in that case it's probably going to make sense for someone to exercise because the dividend might be more than the time value left on the option so do pay attention to Dividend dates and if an option includes a dividend that's going to have the ex div in date for example then if you have a covered call it might be really smart to just close it out and just be on the safe side because

the the worst thing that can actually happen if you do have a covered call is if you do lose your shares and you have a gain then you will have to pay taxes which is not that ideal because obviously depending on which state you're in when you do sell a stock you have a taxable event and all cases it's just a question of is it a loss which is pretty good right if it's a loss then you don't have to worry about taxes it actually helps you out up to $33,000 per year but I'm not

a tax adviser that's just from what I understand you can write off $3,000 in losses per year and the rest gets carried over or if it's a short-term gain well you have to pay short-term taxes or if you hold a stock for more than one year and it's going to be a long-term gain so in most cases you don't really want to sell the stock because if you do sell it off then you know you have to pay taxes even if you do lose a stock you can just re it back but it will be

called something like the wash sale rule if you have a loss then you buy the stock back it's it's not going to count but if you have a gain well doesn't really matter you're going to have to just pay some taxes and then you can Reby the stock that's why for me like the best strategy when it comes to option trading is going to be covered calls and selling puts and I do hold until expiration I'm typically not trading options on a short-term basis and I'm trying to create long-term steady passive income in my case

when it comes to trading however you want to see for yourself what is best suited for you because there are certain strategies where you can make a lot of money like buying call options and spreads and those strategies are worth it because they are short-term capital gains but they can make a lot of money now I also want to talk about hedging because at this portion of the course it's important for you to understand how to manage your portfolio in general so we already learned the trading strategies we learned about early assignment now I want

to talk about hedging so using strategies to hedge your portfolio a hedge is basically just mitigating risk reducing risk or giving yourself less exposure into a really big position so for example let's say that you bought Nvidia shares 2 or 3 years ago and it was 20% of your portfolio Okay so let's say you had $100,000 you bought $20,000 worth of Nvidia and now after 3 years Nvidia has gone up by 10x so your $20,000 has turned into $2 200,000 and let's say the rest of your portfolio the other $80,000 didn't really go anywhere so

now your portfolio is $28,000 $200,000 being Nvidia and $80,000 being other positions so as you can imagine it's not that good in general to have too much of one stock because you're not properly Diversified something that I learned in finance school when I studied Finance basically you want diversification a good Diversified portfolio has 10 to 15 positions that perfect number is around 12 because in Risk Management terms 12 gives you that good variability in your portfolio in terms of like having different stocks giving you that upside but also minimizing risk and as you add more

positions Beyond 12 then then your risk does go down but you have something called diminishing returns so diminishing returns basically is this if you're super hungry and I offer you a cheeseburger you are going to be very happy to eat that cheeseburger that first one is going to be let's assign a 10 out of 10 score you're going to have a 10 out of 10 experience CU you're very hungry and let's say you didn't eat for one day now if I offer you a second cheeseburger you are going to probably have nine or 8 out

of 10 satisfaction it's still going to taste really good if you're hungry but you're not as hungry now the third cheeseburger if you're full is going to have a very small value it's going to have a three out of 10 and then a fourth one is just going to not really be you know something that you want at all so it might be a 1 out of 10 so the the rate at which you are enjoying the hamburger will go down because you are less hungry and the same thing applies with diversification so if you

have one stock you have a lot of risk here and adding a second stock will greatly reduce risk adding a third stock will also greatly reduce risk but to a little bit lesser of a degree okay and so on and so forth at 12 you can think about it as having the two cheeseburgers you're satisfied you're good so let's go back to the example that I used with Nvidia so if in Nvidia we have $200,000 worth of Nvidia because it has grown so much and $80,000 worth of other stocks then what you would want to

do is you want to want to basically take some chips off the table you want to take chips off the table because you have quite a bit of exposure into one stock and even if you like that stock as an overall basket of your wealth it's still good to diversify so what you can do is you would sell covered calls now we have talked about different Deltas to sell covered calls for me I do like to sell 30 Delta covered calls because that's the sweet spot that I realized works very well when I was working

for Gman Sachs however in this course I want you to understand all the different Deltas if you go for a 10 Delta that's going to give you lots of upside and very little income because it's a low Delta there's a low chance of it happening therefore it's very out of the money and get a small amount of money paid to you and then a very high chance that nothing's going to really happen and that's why there's a trade-off in finance there's risk and return okay the more you dial in the risk right here in this

case risk will be higher Delta because a higher Delta means that it's in the money and an in the money option is higher risk than an out of the money option so if we you know increase the Delta and the Delta is say 50 then that's going to be a high Delta and you have a high chance of losing the stock now there's a risk of losing the stock however as a hedge in your portfolio the reason why it's good is because you are reducing exposure into a stock that you have a lot of and

this is actually where hedging is really beneficial because let's just say for example that you have the $200,000 of Nvidia stock if you sell 50 Delta covered calls on the entire position you can theoretically say that you have sold half of your position the reason is because a 50 Delta is a 50% chance of losing the stock right it's a 50% chance of being in the money and that means that 50 Delta is effectively reducing your position by 50% so instead of having $200,000 in Nvidia which you will still have in theory you are reducing

your position by 50% now this obviously is very volatile because options change in Delta very drastically I'm just telling you how to think about it if you do sell 50 Delta then you're going to create income and now you have a higher or high 50% risk of losing your shares that could be a good thing or a bad thing depending in on if you're ready to sell the stock or not you always want to ask yourself am I ready to sell the stock and if not that's still okay because later in this course I'm going

to show you what rolling options looks like now you can also decide for yourself this is a very smart and interesting idea because I've seen this used at Goldman Sach where clients have really big stock positions you can decide to just sell covered calls at say 70 or 80 Delta which is a very high Delta for part of your position so let's say that going to Nvidia you had $200,000 worth of Nvidia well let's say that you only want $100,000 well what you can do is instead of selling your entire position of covered calls for

50 Delta you can sell half your position for 100 Delta that would be a little bit of an extreme case but what you can do is you can just start selling 60 Delta 70 Delta 80 Delta for part of your portfolio just make the math easy and simple for you to look at and you'll understand quickly that by selling High Delta options that you're basically going to be losing part of your position which is a good good thing if you're looking to hedge hedging is very useful in general but remember the market does go up

over time so given that the market does go up over time you don't necessarily really want to be selling High Delta options you usually want to sell outs of the money options so you can collect income and by collecting income that's where you get consistency so now let's move over to talking about an iron Condor we have learned what spreads are an iron Condor is a neutral option strategy involving four options two calls and two puts with different strike prices say but the same expiration date it consists of buying a lower strike put and selling

a higher strike put selling a lower strike call and buying a higher strike call to set up an iron Condor choose strikes that Encompass the expected trading range of the stock typically the distance between strikes is equal for me that's going to be a $5 width so before I show an example I'm just going to tell you that a $5 width would be basically selling a 100 strike and a 95 strike or a 105 strike and a 110 strike I prefer to use increments of $5 that just makes it very easy however if it's a

low stock let's say it's $15 then I prefer to use increments of one so I might sell a 14 and a 13 strike a 16 and a 17 strike so for me that's the way I use iron condors and I'm going to go over an example but first I do want to talk about the risk and reward the maximum profit is the premium that you receive while the maximum loss is a difference between the strikes minus the premium received here's a profit loss graph to illustrate this now the break even is calculating the break even

points by adding the premium to the lower short call strike and subtracting the premium from the higher short putut strike break evens are very important because it gives you an understanding of where the stock has to be for you to be profitable and the break even Point gives you an idea of where you will also be losing money if the stock goes beyond that point now the ideal market conditions for an iron Condor is when the market is steady iron Condors work best in stable or low volatility markets where the stock is expected to stay

within a certain range also looking at adjustments and management if the stock moves significantly consider rolling the position or adjusting the strikes always have a plan for managing your positions however with iron Condors since they are four different legs it is typically the case that you either want to leave the position open until expiration or simply close it out for a loss iron cond doors is very difficult because since there's four legs it is pretty expensive for the bid and the ask spread to really adjust them because as you close out a iron Condor and

open up a new one again you're going to be dealing with four different legs so you might lose four to 8 to $ 122 right if the bid ask spread even has a very tight spread of just one two or three so there are advantages and disadvantages the main advantage is that an iron Condor gives you very limited risk and very high reward in fact I made a different video on this channel discussing the tier list of option trading strategies and I actually place the iron Condor very high so look the iron Condor is very

beneficial because you're selling both calls and puts you can collect a very large amount of money let's go into my portfolio right now and let's take a look at a live trade for an iron Condor and let's go over several different examples I'm going to show you an example right now I'm going to show you break even prices and you are going to learn exactly how to execute the iron Condor now this is not a lowrisk strategy this is a medium risk strategy but you can make crazy amounts of money very quickly so let me

show you what this looks like you're going to go ahead sell put option this is actually going to be very interesting because it's going to look very similar to a put credit spread or a call Credit spread and that's because it's actually the combination of both of those strategies so if you've paid attention to what a put credit spread is if you've paid attention to what a call Credit spread is this is just the combination of those two strategies together now what I can do is let's go to the 210 and specifically actually let me

show you how I use technical analysis I'm going to go to yaho finance and I'm going to pull up Apple on a chart this is going to be important because the way that you pick your break even prices or the strike prices is crucial for being successful on the iron Condor now check this out you can see that Apple has gone up a lot so it's actually not ideal to trade right now on the iron Condor so I'm actually going to go to something else because I want you to pick a stock that is more

predictable for an iron iron Condor strategy so I'm going to take a look at Nvidia right now and Nvidia is actually perfect I'll tell you why so I used the Binger band which is a period of 20 days and two standard deviations this is basically the blueprint for what I use to understand where a stock is trading within you can see right now that Nvidia is right in the middle of its bowling or band that means that the stock is neither expensive nor cheap based on statistics the Binger band just uses statistics to understand volatility

and price movement all right so right now it is in the middle and you can see the top of the Binger band is 135 guess what when I open up an iron Condor my top end will be 136 and you can see the bottom of the Binger band is 11951 so guess what the bottom of my Binger band or you know this is going to tell me that the bottom end of my iron Condor is going to be 119 so basically right now what I'm going to do is I'm going to pick um these strike

prices based on the Bowling band I keep it super super simple this is all you need you don't need any other technical indicators actually you can see right now oh my goodness you guys can actually see right now that I actually have an iron Condor and looks like it's working out very very well so far I'm up $5,610 on the iron Condor and this is actually expiring next couple of days so this has been a pretty interesting strategy that I've been running in my Discord Community because I do focus on small medium and large portfolios

I'm coaching a variety of students majority are beginners but I do have some intermediates as well so let's start off with selling a put option I'm going to sell a put option let's just say uh you know pretty short term here if you're watching this in the future again doesn't matter just copy this logic copy and paste it and print money make money by copying exactly what I'm doing right same logic same thought process now I'm going to sell a put option I said that the bottom is going to be around 1119 now that that

is actually a 20-day Binger band so I'm actually going to go out a little bit further on this options now let's pick the 119 all right so I'm going to go down pick 19 boom and I'm going to make this a $5 width okay $5 width is what I like to do so I'm going to um you know sell the 119 and then I'm going to buy the 114 all right so this is a put credit spread but now I'm going to open up a call Credit spread cuz I'm going to be selling both sides

that's what an iron Condor is now the top of the Binger ban is $ 13595 so I'm going to go for 136 I'm going to sell the 136 now I'm going to go ahead and buy and I'm going to go five up right I'm going to go $5 width 141 so boom now we have a short iron Condor you can see here how my maximum profit is 275 and my maximum loss is 225 so I am making like literally can like double my money in such a short amount of time by running the strategy over

and over as long as uh Nvidia stock stays within this range which again based on the bowling or band it is likely to do so then you are going to make money which is fantastic right if the stock goes up a little bit down a little bit you're still going to be in this green profit Zone which is is amazing right it's very very important to stay within here now let's talk a little bit about um the break even points let's talk about risk management and how much you should allocate to the strategy so in

terms of Break Even points you will see here that uh if Nvidia stock goes to 13875 then basically you're going to start seeing uh some some losses right on the downside if it's 11625 now why is it different well it's different because you're actually collecting a lot of Premium so you actually even have more room for buffer to make money now in terms of risk management I would say that if it hits one of your legs uh one of your break even prices then an iron Condor is better to close out because you have two

options that you're working with um in fact four option legs that you're working with so if it goes into the money I just simply keep it simple I don't roll it I don't do anything crazy I just close out the iron Condor and I move on and I do it on on a different stock now for allocation this is also very important because if you have $10,000 you don't want to put all $10,000 into an iron Condor position that's because obviously there are risks and you want to be Diversified in your portfolio you can definitely

make money but you also want to not put all your eggs in one basket so I would say that the iron Condor strategy if you have a small portfolio you can put in you know 10 15 maybe 20% of your money in it if you're a little bit on the riskier side and as you scale up your portfolio this strategy should only be about 5% of your money because it is you know higher return and higher risk and there's just more better strategies that I consider my bread and butter strategies all right I'm glad that

you guys now have seen an example on iron iron condors and how to profitably trade iron Condors now there's also several other factors that you do have to pay attention to one of them is Market sentiment a lot of my students ask me am I bullish am I bearish on a certain stock well it's really important to look at overall Market sentiment because it can help you in predicting potential Market moves and making informed decisions about entering or exiting a position the market could be very bullish and all stocks can go up even if there's

no particular news that could just be driven by human behavior because at the end of the day the stock market is a game that people are playing so it's important to look and understand Market sentiment if you want to make more accurate decisions also there are different reports that come out into the market which are very important to look at so one of them being a GDP report the other being unemployment rates okay looking at how people are employed in the job sector is very important for the economy overall when the unemployment rate Rises then

that is a bad sign that companies will make less money and when unemployment rates are very low that means that the economy is functioning very well and when the econom is functioning very well then people have more money to spend into the economy and that is a sign of strength in the economy now interest rates are also very interesting because as interest rates rise they become less useful for business owners to borrow money however Savers can make more money by depositing their funds into things like CDs however higher interest rates is typically a bad thing

for the stock market because you want businesses to borrow money and invest that money however the reason why the Federal Reserve will raise interest rates is because High interest rates will combat inflation because when interest rates are very low and everyone is borrowing money we have seen this situation before and we see it all the time there will be higher inflation because there just so much money going around so the Federal Reserve actually has a mandate their job is actually to keep inflation under control and the primary tool that they use to combat inflation is

going to be interest rates interest rates don't really rise in the short term but they can be very different over a 5year period so it's important to look at and interest rates do affect the market because it can freak out other investors next is inflation data so inflation data for example the CPI or the Consumer Price Index will measure a basket of goods so that basket of goods could be coffee gas housing prices a typical ticket to the movie or basically just the basket of goods that people typically buy inflation data is really important when

you're looking at the stock market or trading options because inflation does affect the price of stocks it will affect the consumer sentiment so we have recently seen some manipulation in inflation data just being honest with you you have to be pretty smart when it comes to inflation because if you look at something like education the CPI the basket of goods that we are looking at can change so I believe that the US government took out let's say education or oil and gas or or something can be taken out to kind of manipulate the data so

I wouldn't recommend you really pay a lot of attention to but I do recommend that you just understand basically what inflation is because these indicators can impact Market volatility and the price of stocks greatly also looking at earnings reports and announcements earnings reports can make a really huge difference in a stock for example earnings can come out and a stock can move up by 20% or it can fall down by 15 or even 30% you see this all the time because stocks move based on expectations and earnings is a very huge number it gives you

a good perspective on a company's Financial Health so an earnings report is something that comes out on a quarterly basis so quarterly Financial results announced by publicly traded companies happen every single quarter and those earnings events give you a very good perspective of the health of the company are they making more money are their revenues growing are their profits declining are the margin of the business improving or is it not improving for example if you look at Amazon they have like a 3% profit margin if it went to 4% that would make such a big

difference because Amazon has hundreds of billions of dollars in Revenue so a 1% difference would add a lot of money to their bottom line so that is something that I do pay attention to but again all of these different things are important to understand but option trading doesn't have to be super complicated you don't have to look at all these metrics all the time but I want you to be aware that earnings reports are very important and me personally I use options fi as a software to track potential earnings beats because an earnings beats will

make sure that a company probably Rises and then you can make a lot of money however I will also say that just because I use options F software and I get an idea of if an earnings report will beat or not it's still doesn't guarantee that the stock will move in a certain direction so you have to be careful because a stock can beat earnings and it can still go down for other reasons so you want to monitor earnings dates as well as when you're trading options and you also want to just look at General

technical analysis technical analysis is super important because we've been talking a lot about fundamental analysis we've been talking about what happens in the market sentiment I want to quickly talk about psychological considerations when it comes to option trading emotional discipline is the most important thing when it comes to trading if you finish this course then you will understand how to trade the different strategies and from there it's just really important to have emotional discipline and understand how you behave when the option Market or the stock market moves because the strategies are actually pretty simple you

can just watch take notes here but the emotional discipline is a practice so you want to avoid letting emotions drive your decisions to close a trade you want to try to use as much logic as possible and intuition because option trading is a techn technical game it's something you have to understand but it's not necessarily a science the stock market moves up and down randomly there is a famous book called random walk down Wall Street you do not need to purchase the book or buy it I'm simply telling you that the stock market moves up

and down randomly there is no huge winning strategy that is going to turn $10 into millions in almost all cases you are taking on risk and you will get reward in direct proportion to how much risk you take very similar to other areas of life so if you go to school for a very long time you make a big investment to become a doctor you're going to have a higher salary if you just go out there and take on a lower level job you're going to get paid less right you're depending on the risk of

the job so if you're in sales that is a riskier job you have an opportunity to make more money and my key rules to success is basically having several different positions in your portfolio researching and understanding a basket of stocks that you personally really get so for me it's technology because I was a technology analyst when I was working on wall street so for me I do like the tech companies I think they're growing very quickly and it actually helps me a lot with my emotional discipline so understanding the stock that you're investing in will

greatly help your emotional discipline and emotional discipline in general helps you cut a position more properly hold a position longer because it's not always good to just panic and sell and there are many cognitive biases you want to be aware of cognitive biases when it comes to trading because you are your worst enemy in the stock market it's not other people it's not the stock market it's not the news it's actually you so be aware of COG to biases such as anchoring overconfidence and loss aversion that can affect your decision- making so overconfidence is something

that a lot of people experience it's actually something that is not good just to give you a quick funny story I typically have low confidence in most things I do despite being worth multiple millions of dollars so is that a good or bad thing well it's good and bad because having lower confidence in certain things means that I am more risk averse I'm more scared of certain things and I'm more cautious which has saved me in certain situations but it also does not help in other situations so when it comes to overconfidence when you're super

confident let's say you make $10,000 one month it's very dangerous especially when you get into this game or into this invest thing right and then you do very well you get cocky and you get greedy and then you end up losing more money than you've made and I've seen that situation happen over and over so it's very important to keep a level ahead and avoid cognitive biases another one is loss aversion okay actually ask yourself this if I gave you $11,000 right now how happy would you be you would probably be pretty happy if you

now when into the store and somehow you had $1,000 in cash and you lost it how upset would you be research shows that you would be a lot more upset losing money losing $1,000 than making $1,000 so be aware of loss aversion bias when it comes to investing and if you see a loss it's okay to cut it I see so many students that have lost a couple of dollars on a position their portfolio up a lot but they refuse to sell the stock until it recovers it's not always possible to recover something and that's

true across all areas of life I've done a lot of personal development in areas of health and relationships and in money and it's the same across all of these areas you can't always win and when you do have a loss sometimes just have to cut it a bad relationship just have to let it go or a certain health issue just have to manage it it's not always possible to fix everything and it's not always possible to recover your money in a losing option trade so it's okay to cut your losses in fact I prefer to

cut my losses at a certain percentage so when it comes to let's say a position I may decide to cut my losses at 5% or 10% or on a riskier option trade like a spread I may decide to cut the position when it's down 50% it does depend on your intuition and there are no exact right answers the market isn't an exact science which is why recommend that you keep a trading journal so you can learn for yourself what works what doesn't work what kind of bad mistakes are you making what good decisions are you

making using a trading journal is really good I don't have any recommendations for a trading journal I personally just keep track of it either manually or in a Excel sheet that I have I'll drop a simple Excel sheet in the description now let's talk about a new strategy and that is going to be called a straddle a straddle is an option trading strategy that involves purchasing both a call option and a put option with the same strike price and expiration date on the same underlying asset the strategy is used when the trader expects significant price

volatility in the underlying asset so it means that you're buying calls and you're buying puts at the same time so let's say 80 and 80 let me show you an example of what that looks like now let's go go over a straddle the ideal Market Outlook for a straddle is highly volatile where significant price movements in either direction are expected this could be due to upcoming events such as earnings reports major news or just regular Market uncertainty so you want to pick a very volatile stock let's pick Nvidia right now Nvidia is going to be

very interesting because obviously the stock has been in a very big bull run let me show you what a stradle would look like so let's say that the stock has earnings in fact we can actually use Tesla because Tesla has had a lot volatility recently and yeah Tesla has gone up a lot um but it doesn't really matter what stock you use I'm just giving you this as an example so look let's say that earnings are coming up in a few days um so I'm going to do a short-term option now here's what a straddle

would look like I could buy for example the 255 call okay and I can also buy the 255 put so I'm going to buy the 255 put now you can see that this is a straddle if the stock doesn't do anything you will lose money if the stock goes up a lot you can make a lot of money unlimited on the upside and if it goes down you can make money until the stock price goes down to zero so this is a strategy that you use when you think a stock will either fall a lot

on bad news or go up a lot on good news in terms of risk management there isn't a whole lot of risk management here you're just basically buying an option you are spending money and you have to be okay with spending money to make money here so I wouldn't use a whole lot of my Capital to do this but if you're bullish or very bearish on a stock then go ahead and use a strategy you can use one to two% of your money um and basically make small bets on big moves and this strategy can

make you a lot of money I've seen this used over and over on Wall Street but they would primarily use this during earnings events okay now let's talk about the poor man's covered call the poor man's covered call is an option trading strategy that replicates The Profit potential of a covered call strategy but with a reduced upfront cost it involves buying a long-term call option and selling short-term call options against it here's a detailed discussion on the poor man's covered call strategy first the component is a long call call option purchasing a long-term call option

or a basically a leap is a long-term Equity anticipated security it's just a call option this call option is typically one year out then there's also a short call option this is something that you use to generate income very similar to a covered call but here your long call option functions the same as stock that's why the long call option is best to be in the money 70 or 80 Delta that way it's very similar to stock and it's very longterm it gives you the ability to sell short-term call options against the long-term call option

so there is a purpose and objective the primary goal of the Poor Man's covered call strategy is to generate income through premiums received from selling short-term call options while benefiting from the price appreciation potential of the long-term call option so in the perfect scenario this is a bullish strategy because as the stock goes up the long-term call option increases in value the short-term call option because it's out of the money will go against you however if it's 10% out of the money money and the stock goes up by 5% that's perfectly okay it's still going

to be out of money and because it's shortterm it's going to keep expiring as it keeps expiring you can keep moving up in terms of selling new call options every single month every 2 weeks or every 6 weeks as you wish you can sell call options on a consistent basis that acts as a covered call against your long-term call option that you bought compared to a traditional covered call where you would have to own their underlying asset the poor man's covered call gives you a much smaller upfront investment because you're only buying a long-term call

option and that in many cases can be worth a tenth of buying 100 shares of stock this strategy does benefit from many different things which is why it's a very popular strategy and it's a very good one as well time Decay when it comes to selling that short-term call option the time is going to be benefiting that short-term call option and because it's decaying in value however it doesn't affect the long-term call option that you bought as much because it's long-term in the the future so you're going to be making money as time goes on

if the position basically goes sideways if it goes up well you're going to be benefiting from the leap option that you bought going up while the short-term call option is still going to be losing value because short-term options Decay and value very quickly that's why selling options works very well especially in the short term what I mean is selling short-term options always usually expire out of the money like 90% of the time they expire worthless so it's a very profitable strategy leaps typically have an expiration date over one year in the future however for me

I even go for 6 Months 8 months 9 months but sometimes 2 years if I want to make a position that's very long-term in nature 2year leap option is also perfectly okay now the short-term call option that's what generates income that's what you selling and again you can go for 2 to 8 weeks that's probably the sweet spot for me a shorter term call option has higher Theta dck let's go over an example of a poor man's covered call all right guys now I want to talk about Poor Man's covered call in my community in

Henry trades I am placing all my trades and specifically yesterday I did give a little bit of a blueprint on the poor man's covered call strategy so I'm going to read off of my Discord blueprint right here I'm going to go into more detail so the poor man's covered call can be used as a substitute for a regular covered call I tell this to my students all the time because not everyone has the capital to do a poor to do a regular covered call I mean you could need five figures to make a simple covered

call which is why the poor man's covered call is is a very good alternative to the regular covered call so here's a cardinal rules and philosophy that I have around the poor man's covered call essentially a poor man's covered call needs to have a higher than 50 Delta call option that's also longer than 6 months if you look at textbook definition a poor man's covered call is going to have a 70 or 80 Delta and it's going to go out a lot longer but 50 Delta in 6 months that is the bare minimum and I

would say more is not necessarily better so let me explain you can go for an 80 Delta in 12 months that would be completely fine but above 80 it just defeats the purpose of actually having a leap option because it's going to be very expensive and the whole point of a poor man's covered call is that you don't want to put up all the capital that you would for a regular covered call so that's why for me I go for around 70 Delta all right 70 is not necessarily better than 80 it just in that

range of 70 to 80 Delta and then from there I sell covered calls all right so let's use Tesla and show you a Poor Man's covered call I'm going to buy a call option that's going to expire well into the future all right so I'm going to buy one that's almost one year out for June 20 2025 okay now I'm going to buy something that has around 70 Delta you can see here this has 78 Delta perfect I can also go a little bit higher the 210 this has 76 Delta so this is good all

right so I'm going to go ahead and buy this you see here how the total cost is $7,900 well that's a lot better than buying 100 shares of Tesla because Tesla 100 shares would be $25 $5,000 so you're basically getting like 1/4 of the price which is very very good so if I buy this call option this is actually going to function very similar to owning stock the reason why it's very similar is because this has a very high Delta so when the stock moves up a dollar this option is going to move up by

76 C right so it has a very good correlation very similar to stock now you can use this call option and sell covered calls against this call option making it a lot cheaper so let's just say I'm going to sell a call option here for about a couple months out I can sell something at around a 30 Delta all right so let me go up a little bit higher boom that's perfectly fine 35 Delta is good so you can see right here how I can sell this option and make $13 um on $80 so I'm

actually getting a really good return as you can see this is a bullish strategy you make money if the stock goes up so this is a bullish strategy and it's basically going to benefit if the stock Rises now I'm putting up a lot less than the 7900 I'm putting up only 6,600 and I'm making $113 or $1,300 and I can run this strategy over and over again on a repeat so now I want to leave you with this if you're interested in getting all my trades seeing how I trade and having live coaching sessions with

me I do have a Discord Community this community has taught over 4,000 people how to make a consistent income and the investors in my community have had a lot of success and if you'd be interested in learning more about it do click the first link in the description now I also want to say that if you want to grow a small account I suggest you watch my small account playlist that I'm going to put up on the screen right here