How to sell options for income and steady capital growth
SELLING OPTIONS FOR INCOME / $1,500 A WEEK
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when i first heard about options trading
i immediately thought about
risky plays in the stock market where
you can make a lot of money
really fast but you can also lose it all
really fast after educating myself about
options trading i wanted to see for
myself and see if it's an
option for me see what i did there so i
started with purchasing call
options which i'm not going to cover in
this video but to give you a short
explanation
if you purchase a call option you buy
the right not the obligation
to purchase a specific stock at a
specific price within a specified time
so you're basically hoping for the stock
to appreciate in value so you can either
sell the option for more money or
exercise the right and purchase
the shares at the strike price alright
so i started purchasing call options
and um i had some good trades i had some
bad trades and i
quickly realized i don't know what i'm
doing here so instead of betting and
hoping for a stock to appreciate in
value
i had to change my strategy so i started
selling options this already sounds way
better because
every time you sell something that means
you usually get
paid and that's exactly what i did what
is selling a put me when you sell a put
you are agreeing to purchase a specific
stock at a specific price at a specific
time let me give you an example
i have 1 000 in my brokerage account and
i like the stock
abc which currently trades at ten
dollars
i now sell a put option at nine dollars
with the expiration date of next week
friday
since one contract always handles 100
shares of the underlying stock
this means i need 900 as a collateral in
case abc's price drops to nine dollars
on expiration date for this contract i
receive a premium of 50 cents per share
which brings my premium to 50
which i immediately receive in my
account now i have to wait till friday
and see what happens now we have two
outcomes
number one abc trades above nine dollars
and i don't have to purchase any shares
my collateral gets released back into my
account and i now have one thousand and
fifty dollars in my account
outcome number two abc trades at nine
dollars and i get assigned 100
shares of abc my account now holds 150
dollars in cash and 100 shares of abc
which are currently worth
900 so this was week one and depending
on the outcome i can either
sell another put or if i got assigned
100 shares
i can do the following now that i own
100 shares of abc i can sell a call
which means i am willing to sell my 100
shares at a specified price
at a specified time so i could
technically sell an eleven dollar call
option with the expiration date on
friday for this contract let's say i get
a premium of
four cents per share which brings the
premium up to forty dollars which
immediately gets credited to my account
i now have a hundred and ninety dollars
in cash in my account
and my 100 shares of abc are up for sale
at 11
we have two outcomes again number one
abc trades below 11
and i don't have to sell my 100 shares
and i keep the premium of 40
pretty simple outcome number two abc
trades above 11
on expiration day and i have to sell my
100 shares at 11
i now get 1 100 credited to my account
plus i keep the premium of 40 dollars my
total account
is now worth one thousand two hundred
and ninety dollars all
in cash all right this is beautiful but
now let's see real trades and i can show
you exactly how i got paid
twelve hundred dollars and fifteen
hundred dollars in just two weeks so as
you can see here i sold a put on the
stock riot with a strike price of fifty
four dollars with an expiration date of
three
nineteen i was able to purchase seven
contracts which paid a premium of
one thousand one hundred dollars which
got credited to my account immediately
let's fast forward to march 19th and see
what happened
riot traded at 60.65 which means i
didn't have to purchase any shares
and my collateral got released next week
i did the exact same trade but with a
different expiration date i sold a put
with the strike price of 54
with the expiration date of march 26th
for this contract i got paid a premium
of 1
519 dollars let's see what happened on
march 26th
on expiration date riot traded at 48.22
which means i got a signed and i had to
purchase 700 shares at the strike price
of 54.
so what can i do now now that i own 700
shares of riot i can either just hold on
to them and
don't do anything or sell a call option
receive another premium
and say i'm willing to sell them at a
specific price
i obviously looked at different
scenarios and here is what i
think i'll be doing if riot trades above
54
i might sell all of my 700 shares
immediately
and also sell another put option with a
very low strike price probably around
48.
my premium might be a little bit lower i
don't know why but i feel like there
might be a little correction in bitcoin
which also brings down the price of
right
so that's why i don't want to risk too
much of it and don't you know hold on to
my 700 shares at 54.
if riot trades below 54 i'm obviously
gonna hold on to my shares i'm just
gonna sell
uh another option at either exactly 54
or 55 so i get like a little bit of
stock appreciation as well
but yeah that's it for today's video
guys um if you enjoyed this video i
would highly appreciate it if you just
leave one like that's all that's all i'm
asking just like one click
that would help me out a lot thank you
so much for watching i'll see you next
time
