Option Selling helps me generate $1000s per week in cash flow

My sweet spot for selling options is Delta 0.15 to 0.25

Let's talk about the benefits of selling options with a delta of 0.15 to 0.25

👇👇👇 What’s delta?

Delta measures the sensitivity of an option's price to changes in the price of the stock

Options with a delta of 0.15 to 0.25 are slightly out-of-the-money (OTM)

Meaning the strike price is above (for calls) or below (for puts) the current stock price

Top 8 mistakes beginner options traders make

And how to avoid them:

Thread 🧵 Options have great benefits

You can cut losses, protect your gains and control big chunks of stocks with a relatively smaller amount

But…

You can also quickly lose more money than you invested with options

A thread 🧵 about Option’s premium

There are two parts to an option’s premium:

✅ the option’s intrinsic value

✅ the option’s extrinsic value (time value)

👇👇👇 The intrinsic value of an option holder (buyer):

It is the difference between the underlying stock’s price and the strike price

Intrinsic Value of a Call option = Current Price - Strike Price

Intrinsic Value of a Put option = Strike Price - Current Price

I traded over 300 covered calls in 2023 and generated more than $51,500 in income

Here are my 10 steps for trading a covered call:

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$TSLA $AMZN $GOOG $COIN $AAPL $SQ $SOFI $PLTR Choose a stock or ETF you like for the long term and are bullish on:

✅ Are they profitable?

✅ Are their earnings growing?

✅ Do they have a GREAT product or provide great service?

✅ Do they pay a dividend?

✅ Would you want to own it for 5yrs?

📊 Considering a Cash Secured Put?

Buckle up for some trading insights! 🛡️📉

A thread 🧵 that you will enjoy 😉

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#OptionsTrading #Optionselling ✅ Intro to CSPs

Cash Secured Puts – a savvy trading strategy where you agree to buy a stock at a price you're comfortable with

What are Covered Calls?

Covered Calls are a popular options strategy that can be used to generate CASH 💰

How?

From your stocks that you already hold

I sell CCs on $AAPL $GOOG $AMZN $TSLA $AMD $SOFI $DDD $QQQ $SQ $JNJ $TQQQ

Basics of Covered Calls

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#OptionsTrading Basics of Covered Calls:

✅ Sell a Covered Call Option

✅ Collect your cash!

✅ Repeat

If you like CASH, Covered Calls are for you 💸💰

How do you start? 👇👇

Let's explore the world of buying LEAP calls and weigh their advantages and disadvantages

LEAPs offer exciting opportunities

But it's essential to understand both sides of the coin before diving in

Let's get started! 💡📈

A thread 🧵 👇👇👇

#OptionsTrading 📆 Extended Timeframe

LEAP calls provide a longer expiration period typically more than a year

This extended timeframe gives you ample time for your investment thesis to play out

This allows for more price swings and potential profitability

Example: $TSLA 1/17/25 $200C

I am primarily an Options Seller

But I also buy Options from time to time

Selling options is much more consistent then buying options

Options Selling vs. Options Buying 📈📉

Pros and Cons

A thread 🧵

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#OptionsTrading #Optionselling #Optionbuying 🔥 Options Selling

Selling options involves writing (creating) options contracts for a premium

It can offer several advantages:

✅ Income Generation

Selling options allows you to collect premium income upfront providing a consistent revenue stream

Using delta in options selling?

It involves understanding its significance in determining the sensitivity of an option's price to changes in the underlying stock price

A brief thread 🧵 on how you can utilize delta in options selling

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#OptionsTrading #Optionselling ✅ Delta as Probability

Delta can be interpreted as the probability of an option expiring in-the-money

For example: a delta of 0.30 implies a 30% chance that the option will be in-the-money at expiration

Lower the delta lower the odds of the option ending up in-the-money

I got assigned $AMD at $122 on June 22

When $AMD was at $109

I had already made $425 in premiums in 2 weeks so my cost basis technically is lower than $122

Now I will sell Covered Calls on this assigned lot

A brief thread 🧵 on my process

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#OptionsTrading #Optionselling When the current price is much lower than my cost basis I can’t really sell weekly Calls at my cost basis

Not much premium

I have to sell below my cost basis

But isn’t that risky?

I might lose my $AMD shares at a loss below your cost basis

Not really

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A thread 🧵 about selling $TSLA puts

It’s from the week ending June 23

These puts are sold on margin without the intention of getting assigned

On June 16 I sold puts below delta of 0.09 - 10 contracts

✅ Premiums: $1220

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#OptionsTrading #Optionselling On June 20 $TSLA was climbing up from the low $260s to high $260s

I rolled the $TSLA puts from $240 to $245 strike

Same expiration

✅ Added Premium: $330

#OptionsTrading #Optionselling

If you have $100,000 in cash you can safely generate $450/week of income

Doesn’t sound much?

That translates to a 23% yearly return

How do you do this?

By selling Cash Secured Puts at a 85% success rate

A brief thread with example trades

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#OptionsTrading #Optionselling… twitter.com/i/web/status/1… $AMZN

Income: $37
Capital: $12,100
Time: 1 week

Success rate: 85.5%

A big tech still with big growth prospects

A thread 🧵 about Volatility Skew in Options Trading

A stock’s implied volatility (IV) represents the overall level of a stock’s option prices

Each individual option trades w/ its own IV

Analyze the IV at various strike prices to learn if a stock trades with a volatility skew… twitter.com/i/web/status/1… What is Volatility Skew?

Volatility skew refers to the INEQUALITY of the IV of out-of-the-money calls and puts

You can look at in-the-money options too but in this thread we’ll keep things simple and focus on out-of-the-money options

A brief thread 🧵 about a $JNJ Covered Call

It almost went out of hand but stayed patient with it

In the end it worked out

I created $263 of my own dividends in April and May 🔥🔥🔥

Initial call sold on April 3:

- 4/14 $160c
- Premium: $44

#OptionsTrading #Optionselling Soon after selling that call the price of $JNJ spiked up

It reached $166+ before the expiration date

$6+ more than my strike price

I wasn’t ready to lose my shares

So I rolled to same strike of $160 a week forward to 4/21

Added premium: $47

Selling Cash Secured Puts are not without risks

A hidden risk is LOST OPPORTUNITY

An example:

I had sold a $129 CSP on $AAPL in December that I rolled down a couple of times to $126

A brief thread 🧵

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#OptionsTrading #Optionselling I received $220 in premiums

In 4 weeks

I never let the $AAPL shares get assigned to me at $129

I rolled down to $126

$AAPL then went up beyond $129 and never came down to $126

I LOST MY OPPORTUNITY to buy $AAPL at $129

#OptionsTrading #optionselling

I have 800 shares of $AMZN for long term

On Aug 1, 2022 I started selling Covered Calls against these shares

✅ My objective: To get premiums without losing my shares

✅ 9 month summary:

Premiums: $9,780
No shares lost
No active calls

A brief thread 🧵

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#OptionsTrading The premiums received in the amount of $9,780 is on top of the capital gains or losses in the $AMZN stock since Aug 1

I was going to hold these shares anyway

I don’t try to time the market with my core stocks by getting in and out of the stock

#OptionsTrading #Optionselling

$PLTR Covered Call Update

A brief thread 🧵 on the ups and downs of $PLTR and all the maneuvering I had to do with my Call Option

Premium: $528
Risk: $9600

5.5% return in ~4 months

16.5% annualized return

#OptionsTrading #Optionselling

👇👇👇 Sold a 1/27 $PLTR $7.5C on Jan 9

12 contracts (1200 shares)

Premium added: $72

#OptionsTrading #Optionselling

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🔥 $SQ Covered Call Journey🔥

A thread 🧵 on two separate calls that I had sold against my 200 $SQ shares

Cost Basis: $69 per share

Initial calls sold on Jan 17 and 20:

1/27 $77C
1/20 $78C
Premiums: $123

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#OptionsTrading #Optionselling On Jan 20 $SQ reached beyond my strike price of $78 expiring that day

So to protect my shares I rolled over the call

To 2/3 $80

Added premium: $111

When you sell a Covered Call you always make money

Right?

Wrong

But you always get PAID for selling that call so HOW do you lose money?

If the stock runs up way beyond your strike price you LOST capital gains

It’s important to account for such losses when you sell CCs… twitter.com/i/web/status/1… Technically yes not LOST money but gains limited. But the CC lost you money compared to if you hadn’t done anything. At least for the time being.

If you buy the shares back at exactly the same price as you lost them, then you erased your losses

Looking to sell Options?

Like Covered Calls or Cash Secured Puts?

Then knowing the Greeks can help you make more informed decisions

The Greeks are a set of metrics that measure different aspects of options contracts

A brief thread 🧵 on the Greeks

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#OptionsTrading… twitter.com/i/web/status/1… What is Delta?

Delta measures how much the price of an option changes in relation to a change in the price of the underlying asset

A high delta means the option is more sensitive to changes in the underlying asset's price

All rollovers are NOT the same when you Sell Options

What are rollovers?

You BUY back an option that you sold and then you SELL another option at a different strike price and/or expiry

Here are a few different types of rollovers

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#OptionsTrading #Optionselling Forced Rollover

Your option is already at a LOSS

Your option is about to be called or assigned

But you don’t want that

So you are FORCED to roll it over to the future at the same strike price or higher

Example: $AAPL