Options Trading Start
Last year March was when I stumbled upon this opportunity to make additional income largely due to a misunderstanding with my wife. I took her comment, "that I need to make more money..." to mean I literally needed to make more money for our household when in actuality she was referring to herself. Nonetheless, I went to work thinking what could I do and what could I leverage. I don't remember what brought me to options trading exactly, but I remember thinking I had money to leverage from cash value life insurance that had grown in value that I could borrow against policy for 5%, but at a net of like 2% because the annual floor of growth for the policy is 3%.I Learned 2 Trade Techniques
So, I learned two facet of options trading called the covered call and secured put and I put it into practice right away and I learned as I went the basics. To my surprise, I earned 7K last year and didn't put quite enough aside for taxes, but that is a good problem to have. This year I have put 1/2 of 15% aside on any premiums I receive that way I'm close to even come tax season.
Wouldn't you like to know if you could master another way to earn additional cash flow on a monthly basis? Being that the stock market is one of the vehicle to which we expose our retirement savings, would it not make sense to understand more how it works?
You have to have some financial literacy before jumping in the fire and I have some blogs that give a good basis for mindset and examples of some of the trades I have done. It is no reason why you cannot do the same; however, if your psychology is not right, you can get burned.
Current Trades
Last Friday, every 3rd Friday of the month, monthly options expire and I will demonstrate some of the positions I have or added for this month.
Acacia (ACIA) current price $48.85 - 2 contracts (one is existing from when I purchased at $70 and one just purchased at $55). Today I sold 2 covered call options with a $50 strike price that will expire on June 16th for $175 each.
Micron (MU) current price $28.06 - 2 contracts
(two existing from when I purchased at $28). Today I sold 1 covered call options with a $28 strike price and one with $28.50 strike price that will expire on June 16th for $94 and $71 respectively.
(two existing from when I purchased at $28). Today I sold 1 covered call options with a $28 strike price and one with $28.50 strike price that will expire on June 16th for $94 and $71 respectively.
Nvidia (NVDA) current price $138.90 - 2 contracts
(opened two new positions). Today I sold 2 secured put options with a $130 strike price that will expire on June 16th for $192 each.
(opened two new positions). Today I sold 2 secured put options with a $130 strike price that will expire on June 16th for $192 each.
Twilio (TWLO) current price $24.96 - 5 contracts
(five existing positions from when I purchased at $70, $55, and $34.50). Today I still have open orders for this stock that will expire on June 16th for $39 each.
(five existing positions from when I purchased at $70, $55, and $34.50). Today I still have open orders for this stock that will expire on June 16th for $39 each.
If we tally the premiums((175 x 2) + 94 + 71 + (192 x 2) + (39 x 5) = $1,094. I am glad that my wife and I had this misunderstanding as I am not sure whether I would have come down this path. I do like that there is still a bit of liquidity to this strategy in case there is some real estate opportunity should arise as I still like physical assets as well.
Long Term Sights
I have read and enjoyed the text, "The Richest Man In Babylon", |
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In Closing
I am making money trading options using only two strategies and despite having some negative positions it's ok because I know I have time and patience for things to turn around in some of these companies that have good fundamentals but are out of favor, especially if I continue to receive premiums for selling options. I have seen over the past year several companies I have owned turn around after being down big, examples are Harman International (HAR), Copa Airlines (CPA), Apple (AAPL), Western Refining (WNR), Microsoft (MFST) to name a few. The premiums aren't spend willy-nilly, but instead channeled into long term portfolio. Do you think you can do the same?
Note: If you want to get into investing and it makes your head spin, you can follow my lead where I am investing money and purchase the below diversified motifs I mentioned above.
Note: If you want to get into investing and it makes your head spin, you can follow my lead where I am investing money and purchase the below diversified motifs I mentioned above.
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