I wish it was this easy. 2% down day you are out -$1300. They doesn’t mention stoploss or assignment risk. 1 bad day is 20 days of profit. Also when you are itm you won’t be able to roll for credit. You can roll for debit. Will losing cash flow.
so selling those puts on the qqq so close to the money would seem you frequently need to either take the shares or roll you kind of glossed over that as if its something that never happens. I think it calls for an explanation. Thanks for the video
I do this as well. That's why he showed the sell call options side as well because, yes, sometimes you do get assigned. It's just the wheel strategy buy sell rinse and repeat
I like this idea, but all these wheel videos people publish never talk about what if price goes WAAAY below your put, or WAAAAY above your CC. You could potentially get knocked out of the strategy if price runs above your CC and keeps running. You wouldn't even have enough capital to sell a put against the new price. Would love to see how you handle the what-ifs, because they're more frequent, especially on QQQ and IWM, than this video would lead you to believe.
After 4 yrs of finetuning i've learned that the wheel only ever works by using margin. The margin allows you to build in alot more safety when writing your puts. I typically go for 1% (year) of premium in one month. If challenged it's usually to a degree where you can still roll easily. In this bull market i use the premium of my puts to buy back all the cc's that are at a loss. Whatever the safety you build in writing cc's, in this environment they will always get you a loss. Also only use liquid etf's, the best i find are IWM, QQQ, SMH, SPY
I do this, and I don't use margin at all. If it dips too much, you have to be patient and Make smaller amounts on selling calls... at least that's what I do
IWM the one that could run another 20% to get to all time highs. I think showing an example of rolling a contract, or even closing for a slight loss to prevent assignment would be helpful. I roll a lot if it's something I want to either keep, or don't mind having, but want it at a slightly lower price
If you want to use less capital, buy a further OTM put/call to create a super wide spread. I have an SPX with .05/.03 delta wings that only takes 20k of capital. Right now, a 13 DTE position in these wings is about $360. The wider the wings the lower the capital/profit since you aren't losing to theta. Synthetic strangle. Normally even with portfolio margin, this takes about $76000 but with a small hedge you can cut it by almost 75%. **Critically**: SPX Capital gains are taxed 60/40 long/short term gains vs SPY which is all short term. That probably saves you enough to offset the long options you buy to create the synthetic.
As others have pointed out here, with this small of a buffer between the amount of capital and the price of the assets, a few days of big movement in either direction will price you out. A big run up and you will not have enough cash to sell puts. A big drop and you will not be able to sell calls with enough premium to meet the stated goal. This is like going all in at the poker table. It works until it doesn't. Been there, done that. Good luck.
Out of curiosity. Since you are coming in at the END of the day to open a new position, are you closing the original due to capital requirements? Or are you just using margin to float the capital until your original expires? If you ARE closing, how much on average are you losing of that original premium?
Everyone asking about the setup: keep a small amount of positive delta, as over time that will favor you as we all know there is upward drift if your time period you look at is long enough.
Joe, I liked your previous wheel strategy videos much more....with the spreadsheet entries showing the prices etc. This scenario of daily trades to cover mortgage payment is a bit unrealistic with no long puts to cover the shorts. There is also the risk of a crash which could hurt your call ability. Anyway you always illustrate your concepts very well.
Hello, I’m confused. I see that your spending a lot of time saying how much you need to cover the mortgage like your at an ATM and you show both a call option and a put option to cover that….but that doesn’t explain how your predicting if the market is going up or down that month?
This strategy can fall apart so quickly. All it takes is a fast downturn in the market. And then you cant even sell covered calls for any decent premium, and you are stuck with the shares hoping they bounce back.
@@LMF-ct4lt Cash secured puts and covered calls are fine. My problem is that I think it was misleading because it gives some people the impression that this just works flawlessly to generate income every month (like how a dividend produces cashflow every month). If both of these indexes have a downward movement of lets say of 10% or greater, then you are just holding on to shares for a while because it would be too risky to try to collect a decent premium. So all of a sudden your "cash flow" has just stopped. Although, I would expect both these indexes to be fine in the long run.
What makes a difference of down turn if he is already owning 100 shares. The only risk is upside, if qqq up a lot in a day and he is not winning big , have to sell shares for less profit. If qqq goes down he wins option but lost the capital on shares but since he is owning he can’t eliminate risk but at least saves cc premium. I see it’s not worth selling daily CC
I like how you are showing exact amounts of capital needed and what specific bill you are aiming to cover. The practical application of the strategy is what makes it appealing. Gotta take taxes into account! Thats money ain't free😮 and the man will want his cut. As a homeowner would you have enough deductions in the form of property tax and mortgage interest to off set the tax liability on the premiums gained?🤔
These are great strategies for advanced folks. But be aware of picking strikes close to the market price you are going to get assigned a lot meaning you’re gonna be buying and selling the whole position and that is going to eat into your profits because of market swings, but even if you can make 20% annualized that’s pretty darn good.
Other people have (correctly) commented about the risk of this strategy if the market moves against you--goes far below your put strike price or far above the call strike price. Such events are bound to happen and have the potential to wipe out the initial capital and/or wipe out any gains made--so you won't end up with enough money to pay your mortgage. HOWEVER, if you use put and call "spreads," you can limit your losses. Spreads are harder to explain and more complicated to implement than just covered calls or cash-covered puts, but they require much less capital, and the risk (potential losses) are capped.
Not sure if I will make that video in the near future BUT to answer your question, the income is treated as ordinary income so you do not get a tax break like you do with qualified dividends. But then again, same treatment as REIT's and this is MORE INCOME. THANK YOU for watching and for leaving your $0.02 in the comments! 😎👍🏻
If u find consistency in this options strategy and it is being treated as ordinary income it will def impact your taxes due. You could offset that with additional pre-tax contributions to your 401(k) or other pre tax plan that you have access to. My aim is to realize an additional $500/mo that then essentially allows a larger pretax 401(k) contribution. Consult your tax pro!
Please do a spreadsheet or video describing the capital losses you experienced during a year of running this system, especially if you used 0:49 the wheel strategy describe in another video.
IWM requires less capital to get started but currently QQQ offers daily and IWM only does 3X per week. THANK YOU for watching and for leaving your $0.02 in the comments! 👍😎
Great way to give yourself a manageable goal. And if you are keeping track and are ahead of schedule, you could pull back on the aggressiveness and write at a lower delta during uncertain times or even pause when you might be below your cost basis.
Excellent video - and something I am considering. I feel like there could be some sticky lags and less than perfect outcomes on some percentage of these trades, but it makes sense to me - thanks!
Yes there may be times when markets move a lot and you get assigned. You can still collect income though even if markets move a lot or if markets drop. THANK YOU for watching and for leaving your $0.02 in the comments! 👍😎
Hey Joe! Great video. Could also consider doing this in XSP which is the mini 1/10 version of SPX. It is cash settled and has tax advantages since part is considered long term
Yes you definitely CAN do this BUT there is a lot less volume and liquidity with this one. Something to watch out for. THANK YOU for watching and for leaving your $0.02 in the comments! 😎👍🏻
Theta higher on the dailies, and I'd sell so that your net delta is slightly positive since the market drifts upward as we all know. Example: 1 DTE QQQ sell 442 put, 447 call, closed today at 443. Overall delta is .08 for the strangle. 69 cents credit. Also pretty low risk at .27 delta put, .19 delta call. Or, just outside the expected move strangle is .94cr mid, for .11 delta overall.
Yes there is taxes involved when you make money. You can set a % aside every month if you want to not be caught off guard at the end of the year. THANK YOU for watching and for leaving your $0.02 in the comments! 👍😎
i do an easier way, TSLY and QQQY those pay my mortgage ($2500). But since i have become 100% disabled according to the VA i am now doing this with my roth and i dont have to touch my taxable account. Nothing wrong with how you do it, i am all about easy.
I have a target premium in mind when I am looking at specific strike prices. I try not to be TOO Aggressive. If I can get reasonable/enough premium further OTM I will do so. The next day I try to close that existing position for pennies on the dollar or ROLL my position to the following day for a NET CREDIT around my target premium. THANK YOU for watching and for leaving your $0.02 in the comments! 😎👍🏻
@@AverageJoeInvestor damn, I know nothing about options. How did you learn this? Do you recommend any literature? I have 20k sitting around. If I can open a brokerage and learn this I can pay half my mortgage. Mine is $1409 month- so similar to yours. I don’t really understand what you said🤣
@@egosystem9959a roll would be a BTC/STO combo assuming you already had an open short put or call position. Just make sure you structure the trade so you get a credit
I absolutely love this approach. My question is what are the tax implications on that? Do you keep the extra as a fluff in say a high yield savings account to cover the taxes or just add it back into your starting capital. I have Mr Cooper as well and my mortgage is less than yours with the escrow account.
The tax implications are no different if you get a second job or work Overtime for that matter ( you just pay them cause you have made more income ). Look into other tax deferred vehicles that will allow you to "Offset" some of that extra income if it worries you. Remember is this method of trading has relieved your "paycheck" by the amount of your mortgage then you do have extra cashflow every month to help with that tax bill. Just my 2cents
I find your videos on options interesting but the 1 thing I notice is that you don't include your costs for writing contracts and fees for when you get assigned. If you would be so kind, what are all the fees and thus the real profit numbers after fees? Keep up the good work
So 1400 / 45000 is targeting 3.11% return a month, or ~37% annually. Pretty lofty expectations but looking forward to how this proceeds though this year. We've been in a bull market this year so it's been pretty easy to make money so far.
5:49 was me doing my taxes for all those covered calls this year. What's the best option for people who need to do their taxes and have to log all of the contracts that were made?
Do you recommend any literature to learn about options? How did you start? I need someone to train me 😅 I have 20k sitting around. Would love to put it to work! Thanks! ☺️
Do you have to get a day trading permission or status On your trading platform in order to avoid the checkmarks for unsettled cash positions? I find weekly or bi weekly options easier for that reason.
Arent there ETF that do the covered calls for you? Why risk doing it yourself if a managed low cost fund does it for you, while buying big bits of a broader market
That’s what I’m doing granted my house payment is more however I’m able to contribute 1k in dividends, to my house payment, only a small portion is options for me, he’s better off selling puts on bitcoin based ETFs, I used Bito worse case scenario if you get assigned collect the dividend, then cc on the shares after the dividend is payed
At the end of the video you said this is for cash flow not capital appreciation, but these are 40-50% ROC. I think that is awesome but what option strategy to you consider good for capital appreciation?
What is your definition of profitable. If you can make 2% each month on your portfolio then you would be performing exceptionally (that would be 24% annualized, to be honest if you can make let's say 15% annualized that would be really good, professional money managers cant beat 15% oftentimes. To increase dramatically, you would need to use some high risk, high reward strategies which you can find on UA-cam, but they can also blow up your account.
Much safer selling puts at 3 weeks and a very low delta. Lately those close to the money options are getting run over every few days. And by the way, check your math, 360/wk is $72/day not $65.
Good Question! I do not do any technical analysis. Every day I choose my strike prices based on available premium AND based on what is happening in the markets and if I feel like I want to be more conservative/aggressive. THANK YOU for watching and for leaving your $0.02 in the comments! =)
Here is a crazy idea (if someone have margin) buy 200 QQQs (or 400 WIM) and sell 2CCs, the interest will be covered by the premium. I tried this and netted around 650 bux selling ATM for one week 0DTE. 100 of the shares are cash, and the other 100 is on margin. If the shares are called, so be it, buy 200 more and start this cycle over. But again, I've only done this for one week, currently waiting for 28th of March, so all the margin loan and balances on Schwab gets settled and I can see a net figure.
@@fireoptions Pretty Good, bought/got a PMCC (IWM) on margin, and currently up about $300. Just trying this out, maybe come next year, I'll up it to 2 or 3 contracts.
I had initially planned to retire at 62, work part-time, and save money, but the impact of high prices on various goods and services has significantly disrupted my retirement plan. I'm worried about whether those who experienced the 2008 financial crisis had it easier than I currently am. The volatility of the stock market is a concern as my income has decreased, and I fear that I won't be able to contribute as much as before, potentially jeopardizing my retirement savings.
The increasing prices have impacted my plan to retire at 62, work part-time, and save for the future. I'm concerned about whether those who navigated the 2008 financial crisis had an easier time than I am currently experiencing. The combination of stock market volatility and a decrease in income is causing anxiety about whether I'll have sufficient funds for retirement.
This is precisely why I like having a portfolio coach guide my day-to-day market decisions: with their extensive knowledge of going long and short at the same time, using risk for its asymmetrical upside and laying it off as a hedge against the inevitable downward turns, their skillset makes it nearly impossible for them to underperform. I've been utilizing a portfolio coach for more than two years, and I've made over $800,000.
Leticia Zavala Perkins, a highly respected figure in her field. I suggest delving deeper into her credentials, as she possesses extensive experience and serves as a valuable resource for individuals seeking guidance in navigating the financial market.
Correct me if I’m wrong if I don’t mind appreciation or depreciation on the investment call it qqq the only downside I see is taxable income? Do you offer discord help for patrons? I feel like I’m over thinking this lol 😂
Rolling is nothing more than buying back your short option and selling another option further out. Could be at the same strike or different. Most brokers will let you do this as one trade so that bid/ask spread shouldn't hurt you as much.
You need a lot more than $45k invested to have 100 shares each of IWM and QQQ! $45k alone might get you the 100 shares of QQQ today, but not both ETF’s!
That answer depends on how much do you already make? If you're income is 50k a year, you just added 25k to it. If you make 150k, same thing-- so the impact scales based on what bracket it moves you in to. If 25k pushes you into a new bracket, then yes it would have a larger impact than if it does not.
Oh and the bonus would b getting assigned and then writing calls and then getting called away for maybe a couple hundred more than u were assigned for...good old capital appreciation!
All sound good in theory. 1) How did you manage it during 2022 when price tanked and you're down over 5-10-20-30% ? You sell monthly? 45 day's from now? Can you still pay your mortgage? Thank you.
LOL, well since I am now full-time the Adsense and my Patreon revenue represent my normal income. THANK YOU for watching and for leaving your $0.02 in the comments! 👍😎
Taking too much risk to generate that much of anual percentage. I rather use more capital and get a 2% monthly which is about 24% a year on your money .
With more market volatility you also have the ability to collect more premium and further OTM. But to your point, Yes, there will be times when you get assigned and you switch from covered calls to cash-secured puts and vice versa. THANK YOU for watching and for leaving your $0.02 in the comments! 👍😎
@@AverageJoeInvestor For example, if you get assigned at SPY 500, and the market falls to 420, what covered call and month you will sell? You have to pick many months away, which losing time value. Let say you pick 430 for not losing time value, and the market rebounce all the way to 470, you are losing the trade. No strategy works on all type of market, and each strategy works til it doesn't.
Very misleading video. Look amazing in potential, but selling calls so close to the money on suck volatile ETF’s would mean that a tiny move up or down and yll get assigned or worse, be very down and might wait weeks or months to bounce back to be able to sell and collect premiums. If it would be so easy, everyone would have done it.
My advice to everyone is this : if you want to grow big this year especially in your finances. Be willing to take risks. Saving is great but taking risks puts you on a pedestal where you wouldnt have to worry about savings as you do now. Thanks to larysa Caba, my portolio is doing really great and im proud of the decisions i made last year.
I feel one Of the greatest challenges that we first timers face in the ma rket is that we end up losing all we have,making it difficult to find ourselves back to our feet. My biggest advice is to always seek the services of a professional just like I did when I ventured into it for the first time. Big thanks to Larysa Caba. I now make huge profits by weekly through her services while still learning to stand on my own.
I think she trades for everyone I meet. I met her twice at a meeting in Germany and after her lectures from Ella I had to personally ask her to be my financial advisor. she is definitely good.
I have never seen a trader as open and transparent as Larysa Caba with her clients. The way she decides to make a profit for her clients. she allows you to express your fears and she still rests your fears and that is my respect. I don't normally comment on videos, but this word should be included. she is really cool.
I feel this is quite an easy one. You already have her name which makes it easy for you. Just look up her name online. I’m sure you will come across her. That’s how I found her too.
It depends on what you would call a LOSING DAY. When you get assigned below your basis you can then continue to sell options though at times you may collect less income to avoid getting assigned below your basis. THANK YOU for watching and for leaving your $0.02 in the comments! 👍😎
What they do to pay thier mortgage with 45000 dollars, put $45k in qqq and use youtube income to pay everything. If these people were actually effective trading they wouldnt be on youtube for income lol. Sooooo sad.
You can always roll and get paid more, or take a slight loss every once in a while. I think it could be profitable, but would need to have a good feel on the economic calendar and meetings as those days will be volatile than others.
I didn’t ever state this was advice. I stated this is what I do to cover my mortgage every month. Assignment is not that big of a deal. THANK YOU for watching and for leaving your $0.02 in the comments! 👍😎
Hey Everybody! Happy Tuesday! Make sure to leave your $0.02 in the comments! I appreciate you! =)
I wish it was this easy. 2% down day you are out -$1300. They doesn’t mention stoploss or assignment risk. 1 bad day is 20 days of profit. Also when you are itm you won’t be able to roll for credit. You can roll for debit. Will losing cash flow.
so selling those puts on the qqq so close to the money would seem you frequently need to either take the shares or roll you kind of glossed over that as if its something that never happens. I think it calls for an explanation. Thanks for the video
I do this as well. That's why he showed the sell call options side as well because, yes, sometimes you do get assigned. It's just the wheel strategy buy sell rinse and repeat
I like this idea, but all these wheel videos people publish never talk about what if price goes WAAAY below your put, or WAAAAY above your CC. You could potentially get knocked out of the strategy if price runs above your CC and keeps running. You wouldn't even have enough capital to sell a put against the new price.
Would love to see how you handle the what-ifs, because they're more frequent, especially on QQQ and IWM, than this video would lead you to believe.
you can potentially lose
Nice question so what will you to @AverageJoeInvestor ?
After 4 yrs of finetuning i've learned that the wheel only ever works by using margin. The margin allows you to build in alot more safety when writing your puts. I typically go for 1% (year) of premium in one month. If challenged it's usually to a degree where you can still roll easily. In this bull market i use the premium of my puts to buy back all the cc's that are at a loss. Whatever the safety you build in writing cc's, in this environment they will always get you a loss. Also only use liquid etf's, the best i find are IWM, QQQ, SMH, SPY
@@Wikidpalm cOvErEd CaLlSsSsS1!1!1!
I do this, and I don't use margin at all. If it dips too much, you have to be patient and Make smaller amounts on selling calls... at least that's what I do
IWM the one that could run another 20% to get to all time highs. I think showing an example of rolling a contract, or even closing for a slight loss to prevent assignment would be helpful. I roll a lot if it's something I want to either keep, or don't mind having, but want it at a slightly lower price
Thank you for bringing this up!
If you want to use less capital, buy a further OTM put/call to create a super wide spread. I have an SPX with .05/.03 delta wings that only takes 20k of capital. Right now, a 13 DTE position in these wings is about $360. The wider the wings the lower the capital/profit since you aren't losing to theta. Synthetic strangle. Normally even with portfolio margin, this takes about $76000 but with a small hedge you can cut it by almost 75%. **Critically**: SPX Capital gains are taxed 60/40 long/short term gains vs SPY which is all short term. That probably saves you enough to offset the long options you buy to create the synthetic.
As others have pointed out here, with this small of a buffer between the amount of capital and the price of the assets, a few days of big movement in either direction will price you out. A big run up and you will not have enough cash to sell puts. A big drop and you will not be able to sell calls with enough premium to meet the stated goal.
This is like going all in at the poker table. It works until it doesn't.
Been there, done that. Good luck.
Appreciate your content but could you make a video that’s more realistic and deals with assignments, price swings, corrections and risk mgmt ?
Out of curiosity. Since you are coming in at the END of the day to open a new position, are you closing the original due to capital requirements? Or are you just using margin to float the capital until your original expires? If you ARE closing, how much on average are you losing of that original premium?
1st Comment! Woohoo!
Seriously though, Thanks for all the great content, Brother.
You rock! THANK YOU for watching and for leaving your $0.02 in the comments! =)
You are making it sound way to simple 😊
Minutes to learn, a few years to master.
Yeah.. These financial guro videos always make it look simple. 😅
Everyone asking about the setup: keep a small amount of positive delta, as over time that will favor you as we all know there is upward drift if your time period you look at is long enough.
what are you not doing to be worried about IWM or QQQ crashing considering were at all time highs in a shaky market?
Joe, I liked your previous wheel strategy videos much more....with the spreadsheet entries showing the prices etc. This scenario of daily trades to cover mortgage payment is a bit unrealistic with no long puts to cover the shorts. There is also the risk of a crash which could hurt your call ability. Anyway you always illustrate your concepts very well.
Good video but I still struggle with options… can you do it with any stock with lesser value? How do you set the price and dates..
IWM now has daily expirations. Thank you for your videos
Hello, I’m confused. I see that your spending a lot of time saying how much you need to cover the mortgage like your at an ATM and you show both a call option and a put option to cover that….but that doesn’t explain how your predicting if the market is going up or down that month?
This strategy can fall apart so quickly. All it takes is a fast downturn in the market. And then you cant even sell covered calls for any decent premium, and you are stuck with the shares hoping they bounce back.
Are you better off trading credit spreads?
Has the market ever not bounce back?
YOU ARE A FOOL. I KNOW IT. THE OTHERS HERE KNOW IT. ONLY YOU DONT KNOW IT.
@@LMF-ct4lt Cash secured puts and covered calls are fine. My problem is that I think it was misleading because it gives some people the impression that this just works flawlessly to generate income every month (like how a dividend produces cashflow every month). If both of these indexes have a downward movement of lets say of 10% or greater, then you are just holding on to shares for a while because it would be too risky to try to collect a decent premium. So all of a sudden your "cash flow" has just stopped. Although, I would expect both these indexes to be fine in the long run.
What makes a difference of down turn if he is already owning 100 shares. The only risk is upside, if qqq up a lot in a day and he is not winning big , have to sell shares for less profit. If qqq goes down he wins option but lost the capital on shares but since he is owning he can’t eliminate risk but at least saves cc premium. I see it’s not worth selling daily CC
I like how you are showing exact amounts of capital needed and what specific bill you are aiming to cover. The practical application of the strategy is what makes it appealing. Gotta take taxes into account! Thats money ain't free😮 and the man will want his cut. As a homeowner would you have enough deductions in the form of property tax and mortgage interest to off set the tax liability on the premiums gained?🤔
Awesome video! Tons of good info! You could have broken this up into 3 or 4 separate videos!
Lately the volatility has been up in the last/first hour of the day, maybe 30 minute, so I recommend trying to be in/out after/before that.
These are great strategies for advanced folks. But be aware of picking strikes close to the market price you are going to get assigned a lot meaning you’re gonna be buying and selling the whole position and that is going to eat into your profits because of market swings, but even if you can make 20% annualized that’s pretty darn good.
Other people have (correctly) commented about the risk of this strategy if the market moves against you--goes far below your put strike price or far above the call strike price. Such events are bound to happen and have the potential to wipe out the initial capital and/or wipe out any gains made--so you won't end up with enough money to pay your mortgage. HOWEVER, if you use put and call "spreads," you can limit your losses. Spreads are harder to explain and more complicated to implement than just covered calls or cash-covered puts, but they require much less capital, and the risk (potential losses) are capped.
Great video - I'm inspired! Can you do a video on the tax consequences of selling covered calls and cash-secured puts?
Not sure if I will make that video in the near future BUT to answer your question, the income is treated as ordinary income so you do not get a tax break like you do with qualified dividends. But then again, same treatment as REIT's and this is MORE INCOME. THANK YOU for watching and for leaving your $0.02 in the comments! 😎👍🏻
If u find consistency in this options strategy and it is being treated as ordinary income it will def impact your taxes due. You could offset that with additional pre-tax contributions to your 401(k) or other pre tax plan that you have access to. My aim is to realize an additional $500/mo that then essentially allows a larger pretax 401(k) contribution. Consult your tax pro!
Please do a spreadsheet or video describing the capital losses you experienced during a year of running this system, especially if you used 0:49 the wheel strategy describe in another video.
What are the pros and cons of using IWM versus QQQ for this strategy?
IWM requires less capital to get started but currently QQQ offers daily and IWM only does 3X per week. THANK YOU for watching and for leaving your $0.02 in the comments! 👍😎
Great way to give yourself a manageable goal. And if you are keeping track and are ahead of schedule, you could pull back on the aggressiveness and write at a lower delta during uncertain times or even pause when you might be below your cost basis.
I always enjoy your segment Joe...Do you have no costs to write CC or Puts? I never seems to be included in the cost of trades?
Excellent video - and something I am considering. I feel like there could be some sticky lags and less than perfect outcomes on some percentage of these trades, but it makes sense to me - thanks!
Yes there may be times when markets move a lot and you get assigned. You can still collect income though even if markets move a lot or if markets drop. THANK YOU for watching and for leaving your $0.02 in the comments! 👍😎
Hey Joe! Great video. Could also consider doing this in XSP which is the mini 1/10 version of SPX. It is cash settled and has tax advantages since part is considered long term
Yes you definitely CAN do this BUT there is a lot less volume and liquidity with this one. Something to watch out for. THANK YOU for watching and for leaving your $0.02 in the comments! 😎👍🏻
Theta higher on the dailies, and I'd sell so that your net delta is slightly positive since the market drifts upward as we all know. Example: 1 DTE QQQ sell 442 put, 447 call, closed today at 443. Overall delta is .08 for the strangle. 69 cents credit. Also pretty low risk at .27 delta put, .19 delta call. Or, just outside the expected move strangle is .94cr mid, for .11 delta overall.
What tool or brokerage is the Options Trade Builder that you are showing offered on?
Thanks Joe for all your info..... so you like IWM and QQQ better than SPY?
What about taxes on the option income? What strategy covers that?
Yes there is taxes involved when you make money. You can set a % aside every month if you want to not be caught off guard at the end of the year. THANK YOU for watching and for leaving your $0.02 in the comments! 👍😎
i do an easier way, TSLY and QQQY those pay my mortgage ($2500). But since i have become 100% disabled according to the VA i am now doing this with my roth and i dont have to touch my taxable account. Nothing wrong with how you do it, i am all about easy.
Thanks Joe you got me thinking retiring in 10 weeks this is a great way to Supplement my income
AWESOME! THANK YOU for watching and for leaving your $0.02 in the comments! 👍😎
How do you decide which contract to buy? What do you look at to see if your decision will work out and make money?
I have a target premium in mind when I am looking at specific strike prices. I try not to be TOO Aggressive. If I can get reasonable/enough premium further OTM I will do so. The next day I try to close that existing position for pennies on the dollar or ROLL my position to the following day for a NET CREDIT around my target premium. THANK YOU for watching and for leaving your $0.02 in the comments! 😎👍🏻
@@AverageJoeInvestor damn, I know nothing about options. How did you learn this? Do you recommend any literature? I have 20k sitting around. If I can open a brokerage and learn this I can pay half my mortgage. Mine is $1409 month- so similar to yours. I don’t really understand what you said🤣
@@AverageJoeInvestor- Need a detailed example of a roll. I know BTO and STC. I don't see a roll button anywhere...
@@egosystem9959a roll would be a BTC/STO combo assuming you already had an open short put or call position. Just make sure you structure the trade so you get a credit
I absolutely love this approach. My question is what are the tax implications on that? Do you keep the extra as a fluff in say a high yield savings account to cover the taxes or just add it back into your starting capital. I have Mr Cooper as well and my mortgage is less than yours with the escrow account.
The tax implications are no different if you get a second job or work Overtime for that matter ( you just pay them cause you have made more income ). Look into other tax deferred vehicles that will allow you to "Offset" some of that extra income if it worries you. Remember is this method of trading has relieved your "paycheck" by the amount of your mortgage then you do have extra cashflow every month to help with that tax bill. Just my 2cents
Good video! I've been doing good wheeling GDX. Have you looked at that one?
I find your videos on options interesting but the 1 thing I notice is that you don't include your costs for writing contracts and fees for when you get assigned. If you would be so kind, what are all the fees and thus the real profit numbers after fees? Keep up the good work
Please do a spreadsheet or video that reveals the capital losses you had over at least a year doing this. Thanks.
Great video, the wheel is an awesome strategy. The only real risk I see is if you do it on bad stocks. But this being indexes, it's not that bad.
@Joe-lnvestor- 😂😂
Sounds like a scam
How often are you getting put the shares or having them called away, because it looks like you are picking a higher delta.
Why do you use QQQ and IWM but not SPY?? Is it just because SPY is more expensive with worse premiums??
So 1400 / 45000 is targeting 3.11% return a month, or ~37% annually. Pretty lofty expectations but looking forward to how this proceeds though this year. We've been in a bull market this year so it's been pretty easy to make money so far.
Less commissions but point still made and well taken.
This strategy is amazing!
Do you then sell covered calls on the shares that were assigned when the price goes down at expiration?
5:49 was me doing my taxes for all those covered calls this year. What's the best option for people who need to do their taxes and have to log all of the contracts that were made?
Use a tax guy, LOL... I can appreciate the added complexity involved. THANK YOU for watching and for leaving your $0.02 in the comments! =)
Do you recommend any literature to learn about options? How did you start? I need someone to train me 😅 I have 20k sitting around. Would love to put it to work! Thanks! ☺️
Most online brokers allow you to download your trades directly into tax software.
Doesn't the broker statement give you all the info needed? Could be wrong.
you can lose. I have before on these option plays. Everyone is genius when the market is bull
Do you have to get a day trading permission or status On your trading platform in order to avoid the checkmarks for unsettled cash positions? I find weekly or bi weekly options easier for that reason.
Arent there ETF that do the covered calls for you? Why risk doing it yourself if a managed low cost fund does it for you, while buying big bits of a broader market
That’s what I’m doing granted my house payment is more however I’m able to contribute 1k in dividends, to my house payment, only a small portion is options for me, he’s better off selling puts on bitcoin based ETFs, I used Bito worse case scenario if you get assigned collect the dividend, then cc on the shares after the dividend is payed
Stupid question but could you trade it with margin? Interest rates from brokers are sometimes cheaper than from credit card providers?! 😊
YES.
@@designbydavid I guess you have experience in it? So Capital of 25000 needed to make 1k4 per month? Holly cow! 🫢🤩
What does "roll the existing contract" mean?
At the end of the video you said this is for cash flow not capital appreciation, but these are 40-50% ROC. I think that is awesome but what option strategy to you consider good for capital appreciation?
Do I have any chance to be profitable selling covered with my 2k dollar account?
I have a good amount of money and I’m trying to learn this options stuff!
I just sold put ffor 10 contracts on Tlry for €2000 strike price this week. So yes you can.
What is your definition of profitable. If you can make 2% each month on your portfolio then you would be performing exceptionally (that would be 24% annualized, to be honest if you can make let's say 15% annualized that would be really good, professional money managers cant beat 15% oftentimes. To increase dramatically, you would need to use some high risk, high reward strategies which you can find on UA-cam, but they can also blow up your account.
Why not do the same thing with spx or ndx cash settled and not have to worry about assignment at all or rolling?
Do you have another video on the channel that goes into greater detail to learn this strategy?
you can look up on you tube for the "wheel strategy". This is what he is describing in his video above.
Much safer selling puts at 3 weeks and a very low delta. Lately those close to the money options are getting run over every few days. And by the way, check your math, 360/wk is $72/day not $65.
Do you do any technical analysis or just run the wheel strategy no matter what the charts tell you?
Good Question! I do not do any technical analysis. Every day I choose my strike prices based on available premium AND based on what is happening in the markets and if I feel like I want to be more conservative/aggressive. THANK YOU for watching and for leaving your $0.02 in the comments! =)
Here is a crazy idea (if someone have margin) buy 200 QQQs (or 400 WIM) and sell 2CCs, the interest will be covered by the premium. I tried this and netted around 650 bux selling ATM for one week 0DTE. 100 of the shares are cash, and the other 100 is on margin.
If the shares are called, so be it, buy 200 more and start this cycle over. But again, I've only done this for one week, currently waiting for 28th of March, so all the margin loan and balances on Schwab gets settled and I can see a net figure.
So, how is it going?
@@fireoptions Pretty Good, bought/got a PMCC (IWM) on margin, and currently up about $300. Just trying this out, maybe come next year, I'll up it to 2 or 3 contracts.
This is good if you have the spare time to do this covered call stuff. Wouldn't this be difficult if you had a day job?
Do you trade this strategy daily & if I subscribe to your channel can I follow what you do?
I had initially planned to retire at 62, work part-time, and save money, but the impact of high prices on various goods and services has significantly disrupted my retirement plan. I'm worried about whether those who experienced the 2008 financial crisis had it easier than I currently am. The volatility of the stock market is a concern as my income has decreased, and I fear that I won't be able to contribute as much as before, potentially jeopardizing my retirement savings.
The increasing prices have impacted my plan to retire at 62, work part-time, and save for the future. I'm concerned about whether those who navigated the 2008 financial crisis had an easier time than I am currently experiencing. The combination of stock market volatility and a decrease in income is causing anxiety about whether I'll have sufficient funds for retirement.
This is precisely why I like having a portfolio coach guide my day-to-day market decisions: with their extensive knowledge of going long and short at the same time, using risk for its asymmetrical upside and laying it off as a hedge against the inevitable downward turns, their skillset makes it nearly impossible for them to underperform. I've been utilizing a portfolio coach for more than two years, and I've made over $800,000.
Mind if I ask you to recommend this particular coach to you using their service?
Leticia Zavala Perkins, a highly respected figure in her field. I suggest delving deeper into her credentials, as she possesses extensive experience and serves as a valuable resource for individuals seeking guidance in navigating the financial market.
Thank you for the lead. I searched her up, and I have sent her an email. I hope she gets back to me soon.
Correct me if I’m wrong if I don’t mind appreciation or depreciation on the investment call it qqq the only downside I see is taxable income? Do you offer discord help for patrons? I feel like I’m over thinking this lol 😂
Just out of curiosity do you utilize SPY as well or just those 2
Need a flow chart on how this works. I don’t get it
Why make it so complicated just sell the qqq call at assigned 443 collect more premium then next week sell the put back at 30 delta rinse and repeat
I’ve been getting assigned a lot lately, even with Far out of the money CCO’s. What is “rolling”, can it help me? Do I have to pay a fee?
Rolling is nothing more than buying back your short option and selling another option further out. Could be at the same strike or different. Most brokers will let you do this as one trade so that bid/ask spread shouldn't hurt you as much.
So how does it work when you sell a call and the stock goes down wiping away your covered call premium and leaves you in the red?
My $0.02: taxes. You need to set aside a percentage for taxes. In the US options trading is ordinary income.
Agreed. THANK YOU for watching and for leaving your $0.02 in the comments! 👍😎
How does taxes play out with this method?
You haven't talked about mitigation of the trade gone bad. When selling calls on IWM at deltas of 42, probabilities are not akways in your favour
You need a lot more than $45k invested to have 100 shares each of IWM and QQQ! $45k alone might get you the 100 shares of QQQ today, but not both ETF’s!
I am wondering about the taxes a litle bit how much I would pay on 25000 gain per year for example ?
That answer depends on how much do you already make? If you're income is 50k a year, you just added 25k to it. If you make 150k, same thing-- so the impact scales based on what bracket it moves you in to. If 25k pushes you into a new bracket, then yes it would have a larger impact than if it does not.
Is someone actively buying each one of your calls everyday?
Honestly, do you truly sell calls with a 44 delta everyday???
Idk man it’s alot like gambling but good if you can figure it out
Seems like a lot of your delta around .3, which is very risky. Why not do spreads,, where you are not risking your capital.
This doesn’t work when the market takes a 10-20% downturn and you have no money in reserve.
Oh and the bonus would b getting assigned and then writing calls and then getting called away for maybe a couple hundred more than u were assigned for...good old capital appreciation!
Isn't this really an every 2 day strategy? The position you took won't close until after the next day. And with QQQ that would be all of your capital.
All sound good in theory. 1) How did you manage it during 2022 when price tanked and you're down over 5-10-20-30% ? You sell monthly? 45 day's from now? Can you still pay your mortgage? Thank you.
Who can show a live example ?😊
Now do SFO rents and mortgages $5500
I'm sure the adsense revenue helps quite a bit too (or at least I hope so 😂)
LOL, well since I am now full-time the Adsense and my Patreon revenue represent my normal income. THANK YOU for watching and for leaving your $0.02 in the comments! 👍😎
Taking too much risk to generate that much of anual percentage. I rather use more capital and get a 2% monthly which is about 24% a year on your money .
One person I like said 'Live at the 20 delta'. i.e. thats where you should always have something on. Expiration your choice.
Good information but I think for myself personally the tax implications would keep me from doing this ❤
This strategy will fall apart when market volatility pick up. All it takes a 3-4% drop or a 10% correction, and the wheel will be broken.
I agree. But you should have a cushion for that. Because every once in a while, the stock acts out of character
With more market volatility you also have the ability to collect more premium and further OTM. But to your point, Yes, there will be times when you get assigned and you switch from covered calls to cash-secured puts and vice versa. THANK YOU for watching and for leaving your $0.02 in the comments! 👍😎
@@AverageJoeInvestor For example, if you get assigned at SPY 500, and the market falls to 420, what covered call and month you will sell? You have to pick many months away, which losing time value. Let say you pick 430 for not losing time value, and the market rebounce all the way to 470, you are losing the trade. No strategy works on all type of market, and each strategy works til it doesn't.
Very misleading video. Look amazing in potential, but selling calls so close to the money on suck volatile ETF’s would mean that a tiny move up or down and yll get assigned or worse, be very down and might wait weeks or months to bounce back to be able to sell and collect premiums. If it would be so easy, everyone would have done it.
you forgot about taxes
How is it your mortgage payment is almost the exact same as mine with the exact same company that is the real question sir. LMAO
LOL, THANK YOU for watching and for leaving your $0.02 in the comments! 👍😎
My advice to everyone is this : if you want to grow big this year especially in your finances. Be willing to take risks. Saving is great but taking risks puts you on a pedestal where you wouldnt have to worry about savings as you do now. Thanks to larysa Caba, my portolio is doing really great and im proud of the decisions i made last year.
I feel one Of the greatest challenges that we first timers face in the ma rket is that we end up losing all we have,making it difficult to find ourselves back to our feet. My biggest advice is to always seek the services of a professional just like I did when I ventured into it for the first time. Big thanks to Larysa Caba. I now make huge profits by weekly through her services while still learning to stand on my own.
I think she trades for everyone I meet. I met her twice at a meeting in Germany and after her lectures from Ella I had to personally ask her to be my financial advisor. she is definitely good.
I have never seen a trader as open and transparent as Larysa Caba with her clients. The way she decides to make a profit for her clients. she allows you to express your fears and she still rests your fears and that is my respect. I don't normally comment on videos, but this word should be included. she is really cool.
I definitely like to know more.
I feel this is quite an easy one. You already have her name which makes it easy for you. Just look up her name online. I’m sure you will come across her. That’s how I found her too.
Wow, never a losing day. What a crock.
It depends on what you would call a LOSING DAY. When you get assigned below your basis you can then continue to sell options though at times you may collect less income to avoid getting assigned below your basis. THANK YOU for watching and for leaving your $0.02 in the comments! 👍😎
So you never lose on a put? Wow@@AverageJoeInvestor
What they do to pay thier mortgage with 45000 dollars, put $45k in qqq and use youtube income to pay everything. If these people were actually effective trading they wouldnt be on youtube for income lol. Sooooo sad.
BS.
very bad idea do not fallow this advice. assignment and risk is very high.
You can always roll and get paid more, or take a slight loss every once in a while. I think it could be profitable, but would need to have a good feel on the economic calendar and meetings as those days will be volatile than others.
I didn’t ever state this was advice. I stated this is what I do to cover my mortgage every month. Assignment is not that big of a deal. THANK YOU for watching and for leaving your $0.02 in the comments! 👍😎
you did not cover potential losses or how much you need in your account to cover if you are assigned. @@AverageJoeInvestor
Sounds like you should stay away from the options market.
Unsub.