Was this video helpful? Want the transcript? Head to www.rockwelltrading.com/articles/coffee-with-markus/how-to-pick-the-best-stock-for-selling-options/
Markus, you are doing an unparallel community education service to those interested in stocks and options trading and I can say this based on what I have seen in the industry--sheer greed and manipulation. I cannot thank you enough. You are an altruist to the core. Markus, do not even ask if your video is boring or if we are enjoying it. We are enjoying your videos like an intriguing movie so much so that we cannot move away from the video even for a few seconds.
Great video ! Would it be possible to get your put option calculator spreadsheet - I have purchased both of your books so maybe the link is in one of them.
Ah, this is pure gold. I am just at the stage where it all begins to gell. One question I would have is that with bull put spread- the SPY is $20 down , but still $30 over my break even and I am loosing so much money.. how is that possible if I am so well about break even?
That’s a great question, and it’s fantastic to hear that things are starting to click for you! With a bull put spread, it’s all about understanding how the current value of the spread fluctuates based on market conditions, especially with implied volatility and time decay. Even though SPY is above your breakeven, the drop in price could increase the value of the short leg of your spread, causing a temporary unrealized loss. As time passes and SPY stays above your strike price, the spread should move in your favor closer to expiration. Have you been tracking how implied volatility is affecting the option prices? That can be a big factor here!
Hello Masoud, great question! Our software actually does all of the calculations for you :) If you'd like to see the software in action, you can always schedule a free tour us at the following link: bit.ly/PXO_TOUR
Hi Abhi, thanks for the feedback. I no longer use the Excel spreadsheet. For the past 8 months, I have been using the Wheel Calculator of the PowerX Optimizer for doing my math.
niceeee, sounds like a guy that understand what he's doing, i like the strategy and you explain your thought process well, kudos to you my friend, thumbs up but the VIX is rarely ever above 30 for as long as its been this year, this is not the normal, i was wondering if you could make an updated video for today's more calmer markets where the VIX is barely above 20 because eventually it will come down below 20 and be in the normal range some day, the premiums will dry, so how does the checklist get adjusted for that?
hello, appreciate if you can explain why you picked companies whose price are falling.. isn't there a big risk of being assigned the shares if the prices fall further...thanks
An option with an expiration after earnings date has a different rate of time decay. When you sell puts, you want to see a steady decrease in the extrinsic value as time goes by. When you have an earnings event, there's a risk of stock price jump/fall more than you had planned for. This also causes the extrinsic value of (some) options to increase(!) with time, as you are getting closer to earnings date, and then decrease sharply right after the event. Although this sharp decrease could benefit you, but as mentioned above, it comes with the risk of a sharp price move, sometimes not in your favor.
great video as always, thanks Markus.. I know it doesn't fully fit here, but how do you deal with earning dates when using the wheel strategy? I guess it's easy when selling the puts (just avoid the earning days and cover them prior again), but how do you handle it after having been assigned and when owning the shares? Do you keep them and just don't write calls over the earnings-date and wait it out, or do you just keep on selling calls, hoping the stock-price won't go down too much if the earnings aren't great? ..and of keeping on cost averaging by selling more calls.. ..or do you possibly do something completely different like sell the shares on the market (when profitable) and then search for new wheel candidates?
Hi Markus just watching this for the first time. i do already trade options (Cash Secured Puts as you do). I see you are trading on a Friday just before close - is there a reason for this specific timing ? Thanks
I prefer trading in the first 30 min after the open. The only reason why I traded shortly before the close is because that's when I recorded the video - LOL. Does this help?
Hey Markus, great video! Question: when selling puts on an 8% dividend stock, at $40 and it drops to $38, would you roll out to the next month? Or would you take assignment & sell covered calls on the stock? And why? Thanks!
Hi Adam, it really depends on your strategy. When you're trading "The Wheel" strategy, you want to get assigned. If you are trading "The Theta King" strategy, you don't. If you don't want to get assigned, you should roll your options. And if you want to get assigned, .... well, then do nothing. Are you familiar with "The Wheel" strategy? Here's more information, if you want: ua-cam.com/play/PLBa3sAx-Io2nosgosERUhIZwzvIgD-3Vq.html
Very easy: When you have SOLD an option, there's risk. And if I can make 80% of my profits, then I rather close the position and therefore eliminate my risk. For me, the risk of getting in trouble is not worth the additional few dollars. Is this making sense?
I see in your calculator (in the example you shown in this video) you need for each of the options around $35,000 but that is your account size right? but I don´t know if you should open all of them in the hypothetic case that all meet your criteria. But in my case I have a 25000 USD account, how do you determine how many operations you can open at the same time? BTW thanks for your videos all of them are soooo helpful!!!! :)
Hi Eduardo, I recommend that you trade 3-5 positions in your account. So in your case, you should allocate $5,000 - $8,000 per position. Do you have a $25,000 cash account or is that a margin account? What's your buying power?
hi what will happen if you sell a put above the current share price? I am not clear about that concept. can you please help? because i see they give u an enormous credit if you sell put above market price.
If you sell a put ABOVE the current price, you have a pretty high risk of getting assigned. You should go through my Options 101 course (it's free). I explain everything in detail there. Here's the link: rockwelltrading.com/101
Picking stock based on nothing more than charts and price is beyond stupid and it's reckless to recommend such an approach. The golden rule is don't sell options on something you aren't willing to own and hold. Don't sell options on garbage.
Hi Mike, I'm sure you know that when picking stocks, you can use fundamental analysis or technical analysis. Both have pros and cons. It seems that you prefer fundamental analysis. That's fine. I personally prefer technical analysis. There's no "right" or "wrong". You should use the approach that works best for YOU. Making sense? 👍
Was this video helpful? Want the transcript? Head to www.rockwelltrading.com/articles/coffee-with-markus/how-to-pick-the-best-stock-for-selling-options/
Markus, you are doing an unparallel community education service to those interested in stocks and options trading and I can say this based on what I have seen in the industry--sheer greed and manipulation. I cannot thank you enough. You are an altruist to the core.
Markus, do not even ask if your video is boring or if we are enjoying it. We are enjoying your videos like an intriguing movie so much so that we cannot move away from the video even for a few seconds.
Thanks, Himanshu. Much appreciated. :-)
I like the formula you using for options calculations
Awesome! Thank you for watching! :)
Great video ! Would it be possible to get your put option calculator spreadsheet - I have purchased both of your books so maybe the link is in one of them.
You may reach out to support@rockwelltrading.com. ;)
whats a good delta?
Ah, this is pure gold. I am just at the stage where it all begins to gell. One question I would have is that with bull put spread- the SPY is $20 down , but still $30 over my break even and I am loosing so much money.. how is that possible if I am so well about break even?
That’s a great question, and it’s fantastic to hear that things are starting to click for you! With a bull put spread, it’s all about understanding how the current value of the spread fluctuates based on market conditions, especially with implied volatility and time decay. Even though SPY is above your breakeven, the drop in price could increase the value of the short leg of your spread, causing a temporary unrealized loss.
As time passes and SPY stays above your strike price, the spread should move in your favor closer to expiration. Have you been tracking how implied volatility is affecting the option prices? That can be a big factor here!
@ thanks Markus, really appreciate your reply. I have to revisit the IV element. Have a wonderful Xmas and happy investing in 2025
Great video but if your selling puts and you want to close the position before expiration doesn’t that cost money?
It does, but if the put is out of the money then it becomes very inexpensive to close on the morning of expiry.
Thank you so much
Markus. 2 questions: how do you calculate premium per day and also premium annualized?
Hello Masoud, great question! Our software actually does all of the calculations for you :) If you'd like to see the software in action, you can always schedule a free tour us at the following link: bit.ly/PXO_TOUR
Nice vid dude! Keep up the ward work 💪
Awesome! Thank you for watching! :)
Great lesson as always Markus ! Thanks for sharing.
😊 You are welcome! I am glad that this helps!
Thanks for the video. Is anyway I can get your excel sheet already setup for these put selling math? Thanks
Hi Abhi, thanks for the feedback. I no longer use the Excel spreadsheet. For the past 8 months, I have been using the Wheel Calculator of the PowerX Optimizer for doing my math.
niceeee, sounds like a guy that understand what he's doing, i like the strategy and you explain your thought process well, kudos to you my friend, thumbs up
but the VIX is rarely ever above 30 for as long as its been this year, this is not the normal, i was wondering if you could make an updated video for today's more calmer markets where the VIX is barely above 20 because eventually it will come down below 20 and be in the normal range some day, the premiums will dry, so how does the checklist get adjusted for that?
Thank you for your video clip. it is very helpful. 👍
😊 You are welcome! I am glad that this helps!
I really love your analysis! Good work!
Thank you Simon! 😁
This is helpful, keep up!
You are welcome! I am glad that this helps! :)
Do you have a checklist for selling Calls as well after you have been assigned?
Yes! We did it as part of "The Wheel Masterclass". Do you have access to our private community in MightyNetworks?
great teaching!
Awesome! Thank you for watching! :)
This is exactly what I want to know, thanks for sharing
You are welcome! :)
Love these kind of analysis. Thank you Markus.
You are welcome! I am glad that this helps. :)
Awesome class Markus!!!
Hi Crytomayusia, thanks for watching. And thanks for your feedback. Much appreciated. "See you" in the next video 👍
hello, appreciate if you can explain why you picked companies whose price are falling.. isn't there a big risk of being assigned the shares if the prices fall further...thanks
When the stock prices are falling, put options premiums are higher 😀👍
it is very interesting Markus. thumbs up for you !!
Thank you! :)
Would to trade an option when the expiration day is before earnings? can you please explain a bit more about before or after earnings
An option with an expiration after earnings date has a different rate of time decay. When you sell puts, you want to see a steady decrease in the extrinsic value as time goes by.
When you have an earnings event, there's a risk of stock price jump/fall more than you had planned for.
This also causes the extrinsic value of (some) options to increase(!) with time, as you are getting closer to earnings date, and then decrease sharply right after the event.
Although this sharp decrease could benefit you, but as mentioned above, it comes with the risk of a sharp price move, sometimes not in your favor.
Awesome video!!! Do you give out a copy of that excel spreadsheet to calculate the dollar per day?
Yes! You can request for a copy from support@rockwelltrading.com. 😉
great video as always, thanks Markus.. I know it doesn't fully fit here, but how do you deal with earning dates when using the wheel strategy? I guess it's easy when selling the puts (just avoid the earning days and cover them prior again), but how do you handle it after having been assigned and when owning the shares? Do you keep them and just don't write calls over the earnings-date and wait it out, or do you just keep on selling calls, hoping the stock-price won't go down too much if the earnings aren't great? ..and of keeping on cost averaging by selling more calls.. ..or do you possibly do something completely different like sell the shares on the market (when profitable) and then search for new wheel candidates?
Thanks for the Mug, love it!
You're welcome! "See you" in the next video!
Hi Markus just watching this for the first time. i do already trade options (Cash Secured Puts as you do). I see you are trading on a Friday just before close - is there a reason for this specific timing ? Thanks
I prefer trading in the first 30 min after the open. The only reason why I traded shortly before the close is because that's when I recorded the video - LOL. Does this help?
Hey Markus, great video! Question: when selling puts on an 8% dividend stock, at $40 and it drops to $38, would you roll out to the next month? Or would you take assignment & sell covered calls on the stock? And why? Thanks!
Hi Adam, it really depends on your strategy. When you're trading "The Wheel" strategy, you want to get assigned. If you are trading "The Theta King" strategy, you don't.
If you don't want to get assigned, you should roll your options.
And if you want to get assigned, .... well, then do nothing.
Are you familiar with "The Wheel" strategy?
Here's more information, if you want: ua-cam.com/play/PLBa3sAx-Io2nosgosERUhIZwzvIgD-3Vq.html
Great teacher
Thank you! :)
Why do you not hold into expiration?
Very easy: When you have SOLD an option, there's risk. And if I can make 80% of my profits, then I rather close the position and therefore eliminate my risk. For me, the risk of getting in trouble is not worth the additional few dollars.
Is this making sense?
I see in your calculator (in the example you shown in this video) you need for each of the options around $35,000 but that is your account size right? but I don´t know if you should open all of them in the hypothetic case that all meet your criteria. But in my case I have a 25000 USD account, how do you determine how many operations you can open at the same time? BTW thanks for your videos all of them are soooo helpful!!!! :)
Hi Eduardo, I recommend that you trade 3-5 positions in your account.
So in your case, you should allocate $5,000 - $8,000 per position.
Do you have a $25,000 cash account or is that a margin account? What's your buying power?
@@rockwelltradingservices buying power for options 25,000 and $ 50,000 for buying stocks. I have a TD AMERITRADE account. It's margin account.
hi what will happen if you sell a put above the current share price? I am not clear about that concept. can you please help? because i see they give u an enormous credit if you sell put above market price.
If you sell a put ABOVE the current price, you have a pretty high risk of getting assigned. You should go through my Options 101 course (it's free). I explain everything in detail there. Here's the link: rockwelltrading.com/101
more like this
Awesome! Thank you for watching! :)
Yes. Great video. Thumbs. Upp
Thanks! I appreciate the feedback 😀
Subscribed Liked and Shared
Thank you! :)
Thanks, Jeff! Much appreciated! "See you" in the next video.👍
was wondering if that excel calculator is available?
I am also interested in that calculator
@@JoshTaylor480 If you can help me figure out the calculations I can code it
Will you mentor me?
If you want to enroll to my online courses, you can go to www.rockwelltrading.com. :)
Is it free?
Picking stock based on nothing more than charts and price is beyond stupid and it's reckless to recommend such an approach. The golden rule is don't sell options on something you aren't willing to own and hold. Don't sell options on garbage.
Hi Mike, I'm sure you know that when picking stocks, you can use fundamental analysis or technical analysis. Both have pros and cons. It seems that you prefer fundamental analysis. That's fine. I personally prefer technical analysis. There's no "right" or "wrong". You should use the approach that works best for YOU.
Making sense? 👍