It depends on whether or not it is a margin account, and if it is, how much leverage can you use? I sell weeklies for the most part. I also look to make about $75 to $150 (on average) per week per $25,000. So with $100,000, I would try to make about $400/week. Sometimes I can do it, sometimes not. Here's an example of something I might do. The QQQ options for Dec 24th $305 strike price was $1.15 on Friday. (I'm rounding numbers.) So with a $100,000 stake, you could sell 3 Put contracts netting $345 for the week. So using my goal, I would be tying up $91,500 to get that premium, and if it gets assigned, I would be getting the ETF at $5 under the current price. (I would then turn around and start selling covered calls on it for $305 or $306) So with my goal of $100/$25,000 in mind, I actually would get about 91 cents. That is on a cash secured basis. If you can use margin, you can do more, but if it starts going down you either have to roll down to later which potentially kills the return. That's what I do a lot of. In March I got margin called about 3 times in one week and took a bath getting out of those contracts. It took me until October to dig out. One thing I learned is to use limit stops. Trailing stops are the best, but Ally just stopped offering those which pizzes me off no end. Anyway... I hope this helps. It is not intended as investment advice, it is just a snapshot of what I do. dyodd, ymmv, etc etc...

 

Black Scholes is worthless.

And I HATE the comparison of options trading and a casino. If you truly feel that way, then no it isn't for you. You are correct that it is a dangerous game if you don't know what you are doing. So I highly recommend that you educate yourself. After all, flying an airplane is dangerous if you don't know what you are doing, no?

Selling a call option means nothing other than you have to be long the stock you are selling the contracts on. You only limit your profit potential, you cannot lose money if the option is assigned.

Whatever you do, don't buy into these 'systems'. Learn what options are, how they work and be disciplined in your approach executio.

 

“Hate” is strong stance I’d stay away from that. The conversation was specifically over “covered calls”.

Buying Option Calls or Puts is literally the same as going to the casino. Technically hedgies use it as a “hedge” but unless you have a $100,000,000 portfolio what are we talking about.

I haven’t bought or sold a single Option ever, as you stated I’ve heard all about the horror stories of the Robinhood investors buying up options and getting completely bankrolled.

Your response was nothing more than a rant about nothing, good day.

 

I disagree. Options trade right along with the underlying security. You get control of a lot more stock for a lot less money (if you buy.. which I don't, but that is another strategy) So if you think investing in AMZN or AAPL is going to the casino, then I guess I might agree, but going long on those two has not been disappointing. When a stock is going down, and I have sold a put option, I feel a lot like Wally Schirra in Gemini 6 when the motor shut off at T minus zero. Or like playing chicken with submarines in Hunt For Red October... you have to know when to blink. But to me, poker is random gambling no matter how much those rednecks on ESPN say otherwise. IT doesn't take a $100 million portfolio either. Jan 15th AMZN 3050 Puts are selling for around $50. That's $5,000 per contract in a little over a month. Just sayin. dyodd, ymmv etc etc

 

I disagree that spreads are useless. Thoroughly. I use them a lot. But, like you I also prefer naked puts for ease of management.

 

Regional edition:
6figuredebtbarely5figurejob.com/tryingtosaveface

Major/Legacy Edition:
3xwives7kids6figuresandbroke.com/ifilivepast68mineaswellbedeadcuzillbebroke

Both domains available. Let me know and I’ll get it started.

 

I have an idea: fourstripeinvestor.com

 

love the idea; selling the Jan $3050 is great but it takes up so much buying power, I’d probably buy the $2900 long put. This spread yields $3k in premium.

Selling the $3050 uses $300k in buying power. Selling the 2900/3050 uses $12k in buying power.

$5k in premium for $300k buying power usage or $3k for $12k in buying power? It’s a personal choice, but I do strive for some semblance of an efficient use of capital and premium vs buying power usage.

 

That’s a great URL, but I’m only a 3 striper

the real issue for me is content creation. It’s a full time job, even if I’m not personally typing It up. Lining people up to create the content is just as time consuming.

I do think that there is a need for pilots to have a centralized location to discuss 1-Investing (equities, derivatives, RE) 2-Taxes 3-Misc cheap pilot/money saving stuff.

 

Agree with you completely:


When using spreads you can accomplish three things.

Efficient use of capital: Reducing that 300K to 12K while having the ability to make 60% of the gain allows many more trades.

Capped Risk: Despite arguments to the contrary naked options can empty your account unless you are in front of the computer twenty four hours per day with your finger on the exit trigger.

Non directional plays: You can use condors, etc. to spread both sides of the price and make substantial gains while the market goes nowhere.

Naked options use too much capital for too little gain compared to limited risk plays. 10% per month is very doable with Condors.