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Showing posts from July, 2023

A Wildcard Options Strategy

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Here is a one-sentence summary of my strategy:  I generate cash flow from the shares I already own, or intended to own before even buying them by selling options!  These shares can belong to individual stocks, index funds or other ETFs. If you’re new to options trading you might wanna check my beginner’s guide to options post to learn about the basics and some options lingo before continue.     Why do I prefer selling options over buying them? I actually posted this on Instagram previously but I’ll mention it here again with a one liner:  Option sellers have a higher probability of profiting! There is actually research supporting this mathematically.  In the simplest terms, if you are an option buyer you gotta be right about the direction, magnitude and the timing of the price action of the underlying.  But if you are an option seller, you can profit whether the price goes in the direction you want, doesn’t change, and even if it moves against you up ...
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An Absolute Beginner’s Guide to Options

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What are options? Why would anybody even want to buy options? You can think of options trading like an insurance business.  For example, when you buy auto insurance what do you buy?  You buy the insurance company's promise , of course! With the insurance contract the company promises to cover the costs that are occurring as a result of accidents you’re involved in for the duration of the contract. If you have an accident during this period, the insurance company pays the bill. If not, the insurance company keeps the insurance premium they collected from you and the contract expires. Similar to insurance, when you sell an options contract, you do something similar to what the insurance company does: You promise to buy or sell shares of a stock at a certain price up to a certain date . In return, you receive cash from the buyer for making this promise and taking on the risk . By purchasing this contract, the options buyer receives the right, but not the obligation, to buy o...
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