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I didn’t start making massive amounts of money in trading until I realized a simple concept: Don’t take risks, make them. Essentially you provide an opportunity

by xwdv 6y ago

I didn’t start making massive amounts of money in trading until I realized a simple concept: Don’t take risks, make them. Essentially you provide an opportunity for others to take risky gambles and profit when they lose. So now I sell way OTM option contracts and make great consistent money. Sure a pro day trader might make more, but I make consistent money and with much less skill or accuracy required. And I still benefit from the rise in my underlying stocks as long as they don’t get assigned. Only reason this isn’t more popular is because you really need high six figures or over a million in assets to start making income you can live off of. The amount of people with that much money in liquid assets is already small, and the portion of them willing to invest actively is even smaller, so very small target audience. Also, perhaps the current market environment lends itself better to selling options than it did in the past. I’m optimistic, but ready to accept this easy money could end someday.

benibela 6y ago
I have started doing that as well this month with CSP But the disadvantage is the limited upside. If you just buy the stock, you could have unlimited profit if the price goes to the moon, but the option only gives 1%. And you could still lose everything, if the price goes to zero
- xwdv 6y ago
  I wouldn’t advise CSPs over holding stock. Hold stock and sell covered calls. Only sell CSPS on down days below key support points in price. Back your CSPs using your margin power so your not tying up capital and have 100% equity investment in stocks, so you only go into margin if your CSP is assigned, and then you can just sell it off when the price recovers above cost basis, only costing you the interest of your margin loan amount per day. You could sell covered calls as well while it goes up to cover the margin interest payments.
  - benibela 6y ago
    > I wouldn’t advise CSPs over holding stock. Hold stock and sell covered calls. I have heard CSP and CC have theoretically the same returns? Except for something called "skew". Although often I am too busy to trade for some several months, and then it would probably better to hav estocks. Do you do it on individual stocks or ETFs? Unfortunately I do not have a margin account. I could apply for one

by xwdv 6y ago

benibela 6y ago

I have started doing that as well this month with CSP But the disadvantage is the limited upside. If you just buy the stock, you could have unlimited profit if the price goes to the moon, but the option only gives 1%. And you could still lose everything, if the price goes to zero

xwdv 6y ago
I wouldn’t advise CSPs over holding stock. Hold stock and sell covered calls. Only sell CSPS on down days below key support points in price. Back your CSPs using your margin power so your not tying up capital and have 100% equity investment in stocks, so you only go into margin if your CSP is assigned, and then you can just sell it off when the price recovers above cost basis, only costing you the interest of your margin loan amount per day. You could sell covered calls as well while it goes up to cover the margin interest payments.
- benibela 6y ago
  > I wouldn’t advise CSPs over holding stock. Hold stock and sell covered calls. I have heard CSP and CC have theoretically the same returns? Except for something called "skew". Although often I am too busy to trade for some several months, and then it would probably better to hav estocks. Do you do it on individual stocks or ETFs? Unfortunately I do not have a margin account. I could apply for one