QUOTE(Moneylust @ Apr 8 2022, 06:16 PM)
How much capital did you deploy to make that making usd400-450/week just by selling options?
And the options of which companies did you sell, other than Starbucks?
Depends on your stock. You can do it alone with one stock like Tesla or you can use multiple combo.
I used multiple combos like upstart, crwd , home depot, Nvidia, amd, tsmc, Airbnb. Capital needed around usd100k which if conservative gives you around 20%p.a. Good enough for me.
First rule of selling puts is you need to be comfortable buying 100 shares at the strike price you choose.Like I am comfortable picking up Airbnb in 135-140 range so if it's near that price, I just sell covered put on it easily netting me usd40-80/contract.
Another one is amd, I am ok with picking up another 100 shares at Usd98, hence that's my strike price.
For covered calls is a different story. You want to try to hold on to your stock. For stuff like crwd I set my premium to usd30x4x/week.For tsmc, I set t to usd2x/week. Every stock is different. If you have been selling covered call for a while you will know where is the safe and sweet spot where you can sell and the options expired worthless. The further you go out, the less liquid it gets and premium may become not worth it.
If you don't have capital for it, focus on one company say amd, or palantir. Dont tell me you can afford 100 shares of palantir? 100 shares of palantir, can easily give you usd10/week.
If you don't have the capital or refuse to use margin, another way you can do is do a poor man covered call. Buy a deep in the money call options expiring say 2 years old. Then start selling calls on it. The capital for deep in the money call is lesser than capital required to buy 100 shares.
Another reason is I use interactive broker and uses margin. As long as your stock does not hit the strike price for puts, and your cash balance remains positive, no interest will be charged
Even if it hits, as mentioned I am happy buying at those price and if my cash do turn negative, interactive broker have very low margin rate like 1.5%p.a so my interest is like USD400-1000/year which is easily cancel off by consistently selling calls (1 week of selling options easily wipe out one year worth of interest) Hence subsequent premium from selling options goes to paying down the principal). Of course the more negative your portfolio, the longer you have to sell options just to wipe out the interest. Above is just an example.
Of course with interest rate going up, I will reduced the amount of covered put I opened going forward.This post has been edited by Ramjade: Apr 8 2022, 09:30 PM