Ok. Let's get started. First and foremost this is not financial advise. I am not a financial planner, licensed accountant or my job have anything to do with a finance industry. I am just a dude on the internet who puts his money where his mouth his. I am writing this from my own experience.

Background
Here's my story on how I get into options. I was a pure dividend investor since 2015 I believed. Nothing beats have cold hard cash rolling into your bank account every now and then. Cold hard cash which you don't need to work for. Even till today, nothing beats pure cold hard cash rolling into bank account without working for it.

By being a pure dividend investor, I was limited by few stuff namely:
1. Dividend with holding tax
- 30% dividend tax hurts. After the govt makan your 30% tax, you are basically left with breadcrumbs. There's no way you can get those dividend back especially US companies.
Now with options, I am not limited by dividend tax which means any company which have options is basically fair game. The premium I get from selling options I get to keep instead of say giving to US govt.

2. Can't invest in quality companies that don't pay a dividend
- many quality companies in the United States don't pay a dividend or they pay peanut dividend. Now is it better to invest in wonderful companies that's don't pay dividends or lousy companies that pay a dividend? Keep in mind both a losuy company and quality company can both don't pay a dividend or they can both pay dividends.

How do you know a company is if good quality. One of the criteria is growing revenue, gross profit in double digit. If company revenue is stagnanting or declining, I will avoid. Yes there are other metrics as well.

For me I want to buy quality companies but I was force to choose semi quality companies that pay a dividend.
Before this with options, I won't invest in non paying/peanut paying dividend quality companies. Now as mentioned if they have options, it's fair game. Premium I earned from selling options is basically my own DIY dividends

3. Peanuts dividends
See above.

4. Need to keep looking for new opportunities
As share price increase, every new addition of money into dividend account will decrease dividends received as share price is inversely proportional to yield. Hence your risk reward overtime decreases as you are getting paid lesser to hold your stocks. Hence you need to keep looking. I am a concentrated guy which means I only hold 10-12 stocks and I don't like to hold like 20-30 stocks.
With options, I can average up. No more looking for new companies eveye now and then.

5. Unable to receive your money fast.
Someone once told me they like to received their money fast and now I see the point of it. The faster you received the money, the faster you can reinvest and earned more money. Unlike normal dividends investing where money comes in every few months, now my money comes in every week. I can reinvest or keep the money until better opportunity comes (when market is red). Yes you can do a dividend portfolio that pays weeks but you will be holding like 100 stocks. I know of one guy who is doing that.
Now with options, you choose when you want to get paid.

6. Huge capital needed to generate so-so dividend returns.
Let's be honest here. To generate say RM50k of dividend per year at 5%p.a you need RM1,000,000. Remember not everyone have RM1,000,000 to start with. Even someone working for 30 years does not guarantee they have RM1,000,000. I am one of them without a RM1,000,000 in my bank account. Unless one is born with a gold/platinum spoon, working in private sector, have successful business, unlikely you can have RM1,000,000 in bank account.
However with options, I don't need RM1,000,000 to generate RM50k/year. I just need say RM378,000 to generate RM50k. RM378,000 is easier to get Vs RM1,000,000.

So how to generate say RM50k from RM378k?
Buy 100 shares of square, docusign and crowdstrike. Sell covered calls on them for the price of say USD100/week.
USD100 x 3 X 52 weeks = USD15600 x4.2 = RM65520/year.

There's less capital required than dividend investing.

Now I need less capital Vs dividend investing.

7. Limited dividends.
With selling options, I am getting paid 1 year worth of dividend in a month. That's 12 years worth of dividend in a single year just by selling options. What this means is if I stuck with dividend investing, I would need 12years of dividend to equal 1 month of cash flow from options. #True story. Talk about boosting your dividends

Rules
1. Always do options on stocks you want to own long term. Never do options on stocks you don't even think of holding say 5 years.

That's basically my only rule. I don't do options on stocks that I don't want to hold no matter how good is the premium paid. Eg stuff I won't even think of buying. GME, AMC, penny stocks.

2. I only do selling options be it selling covered calls or cash secured put or naked put.
When you are buying options, you have time decay working against you. When you are selling options you have time decay working for you. Selling options is basically you become the insurance company, Genting/Macau. You want to become insurance seller or insurance buyer? You want to become gambler or the house?

3. I never ever sell naked call.
It's not worth it.

Basics of options.
Call options
Put options

So how I do it?
1. I do covered calls
Buy100 shares of the company you want to hol long term. You can o e shot buy 100 shares or slowly build up position.
Once you have reach 100 shares, you can now covered call provided the stock have options.

You can choose weekly, 2 weekly, one monthly, two monthly, yearly etc. Up to you. For me I choose weekly as I want time decay to work in my favour. Keep in mind all options have expiry date. Time decay of options works faster when the options is near expiry.

Some people might choose monthly or two monthly options to get some meat off the extrinsic value as they said weekly options have no meat left as the option is due to expired in 5 days. The choice is ultimately yours.

2. I do covered puts
Covered puts is basically fancy term for getting paid to wait/queue. What do I mean?
Eg a stock is worth USD100. You can buy at USD100 or you can queue at say USD95.
Normally when you queue, you don't get paid.
But when you sell a covered put, that means you are agreeing to buy 100 shares of the company at that strike price or below the strike price with cash as collateral (you need cash to buy 100 shares. The cash will be lockup as collateral and you cannot use the cash).

Now back to the eg.
Share A is trading at USD100. I feel USD100 is too expensive and I don't wamt to buy at USD100.
I can sell a covered put at stirke price of say USD95 and get paid say USD50 just for waiting for the share at USD95.
Now I get to buy the shares at cheaper price and get paid to do it if the price do drop to USD95 or below.
Now this is not an issue as I want to own the share at USD95. That's why it is important to do options on shares you want to hold long term. Now if you don't want to hold it long term, you basically become a bag holder.

3. I do naked puts as well.
What does this mean? This is basically cash secured put but this time your put is secured with margin/loan from brokerage.

Why margin?
Isn't it dangerous? Yes and no. Depending on how you use it. Keep in mind you buy a house with loan unless you are loaded and pay around 3.5-4.5%p.a in interest.

Same concept as buying a house. I am willing to buy good quality companies using loan. Not to mentioned interactive broker interest is only 1.5%p.a. Yes you read that right. Only 1.5%p.a. Hence if you are buying any one of the above stock on margin (say USD 27k = 100 shares) you are only paying USD405/year = USD33.05/month in interest.
One month of covered call basically pay off the whole year interest rate already. You can then do covered call to slowly pay off the margin.
Good thing about interactive broker is as long as your put options is not assigned (never hit the strike price or went below the stirke price of the put), no interest will be charged. Tried and tested.

Say you have USD100k, by taking a loan of 20% only, it's not even 50%. For me I usually keep it around 20-30% of my portfolio worth.

The goal is do not overleverage. Practice self discipline. It's only dangerous if you don't have restrain. It's like a knife and fire. Use it wrongly and get burn or get slashed.

4. Don't be greedy.
Pick far away strike price. Like Visa for example. A safe premium would be in the range of USD50-60.
For stuff like docusign, square, the range would be in the USD100/week range
For stuff like palantir, I love selling premium for USD10. Yes it's peanuts but it's safe. I am getting around 20%p.a from palantir. So think USD10/week is still peanuts?

You are supposed to look at Delta, theta etc but I don't. There is no formula from me.

There are many ways you can do options, iron condor, butterfly, strangle, saddle. Pick one which you like and you know. I only know covered call and coverd put hence I do that only.

LEAPS
- buying a call which is atm or very deep in the money with very far expiry date. This one only do when market is very red.

Now what are risk associated with options?
It can't be bed of roses right? Yes that's right.
By selling a covered call, you are capping your upside. How much you are willing to sell your stock.
By selling a put, the stock can drop lower but because you are the seller, you have the obligation to buy the stock at the strike price even if current market price upon expiry is way at the below the strike price.

I will give some real life examples of risk with options
1. Sold lemonade puts at 120. Took assignment and stock price drop to USD60+ I didn't panic. But continue selling options at USD20/week. I average down my lemonade holdings as I believed in it long term. I am still holding it. As mentioned above, only do on stocks you want to keep long term.
2. Sold crowdstrike covered call at USD257.5. Took assignment and stock ran up to 280+. I missed the run up to USD280+ but it's ok. Now I am doing covered puts on it at USD257.50

This post has been edited by Ramjade: Oct 28 2021, 12:47 AM

Here are some video that I used to learn about options.

https://www.youtube.com/watch?v=DFGmGsqufos
https://www.youtube.com/watch?v=7o5DkqbWNIc
https://www.youtube.com/watch?v=HDlHNqqN2V4
https://www.youtube.com/watch?v=9BVc_yf6Ut0
https://www.youtube.com/watch?v=dlOziB8Y3-g
https://www.youtube.com/watch?v=BL-tStGdynU

This post has been edited by Ramjade: Nov 1 2021, 12:56 AM

Here you go. Happy reading and watching all the video I posted above.

Use telegraphic transfer. Pay higher exchange rate + TT fees + intermediate fees.

If you have access to sg bank account, you can try FAST transfer even though on paper it mentioned that they accept only DBS/POSB.

Keep in mind TD conversion fees is not as cheap as IB.

From chatting with people who used TOS, they do accept FAST transfer form other sg banks.

That is one way you can do. But I am not sure if money send via ACH is it under your name or TransferWise name. If it's under TransferWise name, it will be rejected (third party transfer not allowed)

3rd week will always have the higher premium as that day have the most contract expiring. Up to you do weekly or monthly. I do weekly or sometimes 2 weekly.

If you are on margin, it won't lock up your entire cash.
It will just use your buying power.
I have done a covered put on stock worth USD20k and the amount of used was only around usd5k.(again minus from my buying power).
My cash is untouched and can do what I like with it.
Best part is the used USD5k did not incur any interest rate as my cash balance remains positive and the options expired worthless.
Hence the USD5k used for buying power is essentially free.

Yes. It's 1.83% p.a not 1.83% per month.

Actually it's based offmhow Voltaire the stock is. If it's very volatile you need a lot of buying power if you are using margin.

Not sure about deep itm. If deep Item, I just buy back at a loss and sell options the next week.

Yes. There's always commission when you buy/close with interactive broker.

I don't roll. I just let it expired worthless or in the money and take assignment.

If you are glued, you are doing something wrong. I just checked it once day. That's it. Don't need to be glued. Like I said remember rule of 1 doing options.

If you are selling put, you are ok with buying 100 shares at that strike price. If you are not ok, don't bother.
If you are selling call, you are ok with selling 100 shares at that stole price. If you are not ok. Don't bother.

I give you an example. I bought Starbucks 10 shares ar 86.6. Did I regret? No. I am buying again at 75.

This post has been edited by Ramjade: Apr 28 2022, 10:02 AM

Lon3Rang3r00

Of course I still sell covered calls on it. Come I give you an eg. I have TSMC at 115. Now its 93.xx I am still selling weekly covered calls on it and pocketing USD2x-3x/week from it. No I don't adjust nearer to ITM as I want to hold on to it long term. Why should I get a higher premium for the stock to be sold away at a loss if there is nothing fundamentally wrong with the stock I am holding?
As long as I am holding the stock, it is generating cashflow for me on a weekly basis and I am holding on to strong companies which will rebound over time. By not selling, I am guaranteeing myself cashflow every week. Don't go chase small short term gain for long term profit.

Yes you can sell put on it. In a down market, it's more profitable to sell puts then sell calls.
There is another way you can do. Let me intro you to poor man covered call. Buy a call options either ATM or Deep ITM with expiry date of 1-2 years out. Once you have bought that call, now you can start selling covered calls on it.
So if price increase, your call value should increase in value. it needs to outrun theta decay and you get to continue doing covered call on it until your covered call get assigned. Then you just exercise the call you bought to pay it off.

Just remember selling put and selling call. Then remember it's the inverse of it when it comes to buying. If you are trying to remember both, you going to get yourself confuse.

That's why I only remember selling puts and calls and never bother with buying options. Buying options for me only reserve in severe cases like in 2008.

This post has been edited by Ramjade: May 4 2022, 08:08 AM

Yes and no.
By buying a deep in the money call. Your options still have value upon expiry. If it's in the money upon expiry it's automatically exercised.
That means you are buying 100 shares at xyz price at 123 date.

Eg. Apple. Current price is 162. You buy a call options of apple at 145 expiry 2 years from now and pay a premium for it.
Now 2 years later, apple is say 250.
You can now buy Apple at usd145. There's a net profit of USD250-145 = USD105 x100 shares
Then add in your covered call profits minus the premium you paid for the call.

Alternatively you can just sell your call say at 6 months prior to expiry and pocket the premium from selling and start doing a new poor man cover call. So no. You don't exactly
"earn enough premium to cover the amount you paid for buying the long call. Anything after the breakeven is profit. "

Hope that's clear.

1. You want the options to decay at a faster rate so that it expired worthless.
I never buy to close. Most of my options expired worthless. Hence I only pay one time brokerage (when I sell options only).
But if paying more per week Vs monthly yes. But if you are earning like USD400-700/week, just treat the commission as business cost to generate revenue.
2. Anything can happen in a month.
Yes there's more meat on the options for 1 month expiry. But what happen if market spike like crazy in a month?
Remember for options you want it to expired worthless most of the time.

End goal is to make money from your options and not lose money. So up to you want to go with one week or one month options.
If you feel you can make money with one month options, by all means. Go with one month options. As they said black cat and white cat as long as can kill the mouse, doesn't matter what colour the cat is.
Yes some people will tell you to do monthly options (I know some expert people online doing monthly in my telegram group and some YouTuber recommend monthly over weekly).

For me, I feel safer and I have been getting consistent results with my weekly options. So I am sticking with my weekly options. I feel less safe with monthly options. It all boils down to personal preference.

Yes you can do that. But usd120 (12 months x USD10)/18000 = 0.6%p.a if you ok with it, by all means go ahead.

0.6%p.a is even worse than any FD you can find in Malaysia.

Now if it's USD10/week = USD10x52 weeks/18000 = 2.89%p a.
Ask yourself is it worth it?
Unless you are holding apple stock.
If you are not and just trying to get the premium, our EPF is giving us 5-6%p.a

Another thing. How sure are you apple won't reach usd180/share by next month? Who knows if fed suddenly said we will ease back on interest rate, or bear market ends and market goes on a run?
What happen if it breach usd180? What are you going to do?

This post has been edited by Ramjade: May 5 2022, 04:34 PM

Please don't waste money on SoFi. Better for you to buy upstart or palantir.

Are you sure it 3xourrd worthless? You need to consider after hours trading.. If during normal hours, it is in the money, it will get assigned automatically.
If after trading hours., The buyer have to manually assign.

Anyway if you are using interactive broker, you can only see it tonight around 10pm. Saturday is maintenance day for them.

I usually checked in Saturday.

Wrong. In a down market, it's more profitable to sell covers put. Selling covered calls give you less premium. Cause simple supply and demand. More people buying put to hedge. Hence increase in price.

By selling calls during down market is market rebounded a lot. Hence you get called away.

I do both. Sell puts and calls on stocks I already own.
You need to make sure it's far otm so it won't get assigned even if market rebound.
Only like 4x I have been called away. Otherwise expired worthless.
I just start doing covered puts on it at the price it was called away.

There are other strategies where you say buy a call and sell a call. I think it's call debut spread.

Keep in mind when you sell a put if in the money it will be assigned.
Yes you need to cough out cash to buy 100 shares.

That's why I don't do naked calls. All my stuff are covered.
I only do naked puts. Cause I don't mind getting assign and it's just like buying house on loan. Sell covered call on it and slowly pay down the principal and interest.

But with interest rate increasing, my amount of naked puts have reduced to basically usd30k/year (basically enough for my options premium to cover + my salary at rm5k/month)

Like mentioned, if assigned I am ok with it cause the amount of premium I can generate is about half of that usd30k and I want to get assigned.

This post has been edited by Ramjade: May 26 2022, 04:24 PM