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Hey guys! My name is Greg Patrick, and I’m one of the co-founders of Dividends and Income. If you’re new here, we’re all about sharing some of our best ideas for generating passive income.
In today’s video, I’m going to show you how I sell options for relatively high income. I’ve been selling options since 2013, generating outsized income from growth stocks like Tesla (TSLA), NVIDIA (NVDA) and Alibaba (BABA)… as well as outsized yields from high-quality dividend growth stocks like Apple (AAPL), Microsoft (MSFT), Cisco (CSCO), Wal-Mart (WMT), United Parcel Service (UPS), Coca-Cola (KO), McDonald’s (MCD), PepsiCo (PEP), Johnson & Johnson (JNJ), Lowe’s (LOW), Aflac (AFL), Target (TGT), Medtronic (MDT) and more.
Selling options is an important part of my income-generating investment strategy. Over the years I’ve generated tens of thousands of dollars selling options… a couple months ago I generated over $10,000 in option income in a single day (from 10 option trades where I sold covered calls)… and just a few days ago I sold a cash-secured put option that generated over $4,000 in income. I’ve also made mistakes over the years that I’ve hopefully learned from them, and I’m still learning today! So by no means am I pro options trader or seller. However, I do have some experience after doing this for so many years and I’ve also found some success with my option selling strategy. So my hope with these videos is to help teach what I’ve learned and what’s working for me given my objective(s) for my investment portfolios. Primarily, I sell options for income and to lower my cost-basis when acquiring stocks I want to own anyways.
WHAT I COVER TODAY
In today’s video I’ll tell you about my put-selling strategy, I’ll introduce you to the 7 rules I follow when selling put options, I’ll walk you through two trades I just made with Starbucks where I sold puts that generated a total of $760 in income… and I’ll tell you about what I believe are the 3 biggest downsides to selling put options.
If you like this video and you want to see more of my real-life option trades for income, please give this video a thumbs up and leave a comment letting me know you want to hear more.
RESOURCES:
► How to Get Paid Monthly Passive Income Lending Money to the Government:
https://youtu.be/EJOx3c-rXa4
► Jason Fieber’s analysis on Starbucks (SBUX) stock:
https://youtu.be/Iq1r7830nDE
► Options Trading For Beginners (see below):
https://youtu.be/7PM4rNDr4oI
I recently came across an in-depth video — almost 3 hours long but worth it! — from Chris @projectoption . It’s a terrific introduction to options for anyone interested in learning options from the beginning and learning at a good pace. He didn’t really go into the strategy I’m using (I use options to generate income and buy stocks for cheaper, whereas it seems Chris trades the actual option contracts for total returns)… but he did a FANTASTIC job of starting from the beginning and explaining how options work, buying call options, selling call options, buying put options and selling put options. And he even made real-life option trades in his video with each of those types of options / scenarios to help demonstrate how they work. So if you’re interested in learning the basics of options from someone who clearly knows what they’re talking about, has experience, is straightforward AND a great teacher, I highly recommend you start with Chris’ “Options Trading For Beginners” video — a TON of great info for FREE. I know I kind of zipped through this stuff in my video which is why I want to make sure you can learn the basics from someone who goes into way more detail and does a great job of teaching it 🙂
#SellingOptions #HowToTradeOptions #OptionsTrading
LEGAL DISCLAIMER: Please consult with a licensed investment professional before investing any of your money. Never invest in a security or idea featured on this channel unless you can afford to lose your entire investment. If your money is not FDIC insured, it may decline in value. Greg is not a licensed financial advisor, tax professional, or stock broker and he does not purport to be.
OPTIONS DISCLAIMER: Options involve risk and are not suitable for all investors. Prior to buying or selling an option, a person must receive a copy of Characteristics and Risks of Standardized Options. Copies of this document may be obtained from your broker, from any exchange on which options are traded or by contacting The Options Clearing Corporation, investorservices@theocc.com.
A complex topic brilliantly explained!
Thanks Greg for putting this together.
I like you! Please teach us more about options… Also, why not do regular buy/sell day trades or swing trades on blue chip stocks that you wouldn't mind owning? Can't we make more money that way rather than options which tie up our money longer?
Nice video Greg. I'm well versed in options already. Your video, however, reminded me that I'm cash heavy right now and treasury and premium corp bonds aren't paying squat, so you've motivated me to put some of that cash to work. Thanks. Keep up the good work. It was nice to Jason, he got motivated to 8 years ago to re-examine my life. I maximized savings, invested in a strong bull market and now I'm retired at 61. Thanks for all you guys do.
Are you actually planning to hold these options until expiration if you're not put the stock? Seems crazy to tie up that much money for well over a year – or do you have something else in mind? Or do you just have so much money in your account that you can afford to do this with many stocks at the same time? I'm unclear on this and would welcome an explanation. Thanks.
Did you make both sales with having cash to buy SBUX if both options are executed?