I trade outright futures currently and have about 600k of cash I want to use for equity options writing. I am wondering if anyone has some good educational resources I can look at to help me implement this? I realize it wouldn't be wise to jump in with the full amount right away but I want to get my feet wet. I'm thinking weekly options would be a good start. 1) Any good advisory services to help guide me early on? 2) I am familiar with the greeks and I know I should stay away from the higher premium options but is 1/2% to 1% per week realistic? 3) I am not concerned about stocks being called away with this investment; I just want to generate income.
The Secret....to successful options writing/selling covered calls....is to Know the Future. And bet against that direction, so you can collect that premium and not get assigned at a loss. The problem with all traders, of all varieties, is that they don't reasonably know the future. And they are completely gambling, with whatever they are trading using whatever strategies they have read in a whatever book they have found, at whatever location. And by the end of the year, they are at break-even, if not at a complete loss. And they repeat this same losing style, year after year after year. And they wonder why God hates them, why God is not showering them with market money, why they haven't been selected as a Chosen few, And solving the market enigma, conundrum, puzzle remains elusive. Mazel tov,
Yep. Tons of resources, from free (YT channels, blogs, FB, probably Instagram/TikTok and other stuff I don't follow), to low cost (books) to more expensive paid services. You can even "wheel" into positions by selling puts first. Or do more complex "poor man's covered calls" with options only. It looks amazing with cherry-picked examples. But you can also lose a lot of money...or be stuck with stocks or ETFs that take years to reach breakeven....if the market or individual stock tanks. Don't ask me how I know.
Simple, covered calls and cash secured puts on 1-3 stocks, for example, starting with TSLA, 20 put options around $250, 2 std out, that is about $540 premium. Only mega cap techs because it will always bounce back.
You are selling away potential future gains for a premium. Don't believe the "generate income" misnomer.
@Snuskpelle is correct. Long term, writing covered calls consistently underperform the S&P index. Do some basic research. Go to Yahoo Finance and compare any covered call ETF, such as PBP, and compare the 1-, 2- and 5-year performance vs SPY. https://tinyurl.com/yc6pms3t If all you want is income with low risk but a chance of some capital appreciation, I recommend the SDY ETF.
Also, remember that you do not need to use the same expiry date for everything; you can write calls / roll / adjust with contracts on more than one weekly expiry as conditions dictate.
I never do weeklies...Too much time consuming for me. Just me...I'm more of an investor for the market in general. I will use CCs (in the right situations). I'd just like to share a situation you may want to consider for income generation (yeah, it's not income), that uses CCs, but in more of a "bond" situation (And YEAH, I know it's not a bond)...Just can't find the right words. You may want to consider for a small amount of your portfolio...Buying QQQ and SPY. Then do a leap on them...June 24 just above your buy price...Just an example. Buy SPY at $396. then option the June 24 for $400. You miss out on the upside, but you gain the option money and dividend. The option money and the dividend money could be put in a money market account or a 2 year treasure, earning maybe 2% for the coming year+. If the market is flat or is still down in June 24, write another option. Just trying to create a safe fixed income, with a small amount of your investment...