Good stuff. Those risks are one of the primary reasons I trade much shorter duration contracts, and I manage them daily like an actual job, even though In too see my options trading as a side hustle amongst my other income streams. I also often close out at set profit and loss percentages regardless of remaining time to expiration. Lastly, sometimes the best trade is no trade at all, such as Fed Weeks. Thanks for all of the great rational, sensible videos.
NVDA's 13% drop this past week is a PERFECT example of all the warnings above. If you were running the wheel, and expected to do well last week, as it was the 3 Friday and bewitching Friday, you were making BANK, right up until the last two days of the monthly option traditional EXP date. Even with a 6% correction today, you are probably holding the bag on any puts until NVDA recovers another 8 to 10%. These are the blindside risk examples that happen ALL the time. Always have a plan for both ups and downs.
"Rolling" options should've been mentioned here. It's the 'ace in the back pocket' to option sellers. Another super important factor is to always have 10-20% of your entire portfolio in dry powder.
That is why you only put to work the amount needed until you get the premium needed to cover your life expenses and inflation, the rest you keep it in cash.
I actually think there is risk retiring on a small account in general regardless of options. The FIRE movement pushes retiring with less and I know everyone’s situation is different, but that could be problematic. I am similar in that I’m predominantly a long-term dividend investor but based on your comments in this video I rely on selling options more than you do and it’s been a game changer. I have Portfolio Margin and I’ll treat all of my wheel positions like an investment so I don’t take realize losses just because a stock moves against me or I get assigned on a stock that’s the difference. I view my wheel positions, no different than my long term dividends stocks that may be down like MCD is right now. I’m still getting my dividends just like I get my options premium on stocks that may be down. Once you learn that its an income strategy that changes everything. Need to shift from a “trader” mindset to an investor mindset. But I do agree, and I tell people all the time you can’t do this with a small account usually but that’s true no matter whether you’re buying crazy stocks or trading Options. You need a certain size account to be successful doing anything.
I agree with a lot that's being said on this topic. In my opinion, options require a decent sized account and a plan. Without these two things you'll likely fail. You can only do 4 things with options: buy/sell calls and buy/sell puts so making a trade is simple. However, if you don't have a plan for that trade you're going to have problems. You need to know what is the goal and how you plan on achieving it. You need to know what you will do if it goes up, down, or sideways. You can't use all your capital so you need to know how you are going to scale into and out of a trade. Trade and capital management are crucial in options trading and that's tough to impossible to do with a small account.
Couldn’t agree more. I’ve seen lots of new RUclipsrs claiming you can retire trading options with less than $100k, $200k etc. I just don’t see how you would do it unless you take on huge risk and therefore you’ll eventually get crushed
IF new investors actually will listen to you, you are doing a great service to them. People tend to get cocky and arrogant when there having some success. In my trading history when the market was shooting up, I was the smartest guy out there and it was soo easy. Unfortunately, in a normal market I was just another average investor, winning sometimes and losing others. Keep up the great info!
Thanks for the guidance here, Dave! I can easily get "buzzed up" when selling puts and cc and the nice premiums that come with them. But....the all-time highs can't last forever. Correction will come but who knows when and how hard. Best right now to stay quite cautious especially when close to retirement age.
I'm new to trading, and I've lost a good sum trying out strategies I found in online tutorials. I would sincerely appreciate any recommendations you have.
Good video. I think options are a good tool in the investing toolbox, but I would hate to rely on them as a sole source of retirement income as some strategies are pretty risky. I also agree that they are interesting and fun. I think my wife used the term entertaining when I described what I was doing.
I do not disagree with ur comments but as an only option trader i quantify that my return is about 1.5 percent per month of the capital. What u said about risk is real an sensible. As rule after i blew up an account i keep 50 percent of my capital at the end of day in t bills or cash. Beside puts i do also calls so that can add more to ur income. It is a difficult year cause of the “hockey stick “ type of market with low volatility. Based of my 1.5 % return i think u need about 500 k if u want to play income game. A caveat though : it is a full job for me! Take vacation u make less! Good luck
Dave, I appreciate the videos you put out and they have helped me make decisions as to investing in several of them. I just found out a new ETF called AIPI and wanted to know if you can do a review on it. I don't know much about AI. Thank you for your time.
Dave, any thoughts on alternative investments for accredited investors? Private equity, real estate funds, etc. I’m not real big on bonds, but would like to diversify from stocks. Interested in your thoughts
Hi. I personally like the idea. I have some money in real estate that I hold and some invested in a real estate development company. I'm also looking at some startups. Are you looking for opportunities?
@@nicholasbroussard5086 My investments outside of traditional stocks, bonds, and real estate have come via friends. Probably better to talk through email and you can find that on my home page under the links.
Options were invented to control risk in either direction the narkets take us. If a trader is worried about a short put position, buy a lower strike put to manage yiur risk. If you dont like the cost of protection and complain about the reduced yield, then are you trading or gambling?
I’m not trying to insult you so don’t get me wrong, but your giving bad advice. I had a small account ($28,000), and I make about $2,000 a week on covered calls or poor man’s covered calls. So, it can be done.
Great info! The #1 lesson I’ve learned trading options is to not quit my day job.
Thanks! Yes... It is not as easy as signing up for a course and raking in the money. Oh, and "Who Dey" from a fellow Bengals fan.
Good stuff. Those risks are one of the primary reasons I trade much shorter duration contracts, and I manage them daily like an actual job, even though In too see my options trading as a side hustle amongst my other income streams. I also often close out at set profit and loss percentages regardless of remaining time to expiration. Lastly, sometimes the best trade is no trade at all, such as Fed Weeks. Thanks for all of the great rational, sensible videos.
As a regular retail trader (20+ years) of SPX and RUT options I've "made" decent money by not putting on a trade
Having a plan in place certainly helps. Well said!
NVDA's 13% drop this past week is a PERFECT example of all the warnings above. If you were running the wheel, and expected to do well last week, as it was the 3 Friday and bewitching Friday, you were making BANK, right up until the last two days of the monthly option traditional EXP date. Even with a 6% correction today, you are probably holding the bag on any puts until NVDA recovers another 8 to 10%. These are the blindside risk examples that happen ALL the time. Always have a plan for both ups and downs.
"Rolling" options should've been mentioned here. It's the 'ace in the back pocket' to option sellers. Another super important factor is to always have 10-20% of your entire portfolio in dry powder.
He did mention it.
That is why you only put to work the amount needed until you get the premium needed to cover your life expenses and inflation, the rest you keep it in cash.
100% agree with this. If you have the time and enjoy the process, by all means explore the side hustle approach.
Thanks Bruce!
I actually think there is risk retiring on a small account in general regardless of options. The FIRE movement pushes retiring with less and I know everyone’s situation is different, but that could be problematic. I am similar in that I’m predominantly a long-term dividend investor but based on your comments in this video I rely on selling options more than you do and it’s been a game changer. I have Portfolio Margin and I’ll treat all of my wheel positions like an investment so I don’t take realize losses just because a stock moves against me or I get assigned on a stock that’s the difference. I view my wheel positions, no different than my long term dividends stocks that may be down like MCD is right now. I’m still getting my dividends just like I get my options premium on stocks that may be down. Once you learn that its an income strategy that changes everything. Need to shift from a “trader” mindset to an investor mindset. But I do agree, and I tell people all the time you can’t do this with a small account usually but that’s true no matter whether you’re buying crazy stocks or trading Options. You need a certain size account to be successful doing anything.
I like to utilize options but just 1 way to to attack the retirement problem. And account size certainly matters.
I agree with a lot that's being said on this topic. In my opinion, options require a decent sized account and a plan. Without these two things you'll likely fail.
You can only do 4 things with options: buy/sell calls and buy/sell puts so making a trade is simple. However, if you don't have a plan for that trade you're going to have problems. You need to know what is the goal and how you plan on achieving it. You need to know what you will do if it goes up, down, or sideways. You can't use all your capital so you need to know how you are going to scale into and out of a trade. Trade and capital management are crucial in options trading and that's tough to impossible to do with a small account.
Well said!
Just put 300k in spyi and call it a day
Couldn’t agree more. I’ve seen lots of new RUclipsrs claiming you can retire trading options with less than $100k, $200k etc. I just don’t see how you would do it unless you take on huge risk and therefore you’ll eventually get crushed
Yup. It works until it doesn't and it may to too late at that point
thanks Dave....... for sharing your insight
Thanks for watching!
Great Video, upfront honest, I had so many others trying to upsell the potential to make big cash,
Thanks!
IF new investors actually will listen to you, you are doing a great service to them. People tend to get cocky and arrogant when there having some success. In my trading history when the market was shooting up, I was the smartest guy out there and it was soo easy. Unfortunately, in a normal market I was just another average investor, winning sometimes and losing others. Keep up the great info!
Sometimes you have to experience it for yourself to really learn the lesson.
Thanks for the guidance here, Dave! I can easily get "buzzed up" when selling puts and cc and the nice premiums that come with them. But....the all-time highs can't last forever. Correction will come but who knows when and how hard. Best right now to stay quite cautious especially when close to retirement age.
Sooner or later, the bill comes due.
Good video ! Nice advices to be diversified !
Not true! Im doing it now!!! Around 300k. Selling puts nets me 5-6000 month. VERY LITTLE risk. Not hard to make this.
Very good and true! Good advise!
Thanks!
I'm new to trading, and I've lost a good sum trying out strategies I found in online tutorials. I would sincerely appreciate any recommendations you have.
As a beginner, it's essential for you to have a mentor to keep you accountable. I'm guided
by a widely known crypto consultant
Mrs Mary Patricia Hester
This is correct, Mary's strategy has normalized winning trades for me also, and it's a huge milestone for me looking back to how it all started..
Isn't she the same Mrs Mary Patricia Hester neighbors are talking about, she has to be a perfect expect for people to talk about her so well.
Her platform is wonderful, and her services are exceptional
somebody is watching invest with henry lol
Good video. I think options are a good tool in the investing toolbox, but I would hate to rely on them as a sole source of retirement income as some strategies are pretty risky. I also agree that they are interesting and fun. I think my wife used the term entertaining when I described what I was doing.
If not $200,000 or $300,000, for you what number would you be comfortable with?? $500,0000 or $600,000
I do not disagree with ur comments but as an only option trader i quantify that my return is about 1.5 percent per month of the capital. What u said about risk is real an sensible. As rule after i blew up an account i keep 50 percent of my capital at the end of day in t bills or cash. Beside puts i do also calls so that can add more to ur income. It is a difficult year cause of the “hockey stick “ type of market with low volatility. Based of my 1.5 % return i think u need about 500 k if u want to play income game. A caveat though : it is a full job for me! Take vacation u make less! Good luck
Dave, I appreciate the videos you put out and they have helped me make decisions as to investing in several of them. I just found out a new ETF called AIPI and wanted to know if you can do a review on it. I don't know much about AI. Thank you for your time.
Sure! I will take a look.
might want to correct the spelling errors in your disclaimer. You know...for legal reasons.
Dave, any thoughts on alternative investments for accredited investors? Private equity, real estate funds, etc. I’m not real big on bonds, but would like to diversify from stocks. Interested in your thoughts
Hi. I personally like the idea. I have some money in real estate that I hold and some invested in a real estate development company. I'm also looking at some startups. Are you looking for opportunities?
@@wealthadventures I am just starting to research real estate funds and private equity. What resources would you recommend to help?
@@nicholasbroussard5086 My investments outside of traditional stocks, bonds, and real estate have come via friends. Probably better to talk through email and you can find that on my home page under the links.
Options were invented to control risk in either direction the narkets take us. If a trader is worried about a short put position, buy a lower strike put to manage yiur risk. If you dont like the cost of protection and complain about the reduced yield, then are you trading or gambling?
basically avoid selling options but covered calls is ok on a small percentage 20% of portfolio
Thank you for raining on my parade dude... Now let's talk futures.. Like crude. $1K a point 🤔
I’m not trying to insult you so don’t get me wrong, but your giving bad advice. I had a small account ($28,000), and I make about $2,000 a week on covered calls or poor man’s covered calls. So, it can be done.
$2000 a week on $28000 is 371% a year. You should be a billionaire soon!