3 Options Strategies to Get Rich (Without Getting Lucky)

Summary

This video presents three simple, effective strategies for building wealth through options trading without relying on luck. The speaker emphasizes the importance of consistency, focusing on the covered call, cash-secured put, and wheel strategies. Each method is designed to generate steady income while managing risk, making them accessible to both new and experienced traders. The strategies are likened to real estate investments, where controlled risk and reliable income generation are key. The video also highlights the speaker’s personal experiences with trading and offers coaching for viewers seeking further guidance.

Takeaways

• 📈 The speaker emphasizes the importance of consistent income strategies over relying on luck for wealth growth.
• 💼 The covered call strategy is introduced as a reliable method for generating income from stockholdings by selling call options on owned stocks.
• 🏫 The speaker's experience in finance, including time spent shadowing financial advisers and traders, shapes his perspective on effective trading strategies.
• 📊 The covered call strategy is highlighted as a top strategy for the speaker, with a demonstration of its application using Apple stock as an example.
• 🔄 The concept of 'rolling' a covered call is explained, where the strike price is adjusted higher to continue generating income without selling the stock.
• 💰 The potential for consistent income from covered calls is underscored, with the speaker sharing his personal success and portfolio growth.
• 🏦 Cash secured puts are presented as a strategy for building wealth by selling put options on stocks you wish to own, with the potential to buy them at a set price.
• 🔗 The analogy of options trading to real estate is used to simplify the concept, likening stock to a rental property and option premiums to rental income.
• 🔄 The wheel strategy is introduced, combining covered calls and cash secured puts to create a consistent income cycle, which is praised for its safety and structured returns.
• 🌐 The speaker shares his personal journey and philosophy on wealth building, advocating for a lifestyle of freedom and travel, facilitated by his income strategies.

Q & A

What are the three option strategies discussed in the video to generate consistent income?

The three option strategies discussed are the covered call strategy, cash secured puts, and the wheel strategy.

What is the covered call strategy and how does it work?

The covered call strategy involves owning a stock and selling a call option on that stock. This allows the investor to collect premiums from the sale of the call option while still holding onto the stock.

How does the presenter manage the risk when using the covered call strategy?

The presenter manages risk by selling out-of-the-money covered calls, which means selling call options with a strike price higher than the current stock price. If the stock price reaches the strike price, they can adjust the strike price higher or roll the position to a later expiration date.

What is the cash secured put strategy and how does it differ from the covered call strategy?

The cash secured put strategy involves selling put options on a stock the investor owns while having enough cash on hand to buy the stock if the option is exercised. It differs from the covered call strategy in that it requires tying up cash rather than owning the underlying stock.

What is the wheel strategy and how does it combine the other two strategies?

The wheel strategy combines covered calls and cash secured puts to create a consistent income-generating process. It involves selling puts to enter a position and then selling covered calls on the owned shares to generate income.

How does the presenter use the example of Apple stock to illustrate the covered call strategy?

The presenter has a covered call on Apple with a strike price of $230. If Apple's stock price reaches $230, they may roll the position to a higher strike price, such as $235, to continue generating income without having to sell their shares.

What is the importance of choosing the right stocks when implementing these strategies?

Choosing the right stocks is crucial because the strategies involve either owning the stock or having the cash to buy it. The presenter emphasizes selecting high-quality companies that one would want to own, as this aligns with the strategy's goal of generating income without relying on luck.

What is the potential annual return of the wheel strategy according to the presenter?

The presenter mentions that the wheel strategy can provide an annualized return of 25 to 40%, depending on the stocks chosen and the market conditions.

How does the presenter's experience in finance and at Goldman Sachs influence his approach to these strategies?

The presenter's background in finance and experience at Goldman Sachs as a financial analyst have shaped his focus on research and strategy. He emphasizes a structured and measured approach to options trading, which is reflected in his preference for the covered call, cash secured puts, and wheel strategies.

What is the role of branding in the presenter's investment strategy?

Branding plays a significant role in the presenter's investment strategy. He mentions that he specializes in brand and tech, and that strong branding is one of the most important factors he looks for in a company before considering its technicals or fundamentals.

Outlines

00:00

💼 Introduction to Wealth Building Through Options Trading

The speaker emphasizes the importance of strategic wealth building over relying on luck, highlighting three simple and effective option strategies for generating consistent income. They share their own success, with a portfolio increase of 7.75% in a month and a personal profit of $227,000. The first strategy introduced is the covered call strategy, which the speaker has been using since the beginning of their trading career. They explain the concept of selling covered calls to generate income from stocks already owned, collecting premiums while retaining the stock. The speaker uses Apple as an example, illustrating how they manage their covered call positions and adjust the strike price to continue generating income without having to sell their shares unless they choose to do so.

05:02

📈 The Power of Covered Calls and Cash Secured Puts

The speaker delves deeper into the covered call strategy, explaining its safety and consistency, and how it can yield returns above the S&P 500 average. They draw an analogy between covered calls and rental property income, simplifying the concept for viewers. The second strategy, cash secured puts, is introduced as a method for building wealth without luck, involving selling put options on stocks one wishes to own, with enough cash on hand to purchase the stock if the option is exercised. The speaker argues that this strategy allows for control over risk and return, and cites research showing that selling cash secured puts can lead to significant annual returns. They also touch on the psychological aspect of decision-making, advocating for independent research and a system-based approach to investing.

10:04

🔄 The Wheel Strategy: Combining Covered Calls and Cash Secured Puts

The final paragraph introduces the wheel strategy, which combines covered calls and cash secured puts for a consistent income generation process. The speaker outlines the strategy: sell puts to enter a position, collect the premium if not assigned, and if assigned, sell covered calls on the acquired shares to generate further income. They emphasize the strategy's structure and control over risk and return, which is suitable for investors at any experience level. The speaker shares research indicating that the wheel strategy can yield annualized returns of 25 to 40%, especially with high implied volatility stocks. They conclude by discussing their own lifestyle, enabled by the income generated through options trading, and invite viewers to learn more about their coaching program or continue following their free content for insights on creating passive income.

Keywords

💡Covered Call Strategy

A covered call strategy is an options trading strategy where an investor holds a position in a stock and sells call options on the same stock. This strategy is highlighted in the video as a reliable way to generate consistent income. The explanation from the script: 'The first one covered calls popular strategy for generating consistent income from your stockholding so from stocks that you already have why not put them to work put them to work so they can start implementing and creating some income for you by selling covered calls.'

💡Consistent Income

Consistent income refers to a steady stream of earnings that can be relied upon, which is a central theme of the video. The speaker emphasizes strategies that provide this, such as covered calls and cash-secured puts. Example from the script: '...consistent income strategies you can actually see my portfolio it's up about 7.75% in the past month I made $227,000 so if you want to grow your wealth you need to be strategic about it...'

💡Portfolio

A portfolio in the context of the video refers to a collection of financial assets such as stocks, bonds, or options held by an individual or institution. The speaker mentions his own portfolio's performance to demonstrate the effectiveness of the strategies discussed. Example: '...you can actually see my portfolio it's up about 7.75% in the past month I made $227,000...'

💡Options

Options are financial instruments that give the buyer the right, but not the obligation, to buy or sell an underlying asset at a specified price on or before a certain date. The video discusses various strategies involving options trading. As mentioned in the script: '...we're going to focus on consistent income strategies you can actually see my portfolio it's up about 7.75% in the past month I made $227,000 so if you want to grow your wealth you need to be strategic about it, which is why you don't need that many strategies you just need to implement the right strategies the first strategy, is going to be the covered call strategy...'

💡Risk Management

Risk management in the video is discussed in the context of controlling potential losses while trading. The covered call strategy and cash-secured puts are presented as methods to manage risk effectively. Quote from the script: '...what I like about it a lot is I control risk I buy 100 shares I like the stock and I know exactly that the stock, you know about what it's worth and the covered call really the worst that happens is I make money right I make money that's the worst that can happen, so I have very controlled risk I know what my return is so I have a defined return...'

💡Strike Price

The strike price is the price at which an option contract can be exercised. It is crucial in the context of the covered call strategy discussed in the video. Example usage: '...if Apple goes to 230 I will have to sell at 230 now guys I do not want to sell at 230 but I want to create income, so how do I balance that what you should be doing is you should be selling out of the money covered calls so for example, apple is at 223 I sold a 230 covered call...'

💡Income Generation

Income generation is a key focus of the video, with the speaker discussing strategies that can be used to create income streams from investments. This is exemplified through the use of options like covered calls and cash-secured puts. As stated: '...so the first one covered calls popular strategy for generating consistent income from your stockholding...'

💡Out of the Money (OTM)

Out of the money refers to an option that has no intrinsic value because the strike price is not favorable for immediate exercise. The video mentions selling OTM covered calls as a strategy. From the script: '...you should be selling out of the money covered calls so for example, apple is at 223 I sold a 230 covered call...'

💡Rolling Options

Rolling options involves closing an existing options position and opening a new one, often to maintain a position or to adjust the strike price and expiration date. The video explains this as part of managing a covered call strategy. Example: '...if it goes to 230 what I will do is I will adjust the strike price from 230 to 235, that will be my goal okay the covered call is very simple when you sell a covered call you collect income you get paid and you do have to let go of the stock at the strike price at expiration, but before expiration I can basically close out the stock and then what I can do I can close out the option and then I can roll it higher...'

💡Cash Secured Puts

Cash secured puts are a strategy where an investor sells put options and has enough cash on hand to purchase the underlying stock if the option is exercised. This strategy is discussed as a way to build wealth without relying on luck. As mentioned in the script: '...cash secured puts are another effective strategy for Building Wealth without relying on luck this involves selling put options on a stock you own while having enough cash on hand to buy the stock if the option is exercised...'

Highlights

The video introduces three option strategies for consistent income without relying on luck.

The presenter's portfolio has increased by 7.75% in the past month, earning $227,000.

The first strategy is the covered call strategy, which has been used since the presenter started trading 10 years ago.

Covered calls involve owning a stock and selling a call option on it to collect premiums.

The presenter uses Apple stock as an example of a covered call strategy, with a current position and a $230 covered call.

If the stock price reaches the strike price, the presenter adjusts the strike price higher to continue generating income.

Covered calls are a safe strategy that provides a consistent source of income and controlled risk.

The second strategy is cash secured puts, which involves selling put options on a stock you own or want to own.

Cash secured puts can produce average annual returns of 24% when premiums and potential capital gains are considered.

The third strategy, the wheel strategy, combines covered calls and cash secured puts for a consistent income generation process.

The wheel strategy provides a structured approach to generate income with controlled risk and defined returns.

The presenter emphasizes the importance of not relying on luck but instead using a proven system to make money.

Options are compared to real estate, where you can generate income from owning an asset.

The presenter discusses the importance of controlling risk and knowing your return, which is possible with these strategies.

The video concludes with an invitation to join the presenter's 6E boot camp for hands-on coaching on these strategies.

The presenter shares his personal journey and how options have contributed to his freedom-based lifestyle.

Transcripts

three option strategies to get rich

without getting lucky guys this is going

to be a very important video so how do

you get rich without getting lucky this

is the no fluff and I'm going to say

that first of all simple scales and

fancy fails we're going to stay away

from all the crazy strategies and we're

going to focus on consistent income

strategies you can actually see my

portfolio it's up about 7.75% in the

past month I made

$227,000 so if you want to grow your

wealth you need to be strategic about it

which is why you don't need that many

strategies you just need to implement

the right strategies the first strategy

is going to be the covered call strategy

I've been using covered calls since the

dawn of Ages basically since I started

trading 10 years ago and during in

college I had some time I shadowed some

financial advisers some Traders some

everyone in the finance field right I

love Finance that's what I study that's

what I have a degree in I was talking to

a financial adviser who was managing NBA

player money okay this financial adviser

that he has made really good consistent

returns by just selling covered call I

heard this about 8 years ago and and I

was really intrigued well I didn't have

that much experience with them I had a

small portfolio I started off with

$22,000 now obviously we have multiple

portfolios on this channel two are both

at seven figures I scale small

portfolios medium portfolios big

portfolios I've had a lot of experience

and the cover call strategy to me is

going to stand out as the top strategy

or one of the top strategies we have

three simple strategies in this video

and all three simple strategies are

actually very very similar so the first

one covered calls popular strategy for

generating consistent income from um

your stockholding so from stocks that

you already have why not put them to

work put them to work so they can start

implementing and creating some income

for you by selling covered calls this

strategy involves owning a stock you do

have to have 100 shares and selling a

call option on that stock that's why

it's called a covered call by doing this

you collect premiums from the sale of

the call option while still holding on

to the stock all right that's the most

important thing I'm going to show you

how to manage the strategy in just a

little bit but simply said you have 100

shares and if the stock price goes to

the strike price of the covered call

you're in a little bit of trouble let me

explain what I mean all right let me

actually show you an example it's going

to be much better for you so right now I

have several positions in my portfolio

let's go to Apple this is my biggest uh

stock and I want to show you I do have a

covered call on Apple right now apple is

at $223 per share my average cost is

$186 average cost per share I'm up about

$290,000 guys which is quite a lot of

money on Apple it's been my best play

due to the strong brand I love Brands

guys branding is the most important

thing that I look for um before I look

at technicals and before I look at fun

mentals of a company it's what I

specialize in brand and Tech all right

so looking at Apple I have $230 covered

call if Apple goes to 230 I will have to

sell at 230 now guys I do not want to

sell at 230 but I want to create income

so how do I balance that what you should

be doing is you should be selling out of

the money covered calls so for example

apple is at 223 I sold a 230 covered

call that does not mean that I'm looking

to get rid of Apple at 230 I just think

in the short term apple is on bullish

but I don't think it's going to go to

230 or that much higher all right if it

goes to 230 what I will do is I will

adjust the strike price from 230 to 235

that will be my goal okay the covered

call is very simple when you sell a

covered call you collect income you get

paid and you do have to let go of the

stock at the strike price at expiration

but before expiration I can basically

close out the stock and then what I can

do I can close out the option and then I

can roll it higher I can adjust higher

usually I will adjust higher for a gain

or for no cost at all all right so I can

show you what that looks like I don't

need to do it right now everything is in

the clear this is a trade that I put out

in my Discord Community everything is

good but let's just say hypothetically

Apple went to 230 what I would do is I

would simply roll this position all

right I would roll it up I'll show you

this quick example and then we'll move

on to the second strategy that I will

use that uh can build a lot of wealth

and create consistent income so uh

currently this option expires on 920 you

can see here on September 20th all right

I'm going to adjust it to October 18 and

you can see here how the 235 five strike

is worth more it's worth $315 so the

total credit for me would be over $6,000

now guys why is that well it's because

when you are adjusting or fixing or

rolling an option more time equals more

money so that's the beautiful thing

about option you get paid for time

you're strategically Building Wealth and

you're getting rich by time strategy and

high quality companies okay so on Apple

I'm very bullish on Apple and I have

covered calls and I'm generating income

on the covered calls themselves so the

first strategy is covered calls that's

one of the best strategies to get rich

and you don't have to get lucky the

stock you move sideways you make income

the stock goes up you make money on the

stock and you made money on the option

and at worse you might have to roll it

higher or just let your shares get sold

off there's nothing wrong with buying

Apple for $220 and selling it off at 230

and you've gotten paid guys you've

gotten paid so uh you know that's one of

the top strategies that I would say is

over and over again consistent for me

and what I like about it a lot is I

control risk I buy 100 shares I like the

stock and I know exactly that the stock

you know about what it's worth and the

covered call really the worst that

happens is I make money right I make

money that's the worst that can happen

so I have very controlled risk I know

what my return is so I have a defined

return and there's really no luck the

covered call can provide a consistent

source of income it's consistent source

of income it's safe and studies actually

show that you can make well above

average returns in comparison to the S&P

500 which is very important for me

there's a reason why Warren Buffett

doesn't live in New York City he said

that he doesn't like other people's

opinions so I like to do the research

myself I like to form my own decisions

and uh for me I don't want to get lucky

I want to have a consistent proven

system to make money I've done a lot of

research right I've worked on Wall

Street according to a study by the CFA

Institute writing covered calls enhances

portfolio income without any substantial

risk it actually decreases risk so if

you want something safer than stocks

covered costs all right quick analogy

and then we'll go into the cash secured

puts which is my second strategy so a

quick analogy is imagine you have a

rental property okay options are very

similar to real estate guys a lot of L

of people think options are really hard

to learn no they're not they're very

very similar to how real estate

properties function and make income for

you so imagine you own a real estate

property all right you receive regular

payments from a tenants which helps you

cover your mortgage but it also provides

income all right so think about Apple

stock as the the house but the rent is

coming from like something like options

all right so that's kind of similar to

how it works and just like renting out

your property selling covered calls

involves zoning shares of stock and

receiving regular premiums and basically

that's how you collect monthly income

it's exactly what I'm doing all right

number two all right this strategy is a

cousin of the covered call it they

actually look very similar they both

have controlled risk and return you

don't have to get lucky to get rich off

of selling cash secured puts all right

cash secured puts are another effective

strategy for Building Wealth without

relying on luck this involves selling

put options on a stock you own while

having enough cash on hand to buy the

stock if the option is exercised if the

stock stays above the strike price right

you're selling a put option if it stays

above the strike price you're good you

get to keep the premium if it goes below

you have to purchase the stock but

that's a good thing that's always a good

thing if you're selling puts you should

be doing it on stock that you like guys

if you're selling puts on stocks that

you don't like something's wrong with

you up here you have to sell puts on

stocks that you do like don't put

yourself in a bad situation just don't

do it don't count on luck don't count on

emotion count on actual facts of what

works okay study what works do what

works all right and this is how you

basically make money there's no luck

involved you have a system and a process

and the best thing is you have control

over your risk because when you sell a

put option say you sell an $80 put you

know you have to tie up an $80 put is

$88,000 you're tying up 8 Grand you

might collect let's say $240 3% you

might be thinking to yourself ah 3% is

not that much I have 8 Grand of capital

being laid out no eight grand of capital

being laid out can't go to zero if

you're selling puts on a high quality

company that you want to own in theory

your risk is basically zero because you

want to buy the stock anyways but now

you're buying the stock and getting paid

3% what can be better than that I mean

it's please tell me what can be better

than that you're getting paid to buy the

stock all the stock buyers out there

they're buying the stock at the current

price you are getting paid literally

money in the bank right away to buy a

stock and you get to choose the price

you control your risk you control the

return that you get you know exactly how

much money you're making so that's how

you basically are building Strategic

Wealth and this is one of the best

options strategies to get rich and you

don't need any luck with it all right so

um I wanted to read you this research

that I I did here uh this is from the

Chicago Board of option exchange or the

sibo all right uh they show that selling

cash secur puts can produce average

annual returns of 24% when premiums and

potential capital gains are factored in

this strategy is effective because it

allows investors to set their entry

prices which I've been saying that all

the time is basically just saying the

same thing I was saying guys I'm buying

stocks hand over fist bicep over tricep

on the stocks that I want and by selling

puts I'm forced to dollar cost average

I'm forced to buy highquality companies

what's wrong with that bicep over tricep

guys I'm being forced to buy highquality

companies and I'm buying them and all

I'm doing is we'll talk about the

strategy number three which is the wheel

strategy all right I'm getting forced to

buy the stocks that I want then I'm

getting I'm selling puts then I can sell

covered calls so what you'll notice here

is that selling covered calls is

actually very similar to selling puts

right you're selling puts to get in you

get you have to tie up some Capital you

get premium for tying up that capital

for covered call you have basically the

shares that you bought and now you're

selling covered calls which is you have

Capital making you money so the equation

is very simple you have Capital that

makes you money so $88,000 makes you

let's say $240 a month or whatever in

two weeks so you have a return capital

and it's a process that process is the

wheel strategy I've been using this for

a very very long time because I wanted

safety guys I wanted safety I coach with

a lot of students and I help them retire

uh in my Discord Community I'm working

with folks that have 50k 100K and plus

and they're looking for a system and a

process to follow that to be honest is

so simple that anyone can do it so they

no longer have to work they can focus on

consistent income whether you know

people have different goals I have a

gentleman right now in New Jersey he has

a couple million portfolio and he's

looking at generating $40,000 per month

plus that's fine if youve reached that

scale if if you're at a different scale

and you have a 300K portfolio and you

just want to be like I had a student for

a long time I mentioned his name his

name is Denny I mentioned him many times

because he didn't want to do anything

interesting and I feel like that was

perfectly okay with me I feel like uh

that Vibes very well with so many

students that they don't have the best

option expertise they don't want to do

anything interesting they just want to

build wealth without really having to

over complicate it or betting on what

the market will do or or having

experiencing volatility so just selling

puts to get in can generate 3% per month

I've recently made a video on just doing

that on something like spy so you can do

a strategy like selling puts on a high

quality company which is what I

recommend or you can also do that on

something like spy with spy things are

very simple because spy already has

built-in diversification spy has 500 the

top companies already within it all

right so I'm going to wrap up here with

the wheel strategy so the wheel strategy

combines covered calls and cash secured

puts to create a basically a c or a

consistent income generating process

first you sell puts if you don't get

aign that's fine you've gotten premium

you're probably happy you're like I made

money why not if you do get assigned you

still want to make income right you have

shares well you sell covered calls so

you have a very good consistent cash

flow system and I have some research I

want to show you in a second but the

goal is to continuously cycle through

selling puts and cover calls this

strategy provides a structured approach

to generate income so again this is

something that anybody can copy whether

you're new to option trading or you're

already at the you know more experienced

uh you know level of option trading it

doesn't really matter you can control

your risk by selling puts and covered

calls and that's what makes the wheel

strategy such a strong strategy that

basically no luck you control the risk

you know what your return is and that's

what I love that's what I love about

these three strategies and I looked at a

back test by tasty trade and they

revealed that the wheel strategy went

executed with well chosen stocks guys

well chosen stocks that's what I look

for that's why I was a financial analyst

at Goldman Sachs I was not a Trader I've

never said I'm a Trader at Goldman Sachs

I was a financial analyst at Goldman

Sachs I was working in Los Angeles I was

uh looking at portfolios that were huge

I was looking at strategies and I was

doing a lot of option research I that's

what I love to do I loved option

research options just fascinated me

options were just so fascinating because

you can create mix and match options you

can make them very safe you can make

them very risky you have so much control

over options which is why I started

trading options such a long time ago for

me I thought it was going to get rich

quick of course I had a different

mindset back when I was uh 18 19 20 21

22 now that I'm 30 I basically have a

different mindset which is I want

consistent safe passive income that's

why you do see me living in hotels

because I'm traveling the world and I uh

have enjoyed that lifestyle I've enjoyed

trying new Cuisines and living a

freedom-based lifestyle it's been very

enjoyable and one day when I have a

family I look back at these times and

say I was crazy I've traveled the whole

world and options have been a big

contributor to that so look the wheel

strategy you can have an annualized

return of 25 to 40% if you go for the

more you know I covered Nvidia in a

recent video If you go for NVIDIA

there's a lot of volatility there so

high implied volatility stocks can give

you a lot of returns which is fantastic

that's where you can run the wheel sh

and make a lot of money so uh looking at

the research the wheel strategy uh

basically gives you a structured and

measured outcome which is what it's all

about guys structured and measured

outcome it's like baking a cake you know

the ingredients you know how to make a

good cake and then cake tastes good so

that's what I want to help you guys with

make consistent passive and safe income

and if you're looking to work with me

handson I do have a 6E boot camp during

that boot camp I show you how to trade I

show you all my trades give you access

to my Discord Community it's my highest

level coaching for six weeks I have

basically a lot of one-on-one time with

you group coaching sessions a whole

lot's in the program so if you want to

learn more about the program is the

first link in the description and I'll

be more than happy to show you guys how

to scale up or you can just keep

watching the free content I have here on

YouTube make sure to subscribe to my

channel so you can keep getting videos

on creating consistent passive income

that's my goal that's what I want to

teach and I'll see you guys in the next

video