Option trading can be intimidating at first with all the new terminology that comes along with it Puts, Calls, Strike. It can quickly make your head spin and one wrong click can cost you dearly. Plenty of brokers offer paper trading and I highly recommend if your starting out to use this to learn. Paper trading is a play account think of it as monopoly money, you can trade options and learn as you go and it will not cost you any real money. Once you have a grasp of Options trading then you can being to risk money or stock in your portfolio.
There are numerous ways to trade options but to start stick with Covered Calls and Cash Secured Puts. Options revolve around 100 shares per contract, you are either selling or buying 100 shares.
For a Covered Call you will need to own 100 shares of a given stock while a Cash Secured Put requires you to have the funds to purchase 100 shares. Contracts have expiration dates, some tickers have weekly expirations while others are once a month. In return for selling a CC or CSP you receive a premium which is yours to keep no matter what happens to the contract. The image below is an option chain for ticker AAPL . The left side has the Call options while Right side is Puts. The strike price would be the price you are looking to write the contact at, for Calls you want that above the current share price and vice versa for Puts. The top chart has zero days left meaning it will expire at then end of that trading day. Apple was at $189 when this was posted and if you owned 100 shares and wrote a CC for $190 you collected $55 in premium, now if it ended the day above $190 you would lose your shares. You would receive $19,000 for the shares plus the $55 premium. Same scenario for a Put in this case the 187.5 contract pays a premium of $18 and you would be assigned those shares if the price falls below that amount. Now the further you go out on the calendar the higher the premium and you can go out months and even years but the risk is always assigment. You can buy back the contract and roll it out to a future date if you do not want to lose your shares.
Not all stocks offer the same premiums the more volatile a stock the juicier the premium and so comes a higher risk of assignment. Lately the MEME stocks with wild price fluctuation are all the rage but can end up costing you dearly. I suggest staying away from any ticker you are not comfortable holding long term.
Below is my Options spread sheet. I stick to Cash Secured Puts and Covered Calls on a $25,000 account as collateral with a goal of collecting $500 in premiums. Now 2% doesn’t seem like much and I could do much better if I raise the risk but 2% compounded montly adds up quickly. What do I do with the income I’m generating? buy more dividend paying stocks of coarse.
One last thing to remember is any income generated is taxable unless it’s in an IRA or Retirment account. If you are using a brokerage account remember to set some of the profits aside for Uncle Same at the end of the year and for some more information on Options Trading checkout this Investopedia article.
| 2023 Options | Total Premium Collected | $2183.76 | 11.73% | ||||||||||
| Date Openeds | Ticker | Option | Buy/Sell | Expiration Date | Strike | Quantity | Premium | Status | Date Closed | Credit | Fees | Profit | Profit Yield |
| 12/29/2022 | AAPL | Put | Sell | 01/06/2023 | $125.00 | 1 | $1.11 | Closed | 01/05/2023 | $111.00 | -$43.70 | $67.30 | 0.89% |
| 01/05/2023 | OXY | Put | Sell | 01/13/2023 | $57.00 | 1 | $0.45 | Closed | 01/05/2023 | $45.00 | -$20.70 | $24.30 | 0.79% |
| 01/05/2023 | AMD | Put | Sell | 01/27/2023 | $57.00 | 1 | $1.05 | Closed | 01/06/2023 | $105.00 | -$74.35 | $30.65 | 1.84% |
| 01/06/2023 | AAPL | Put | Sell | 01/20/2023 | $120.00 | 1 | $1.15 | Closed | 01/06/2023 | $115.00 | -$60.70 | $54.30 | 0.96% |
| 01/09/2023 | AAPL | Put | Sell | 02/03/2023 | $125.00 | 1 | $2.58 | Closed | 01/13/2023 | $258.00 | -$146.35 | $111.65 | 2.06% |
| 01/10/2023 | OXY | Put | Sell | 01/27/2023 | $59.00 | 1 | $0.60 | Closed | 01/12/2023 | $60.00 | -$28.70 | $31.30 | 1.02% |
| 01/17/2023 | OXY | Put | Sell | 02/10/2023 | $60.00 | 1 | $0.76 | Closed | 01/26/2023 | $76.00 | -$22.70 | $53.30 | 1.27% |
| 01/18/2023 | AAPL | Put | Sell | 02/17/2023 | $125.00 | 1 | $1.53 | Closed | 01/27/2023 | $153.00 | -$35.70 | $117.30 | 1.22% |
| 01/30/2023 | AAPL | Put | Sell | 02/17/2023 | $135.00 | 1 | $1.75 | Closed | 02/02/2023 | $175.00 | -$55.71 | $119.29 | 1.30% |
| 01/31/2023 | C | Call | Sell | 02/03/2023 | $52.00 | 1 | $0.56 | Expired | 02/03/2023 | $56.00 | -$0.68 | $55.32 | 1.08% |
| 02/02/2023 | OXY | Put | Sell | 03/17/2023 | $60.00 | 1 | $2.25 | Closed | 02/28/2023 | $225.00 | -$196.37 | $28.63 | 3.75% |
| 02/07/2023 | F | Call | Sell | 02/10/2023 | $13.50 | 1 | $0.09 | Expired | 02/10/2023 | $9.00 | -$0.49 | $8.51 | 0.67% |
| 02/07/2023 | C | Call | Sell | 02/10/2023 | $52.00 | 1 | $0.25 | Expired | 02/10/2023 | $25.00 | -$0.69 | $24.31 | 0.48% |
| 02/13/2023 | C | Call | Sell | 02/17/2023 | $52.00 | 1 | $0.15 | Expired | 02/17/2023 | $15.00 | -$0.69 | $14.31 | 0.29% |
| 02/27/2023 | C | Call | Sell | 03/03/2023 | $52.00 | 1 | $0.14 | Assigned | 03/03/2023 | $14.00 | -$0.69 | $13.31 | 0.27% |
| 02/28/2023 | SBUX | Put | Sell | 04/21/2023 | $95.00 | 1 | $1.35 | Closed | 03/06/2023 | $135.00 | -$69.37 | $65.63 | 1.42% |
| 03/03/2023 | F | Call | Sell | 03/17/2023 | $13.35 | 1 | $0.25 | Expired | 03/14/2023 | $25.00 | -$0.69 | $24.31 | 1.87% |
| 03/06/2023 | NKE | Put | Sell | 03/24/2023 | $115.00 | 1 | $2.53 | Closed | 03/22/2023 | $253.00 | -$11.72 | $241.28 | 2.20% |
| 03/07/2023 | OXY | Put | Sell | 04/21/2023 | $55.00 | 1 | $0.91 | Closed | 03/28/2023 | $91.00 | -$44.72 | $46.28 | 1.65% |
| 03/22/2023 | NKE | Put | Sell | 03/31/2023 | $118.00 | 1 | $0.75 | Closed | 03/23/2023 | $75.00 | -$65.72 | $9.28 | 0.64% |
| 03/24/2023 | NKE | Put | Sell | 03/31/2023 | $116.00 | 1 | $0.95 | Closed | 03/29/2023 | $95.00 | -$15.72 | $79.28 | 0.82% |
| 03/28/2023 | NEE | Put | Sell | 04/21/2023 | $72.50 | 1 | $1.20 | Closed | 04/04/2023 | $120.00 | -$40.72 | $79.28 | 1.66% |
| 03/30/2023 | NKE | Put | Sell | 05/12/2023 | $115.00 | 1 | $2.55 | Closed | 04/10/2023 | $255.00 | -$149.37 | $105.63 | 2.22% |
| 04/10/2023 | OXY | Put | Sell | 04/21/2023 | $62.00 | 1 | $0.86 | Closed | 04/14/2023 | $86.00 | -$18.72 | $67.28 | 1.39% |
| 04/11/2023 | SBUX | Call | Sell | 05/05/2023 | $109.00 | 1 | $2.05 | Closed | 05/03/2023 | $205.00 | -$171.37 | $33.63 | 1.88% |
| 04/17/2023 | AMZN | Put | Sell | 04/28/2023 | $94.00 | 1 | $1.01 | Closed | 04/21/2023 | $101.00 | -$40.72 | $60.28 | 1.07% |
| 04/24/2023 | ATVI | Put | Sell | 04/28/2023 | $79.00 | 1 | $1.05 | Assigned | 04/28/2023 | $105.00 | -$0.69 | $104.31 | 1.33% |
| 05/04/2023 | SBUX | Call | Sell | 05/12/2023 | $107.00 | 1 | $0.55 | Closed | 05/11/2023 | $55.00 | -$25.72 | $29.28 | 0.51% |
| 05/04/2023 | ATVI | Call | Sell | 05/12/2023 | $77.00 | 1 | $0.26 | Closed | 05/12/2023 | $26.00 | -$25.72 | $0.28 | 0.34% |
| 05/05/2023 | F | Call | Sell | 05/19/2023 | $12.50 | 1 | $0.12 | Expired | 05/19/2023 | $12.00 | -$0.69 | $11.31 | 0.96% |
| 05/12/2023 | ATVI | Call | Sell | 05/19/2023 | $79.00 | 1 | $0.58 | Closed | 05/16/2023 | $58.00 | -$15.72 | $42.28 | 0.73% |
| 05/15/2023 | SBUX | Call | Sell | 05/26/2023 | $109.00 | 1 | $0.55 | Closed | 05/19/2023 | $55.00 | -$19.72 | $35.28 | 0.50% |
| 05/19/2023 | ATVI | Call | Sell | 5/26 | $79.00 | 1 | $0.52 | Expired | 05/26/2023 | $52.00 | -$0.69 | $51.31 | 0.66% |
| 05/15/2023 | CUBE | Call | Sell | 06/16/2023 | $50.00 | 1 | $0.36 | Expired | 06/16/2023 | $36.00 | -$0.69 | $35.31 | 0.72% |
| 05/30/2023 | ATVI | Call | Sell | 06/02/2023 | $79.00 | 1 | $0.90 | Assigned | 06/02/2023 | $90.00 | -$0.69 | $89.31 | 1.14% |
| 06/05/2023 | COIN | Put | Sell | 06/09/2023 | $50.00 | 1 | $0.52 | Closed | 06/08/2023 | $52.00 | -$14.72 | $37.28 | 1.04% |
| 06/05/2023 | HPQ | Call | Sell | 06/16/2023 | $29.50 | 1 | $0.41 | Assigned | 06/13/2023 | $41.00 | -$0.72 | $40.28 | 1.39% |
| 06/12/2023 | COIN | Put | Sell | 06/16/2023 | $47.00 | 1 | $1.10 | Closed | 06/14/2023 | $110.00 | -$20.72 | $89.28 | 2.34% |
| 06/14/2023 | COIN | Put | Sell | 06/16/2023 | $49.00 | 1 | $0.53 | Expired | 06/16/2023 | $53.00 | -$0.69 | $52.31 | 1.08% |
| 06/21/2023 | NKE | Put | Sell | 06/30/2023 | $103.00 | 1 | $1.63 | Closed | 6/27/2023 | $163.00 | -$49.72 | $113.28 | 1.58% |
| 6/28/2003 | NKE | Put | Sell | 6/30/2023 | $104.00 | 1 | $0.70 | Expired | 06/30/2023 | $70.00 | -$0.68 | $69.32 | 0.67% |
| 7/3/2023 | NKE | Put | Sell | 7/14/2023 | $107.00 | 1 | $0.50 | Expired | 7/14/2023 | $50.00 | -$0.68 | $49.32 | 0.47% |