In this blog I share how I have been able to retire sooner selling options. I sold Covered Calls, Cash Secured Puts and Vertical Credit Spreads and made $2,130 for the month of July 2021. I used safe option strategies and tried to keep my trades as simple as possible.
Meaning I stayed with the following guidelines.
- Invest in quality companies that are not too volatile.
- Look to get around a 10% increase for calls and 10% decrease for puts. For instance, if the stock was trading at $50, I would set a $55 call strike or a $45 put strike.
- Try to get an 80% probability that the stock will expire out of the money. This also translates into a 20 Delta.
- Look to stay within a 60-day expiration for both puts and calls. You can typically do better on several short duration’s vs one long one.
- Try to do more contracts when I can find good premium.
- Try to limit the number of trades to around 15 or so a month. Easier to manage this way.
In July I did 15 trades and averaged $142 a trade. Fairly even between covered calls, cash secured puts and put credit spreads. The trades were spread out during the month and were very passive in nature. 3 or 4 trades a week. Did have one day where I did four trades. I currently do the trades in my brokerage accounts that have a lot of investments that I do not trade. I feel that I could have made most of these trades on an account that was $250k. For my two brokerages the extra return for the year would equate to about 4.28% yearly. On a $250k account this would be 10.23%.
I had my first big loss this month. It was on a Call Vertical Credit Spread. This was MSFT and I have a blog that discusses it in more detail. (Big Loss link) I have only done two Call Vertical Credit Spreads. Both have gotten me into trouble. I was able to roll out of trouble with ARKK but got assigned early due to the ex-dividend date. Going forward I will no longer do these kinds of trades. The only calls I will sell will be covered calls.
By selling options I have found a nice passive income that I did not have before. I am able to retire sooner selling options. Next month will be the last month of my year journey. I will share even more details soon on what the most profitable trades were. I encourage you to tune in often. I believe most people can do these trades and retire sooner.
Happy Investing and God Bless!
In the video below I share my trades for July and discuss what I learned for the month in more detail.
