How Much Can I Make Trading Options

How Much Can I Make Trading Options – Early last year I did some calculations to determine what it would take to earn $100,000 each year through dividend stocks.

Although it costs a surprisingly large amount of money to do so, reinvesting the dividend, watching the dividend grow each year and continuing to invest in your portfolio will speed up the process, making $100,000 a year through dividend investing a very long time. it’s necessary.

How Much Can I Make Trading Options

Sales opportunities, on the other hand, can be accelerated or slowed down by your pace. Instead of receiving consecutive dividends, you decide how much bonus to withdraw each week.

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Volatile stocks will give you higher premiums, while reliable companies with low volatility will not give you higher premiums.

If you want to earn $100,000 every year from trading options, you will need to earn $1,923.08 in weekly bonuses.

While you still need a pretty penny to earn $1,923.08 in weekly rewards, you can make 6 figures faster than dividend stocks with this strategy.

Calculating $100,000 each year depends on which stock or ETF you choose, but for this example we’ll focus on QQQ.

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QQQ is an ETF that tracks the NASDAQ 100, which means you want to focus heavily on the technology sector.

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I prefer to sell options that expire at the end of each week and this is a great way to make consistent income. This is where QQQ premiums appear on contracts that expire within two days.

If you sell options on Monday, you will receive higher premiums because there are more days left until the contract expires.

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Let’s say you want to hold on to your QQQ shares as long as possible, but still want to receive the bonus. In this case, I would set the price at 269 to get a premium of $104 from the start.

$269 is safe for me because QQQ should move 1.8% in 2 days. With the way the market has been lately, I’m not holding my breath that QQQ will hit $269. In fact, I wouldn’t mind selling my stock at $269 a share.

Yes, there are a lot of numbers in this chart. Just look at the number 269 in the middle, look to the left where the calls are displayed and under the quote category you will see 1.04. This is what you sell the contract for. 1.09 shows how much you pay to buy a call from someone.

Since options trade in multiples of 100 shares, 1.04 represents how much you will earn per share. Since we are talking about several 100 shares, the premium for this call is $104.

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At the beginning of the week you sell covered calls on QQQ, it is more likely that you will make $100 every week and keep your shares.

Importantly, you need 100 shares of QQQ to sell a covered call. Since QQQ last traded at $264.16/share, you should invest $26416 in QQQ.

To earn $1,923.08 each week, you need to sell about 19 covered calls, which means you need 1,900 shares of QQQ.

Since QQQ last traded at $264.16/share, you would need to invest $501,904 in QQQ to make 6 figures by selling covered calls.

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If you have $500,000, you’re all set. Although it may sound like a lot, you need more money to achieve the same goal through dividend investing.

$500,000 invested in dividend stocks with a dividend yield of just over 4% would be $20,000 annually. Not bad, but still far from 6 figures.

If you only own 100 shares of QQQ and earn $104 each week, it will take 254 weeks (almost 5 years) to earn 100 shares of QQQ from just rewards.

If you have 500 shares of QQQ, it will take less than a year to get 100 shares of QQQ through bonuses.

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Another scenario is to set a lower price like $268 and get a weekly bonus of $134 based on the chart.

$134 per week instead of $104 will speed up the process. Instead of 1,900 shares of QQQ, you only need 1,500 shares of QQQ to make a 6-figure income.

The reward you receive from 100 shares of QQQ will be converted into another 100 shares one year in advance.

The rewards you collect from 500 shares of QQQ will turn into another 100 shares in about 9 months instead of practically 1 year (50.8 weeks using a weekly reward of $104).

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You can sell covered calls on growth stocks like Fastly, which promise higher rewards but carry more risk. Not only can stocks go lower than your regular stocks, they can also go up at will and exceed your strike price.

You can buy 100 shares of several of these types of stocks. You don’t need to deposit as much as $396,240 in our previous example. At this point, the amount of money required depends largely on which stocks you choose and what their premium is.

Eventually you will be forced to sell shares in multiples of 100. This may not be a bad thing as you can get out at the right time.

You can also earn extra income through cash deposits. Not only is this a great way to earn extra income, but you can get paid to be willing to buy the stocks you want at attractive prices.

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For Pinterest, I decided to focus on pin options (the numbers on the right) that expire in 9 days. Deposited contracts that expire within 2 days have small bonuses that are not worth mentioning.

I could effectively pay myself $29 to buy 100 shares of Pinterest at $35. I’m perfectly fine with buying these stocks, and if I don’t get them before the contract expires, I still have a profit of 0.8% for the week and $3,529 in cash.

You don’t need to buy 100 shares to deposit cash. You just deposit the money. When the contract expires, you either get 100 shares or you get all your money back plus a bonus.

It is also the best way to buy stocks. In a previous article, I detailed how Warren Buffett used this exact strategy to make $7.5 million in less than 5 minutes.

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If you have to sell 100 shares of QQQ at 265, you can continue to deposit cash at the strike price of 260 to get the premium and get the same shares at a discount of $5/share.

The only risk is that the QQQ will continue to rise and will be well above your strike price for cash deposit stocks. Therefore, I prefer to sell contracts that expire before the end of the week, because you usually do not see a significant movement in a week, except for big earnings news or an event.

These two situations are more common for companies than ETFs, but if several high-profile NASDAQ companies release earnings at the same time (I’m looking at FAANG and Microsoft), the index will be very volatile this week.

Selling options is a great way to make extra money faster to 6 figures than dividend investing. Even if you can’t make 6 figures, you can quickly put yourself in a position to make an extra $100 or even $1000 every month by selling options.

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Your income will increase every week. Over time, you too can start making 6 figures selling options without needing a million dollar portfolio.

UPDATE: I recommend this strategy only with covered calls and cash deposits. If you sell uncovered calls and calls, you are exposing yourself to the potential for large losses. Covered calls and cash deposits protect you from the huge loss scenario associated with exposed positions.

I also suggest in the article that you can lower the strike price to get a higher premium. While this is true, it also increases the chances of you canceling the stock. If the stock suddenly rises significantly above the strike price, you may miss out on further increases in the stock price.

Annual returns of 8-10% are possible with a less risky version of this strategy, meaning you need $1 million or a little less to make 6 figures with this strategy.

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A 20% annualized return scenario is also possible, but it carries an additional risk and you could be leaving money on the table due to stock appreciation in the case of a covered call or depreciation in the case of a cash sale.

Exposing the Risks of Covered Calls and Cash Selling these two options is a safer option strategy but still has risks.com

The options are hard to understand unless you try them. I recommend starting with closed sales.

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