The Option Writer

99% boredom vs 1% mega stress

📅 April 28, 2023 edition

🪧Options Selling 101

If you're new to options trading, you might not be familiar with options writing, which is the act of selling options rather than buying them. Options are a 💰financial instrument that allows investors to buy (calls) or sell (puts) an asset (underlying) at a future date (expiration date), paying a price (premium) for that right.

While many investors buy options as a form of speculation or 🎰gambling, selling options can be a more methodical and low-risk approach. As an options writer, you can collect the premium paid by option buyers and be responsible for paying out any profits they make on the expiration date. However, by only selling WAY out of the money options and aiming for modest profits of 1% to 2% in each sell, you can compound your earnings over time and avoid unnecessary risks.

The beauty of this approach is that it allows you to avoid the high-stakes gambling mentality that many traders fall into, and instead, focus on consistent profits and risk management. If things go against you, you can always close the position and manage any losses.

Last week, I wrote about the importance of spreading risk and mitigating potential losses. As part of my ongoing journey to fine-tune my option selling strategy, I am experimenting with various ideas and strategies to make it as low-risk and consistent as possible. Ultimately, my goal is to make options writing as boring as possible - and that's a good thing! By avoiding unnecessary risks and focusing on small profits, I can achieve peace of mind and long-term success.

To illustrate the potential benefits of this strategy, consider a compound simulation starting with $1,000 and compounding weekly for five years at an average weekly yield of 1.85% (my average so far). By the end of the five years, your investment would be worth significantly more than the initial $1,000, with minimal risk involved.

Overall, options writing can be a highly effective investment strategy for those looking for consistent, low-risk profits over the long term.

📋April 28 Epoch Review

As discussed last issue, I started by selling:

• $2100 CALL 

• $1750 PUT

And added more positions on the following days:

• $2050 CALL

• $1700 PUT

• $1650 PUT

As I mentioned before, my goal is to minimize risk by spreading my entries across multiple strikes. This approach allows me to avoid any significant losses and maintain a consistent portfolio. Here's how my week went:

📋May 5 Epoch Plan

As my strategy has been performing well, I plan to sell options using 40% to 60% of my collateral on Friday while keeping the rest available to build new positions in the future. In the event that ETH does not experience any significant movement, I will add to my current positions and sacrifice premium for added safety. I still had some unused collateral from last week that I used to sold a $2100 CALL during Wednesday pump. As we expired at the same price we did last week, I plan to start by aiming for the same initial strikes.

• $2100 CALL 

• $1750 PUT

We will see what shenanigans 😎crypto bros give us on the weekend for more possible entries.

The plan is still the same: multiple strike prices way out of the money.

📈📉My results

Average Yield %: 1.85%

Projected APY %: 159%

Growth %: 13,17%

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Nothing in this newsletter is financial advice. I just share my thoughts and personal experiences on Options and the markets in general