If a stock has high put premium, it’ll also have high call premium. So this effectively is finding stocks with high option premium. Basically the same list.

Close out and double down with the same delta spread the same day.

You’re totally correct. This is an older video and VIX is much lower now. I’ve stopped doing these as a result

Is that because you are an old white guy?

Lol

Because share price = market cap / shares outstanding. It’s the same calculation.

Thanks for watching!

That’s the great part… you can! This assumes a margin account, but when you have that your broker isn’t going to require all of the buying power to place the trade. It’s cash-secured in the sense that if you need to take assignment, you do have that cash. It’s just now in the form of a money market fund if you use that vehicle to generate an extra return. Your broker recognizes that those money market funds and T Bills are so low risk that it doesn’t lock your buying power up in them. Let me know if that doesn’t make sense.

I heard that some brokers give you interest (would like to hear more if someone knows. Mine doesn't. When I sell puts, I just see the cash "disappearing" from my buying power, the second I place the order.

so you only front some of the money for a put when you're doing it on margin and keep the rest of the cash somewhere else that's earning some interest and if you get assigned you can move the cash in to cover the cost of the put rather than pay the interest on margin? @@thehourglasstrader9280

So it may be helpful to think about it the other way. Like we mention in the video, if you put $100k in a money market fund, your broker may only require $25k of your buying power to do that. So you then have $75k to sell cash secured puts with, even though you’re getting the full benefit of $100k worth of interest. With T Bills sometimes your broker will only require 1%, so you’d have $99k left to trade with! You might think “oh well in that case why don’t we buy more than $100k of money market funds or T Bills?”. But once you go over your account balance in either of these items, you’re paying margin interest which will cost you more than the interest on the cash makes. Since you’re paying actual cash to acquire both of those. If you buy $100k of a money market fund and then sell $50k of cash-secured puts, you’re not charged margin interest on the $50k because you’re not actually spending $50k of cash to sell the cash secured puts - someone is paying you. You’re not really fronting cash to sell a CSP… just buying power. But yes - if you’re assigned it’ll cost cash to hold those assigned shares. In that case you can either dump some of the money market to free up cash, or just roll the put to avoid assignment. Whole point of the video is to explain that if you were going to take assignment and sell a covered call, you could have just rolled your put to that same strike which allows you to keep all cash in a position that earns risk free interest

I understand, but I'm not familiar with holding money market funds or T bills. Have you got any examples? Will this be the same with any broker's margin account? Are you US-based? @@thehourglasstrader9280

And not to mention the fact that when a dividend is paid, the stock price drops by the amount of the dividend so you’re not gaining any ground overall!

​@thehourglasstrader9280 it depends on the stock you own. Most oil an gas stocks that pay divided have appreciated in price the last few years 😮

That isn’t to say the stock paying dividends will never go up… but if they hadn’t paid those dividends it’d be up even further. It’s kind of a zero sum thing.

Yeah if you’re buying an option you’d just put a positive amount in the quantity column as opposed to a negative when you’re selling. Formula should work the same way.

That’s exactly right. As long as they’re the same strike… it’s basically the same thing!

Can happen early if ITM

Yeah they can be assigned early if in the money. However they’ll only be assigned if extrinsic value on the option is zero (the value of the option that is subject to decay by expiry). If someone exercises an option that has extrinsic value, they’re basically giving you free money.

It’s still the same! The gains from the stock are matched by the intrinsic value on the put you sell. No matter what (in most cases), they’re still going to be identical at the same strike. Whether it’s at the money, in the money, or out of the money.

Yeah once I pick a side I'll roll as much as I need to. Either until it results in profit or we hit that max loss cutoff