Trading options for income

Does anyone here trade options for income?

I have been dabbling in options to try and boost my income but my results are mixed. I was wondering if anyone here is willing to share their strategies.

Buy Nvidia 5 years ago and hold it.

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Even just buying it a few months ago or even a year ago wouldn’t have been too bad either.

Bought some in 2008, but I like the sound of options for income…

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I haven’t made any profit with options yet however my friend does covered calls for regular income. But if market is volatile I don’t think his strategy works.

:wave: What are you doing, and what mixed results are you having? I always suggest starting simple - writing covered calls for things that you’re ok with / thinking about selling, and cash covered puts for things you’re thinking about buying. Bull put credit spread would be a good next toe dip. As long as you can leave the FOMO at the table, low risk strategies that can spin off some nice extra cash. (yolo options to try and score big are a different topic… ;D)

Volatile can be much, much better as long as you’re not going to kick yourself over getting exercised and missing out on a run, as volatility comes with bigger premiums. A lot of time when I get exercised on a covered call I turn right around and sell a put at the same price. Usually works out, unless it’s the next nvda (but since you should only sell covered calls on something you’re ok selling, you likely would’ve taken profit and sold before a big runup anyway, so…)

edit: current option I have open - I sold 4 lots of COIN JUN 14 2024 $257.50 CALL last Wednesday at $8.63 when COIN was at ~$250. So potential 3.5% on asset price over 1.5 weeks (I almost always put in a buy to close order at 20% of what I sold for right away though - generally don’t want to get exercised chasing pennies)?

edit2: trade to close literally just went through while I was typing at $1.70, so $2770 in 3.5 trading days for 4 lots that I’ve been trying to get called on at $200 for a while, but keep collecting premiums 1-2 weeks out instead… I’m cool with that. ;D

edit3: here’s my COIN option trades this quarter:

ASSET Contracts Sold Bought Proceeds
CALL (COIN) COINBASE GLOBAL INC APR 05 24 $300 (100 SHS) 1 $344.32 $85.68 $258.64
CALL (COIN) COINBASE GLOBAL INC APR 19 24 $200 (100 SHS) 1 $5,099.27 $6,292.68 ($1,193.41)
CALL (COIN) COINBASE GLOBAL INC MAY 10 24 $245 (100 SHS) 3 $2,577.94 $887.03 $1,690.91
CALL (COIN) COINBASE GLOBAL INC MAY 31 24 $237.5 (100 SHS) 1 $1,099.28 $793.68 $305.60
CALL (COIN) COINBASE GLOBAL INC MAY 31 24 $245 (100 SHS) 1 $599.30 $0.00 $599.30
CALL (COIN) COINBASE GLOBAL INC MAY 31 24 $250 (100 SHS) 1 $1,984.30 $945.68 $1,038.62
PUT (COIN) COINBASE GLOBAL INC MAY 31 24 $225 (100 SHS) 2 $506.63 $201.35 $305.28
PUT (COIN) COINBASE GLOBAL INC JUN 07 24 $225 (100 SHS) 1 $366.30 $64.03 $302.27
CALL (COIN) COINBASE GLOBAL INC JAN 17 25 $300 (100 SHS) 1 $6,841.26 $5,000.68 $1,840.58
CALL (COIN) COINBASE GLOBAL INC JUN 14 24 $257.5 (100 SHS) 4 $3,453.19 $682.71 $2,770.48

You’ll notice I don’t hold most of these to expirations - take your winnings and run. I was assigned on 1 lot at $235, which I sold @ $7.56 (so effective sale price of $242.6); didn’t want to pay the premium to close out the position when the stock was around $250, figuring it’d go back down and I’d consider buying back in at the same price (or rather I’d sell puts) when the stock is back down - which looks to be today. Looked now, and next weeks $235 put is going for around $9, this week’s for around $6. So I just put in a sell order for $9.35 put. :man_shrugging:

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Predict the future. Buy stock your crystal ball tells you to buy. Profit.

So what you’re saying is you don’t get it. ;D Stick around and learn something!

Stock market is for people with money, if you can’t afford to lose it, you can’t afford to play.

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This is a truism, of sorts.

This is pretty much what I’m doing, selling covered calls and selling puts. Any other strategies such as spreads are just too complicated for my old brain. Sometimes I can’t even remember what was the exact strike price I sold. I need to look back at my trade just to make sure.

Overall, I’m coming out ahead with my trades, but it’s not something I do consistently.

How do you choose the strike price you sell at?

And for people who want money!

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I actually like the volatility. It makes the option premiums more juicy. I find it hard to sell for a meaningful premium when the volatility is low.

This is true. If you’re living paycheck to paycheck and you can’t save then you’re probably not in a position to invest. But in general, I think for those who do have money to save it’s better to give each dollar a job.

Years ago, I was saving money in a bank account. Looking back I realize for me that was a big mistake. I should’ve invested that instead.

Which broker are you using to trade?

Hindsight is always clear when it comes to stocks.

But the reality is, you’re probably going to lose some, unless you only buy stocks from mega corporations that won’t go out of business, until it does.

And managing it as well as making anymore money on them is a full time job. If you want bigger gains, you must take bigger risks, as in invest in startups and hope they make it (but most of them don’t).

I really only know about the US stock market. So most of what I’m saying pertains to that.
I think for the average person who doesn’t want to make this a full-time job and who has a longer time horizon there are very few things better than investing in the stock market. For the average person, I think investing in a low cost index ETF like VOO or VTI should serve them well in the long-term.

In my opinion, it’s one of the few areas where you don’t need to study and work hard to be an expert, but you can get “expert” like results. Just dollar cost average into these and let it cook for 5, 10, 20 years etc and you’ll be surprised at the results.

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I use Fidelity. Doesn’t feel like it matters too much. :man_shrugging:

Nope.

Or options! :smiley: One of these days I’m actually gonna yolo something rather than taking little bites (well, no, I’m not, but it’s fun to dream). bought this yesterday, sold today…

I’m actually thinking of leaving Schwab and going to Fidelity. Schwab’s customer service is excellent but I don’t like that they accept payment for order flow and I really hate that they don’t sweep your cash into a money market fund the way the other brokers do.

Are you living in Taiwan now? If so, does Fidelity reimburse you for ATM fees if you withdraw from foreign ATMs? Do they charge any fees for overseas transactions?