This content is a comprehensive guide to understanding and implementing covered call strategies for generating income and potentially turbocharging wealth, emphasizing the importance of mean reversion and strategic timing.
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We should be live.
Testing. Testing. One, two, three. Takes
a second for YouTube to fire up. And I
think you got a spring on your mic stand
that's really causing a big vibration
and a
so if you watch your thumping on the desk.
desk.
>> Okay. I won't bounce my leg.
>> There you go. There we are. We are live
now. Jacob, happy new year, my friend.
First time streaming with you so far,
but we chat every hour every day. How
was the slide into 2026?
>> Good. Yeah, had a nice You spent a lot
of time with family. Feel like holidays
last forever. Like after Thanksgiving
and then everyone gets together and then
Christmas and the New Year's just I'm
happy to be back to regular good time
with family. Um but glad to be back to a
good schedule.
>> But if you work every day, time flies.
So, that's kind of my strategy.
>> That's true. It was a fast year. Fast 2025.
2025.
>> Yeah. I didn't even notice. I didn't
even know what day it was. Whether it
was Christmas Day or New Year's Eve or
whatever, doesn't matter to me. But
let's get into covered calls. Um, and
the reason for this, as you know very
well, Jacob, uh, covered calls made me
in the 90. I used to call it my personal
money printer. And that's your little
image here. So, when I sent you that
graphic the other day, you picked up on
it. Um, like literally you can own a bag
and you can make a huge amount of money
from your bag by which to live while
retaining your bag and it appreciates.
By the way, hopefully the retire on
model will be out tomorrow. Uh, K8, let
me know if the dev team of any update on
that. They did promise me January 6th.
So that'll be a huge part as well of
determining what you need to live when,
when you can retire, how much can you
spend during retirement, and how much
can you can retire from. That's
basically the mission of that product
and that's coming out too. But if you
need to turbocharge your wealth, easiest
way is covered calls. Boom. Take it
away. And let's make it as interactive
as possible. Um with uh
maybe I'm going to mute.
>> Yeah. If you guys have questions during
like I think K or James, you can
highlight them. Like I'll be watching
the chat. So if you have questions
during like please just jump in. we can
pause and take questions when out
whenever. Um, so yeah, covered
[clears throat] calls. I know a lot of
people have been asking for this. Every
time James post a trade alerts, I try to
make a video about it. And we've had a
lot of great examples recently, uh, for
covered calls with ALAB and Tesla. And
so, uh, we're going to go over those
examples and how everyone can get
started. Okay, so here's our agenda for
today. If I can keep going. Um, so we're
going to talk about I I'm going and this
this angle is I'm going to try my best
to go from if you know zero um and we'll
quickly ramp into covered calls. So
absolute basics of calls. Then we're
going to talk about the difference
between long and short calls. We'll talk
about covered calls. We'll jump into the
charts after that and look at some of
the settings. Mean reversion is key
here. Okay. And then I actually have a a
portion because a lot of people don't
even know how to um [clears throat]
place a trade and I know a lot of people
are on fidelity. I personally I don't
like fidelity but um I wanted to show
how you can do that on fidelity um mean
[clears throat] reversion a little bit
more about mean reversion back testing
as well and then we'll go through some
examples and then position risk
management. Okay. So a lot to go through
today but I think you guys will find
this interesting and useful. Okay. So,
let's keep rolling here. So, uh, a
little bit of terminology before we get
started here. Intrinsic value versus
exttrinsic value. You're going to hear
this a lot, uh, when it comes to
options. And you just have to remember
that if there exttrinsic value is your
time value, okay? And intrinsic value is
the actual profit if you were to
exercise your call option. Right now,
very, very basic example. If we were to
go look at the Tesla chart, okay, Tesla
is currently trading at $455, let's call
it, okay, 455. Let's say that you had a
$400 call and the value of that call,
let's call it 80. Let's just say it's
80. If we are trading at 455, you have
$55 of intrinsic value. Okay? Well, your
call's worth 80, right? because there's
potential there's probably still time
left and there's potential that it's
going to keep going up. Okay, so your
exttrinsic value is the is the extra.
Okay, it's the volatility. It's the
time. Okay, so you would have $25 of ext
exttrinsic value on that call option.
Okay, so that's the difference between
intrinsic and exttrinsic. When we sell
calls, we are typically almost always
selling 100% exttrinsic value, time
value. Okay? And we'll get more into
this as we keep going. Okay? So, that's
intrinsic versus exttrinsic. Some other
basics here. Your strike price is the
predetermined price at
>> I'd like to add add something very
important before you get into covered
calls. A a big part of um what I like to
do as well is buy leaps. You know, you
sell short-term stuff, you buy long-term
stuff. Easy way to think about it. But
if you are buying LEAP standalone, try
always buy some intrinsic value. Never
ever buy alltime value unless of course
you see something like Tesla falling to
$106 and you know it's going to mean
revert and you want to buy as many calls
as you can. Then you buy a truckload of
$140 calls out of the money. That's the
only exception. So that's very important
to wrap your head about. Think about
you sell time you buy intrinsic value.
Always remember that everybody. Sell
time buy intrinsic ma value. And in
investing and trading all the money is
in the selling. You don't make diddly
squat until you start selling something.
So my two cents.
>> Thank you. Yeah. Whether it's selling
options or selling shares, right? You
don't make any money until you sell. Now
we don't really always want to sell
shares. So that's why we can sell
options instead. Okay. We'll talk about
that. Um, a few key terms here. Then
we're going to go into into buying
options. What James mentioned, uh,
buying leaps. Okay, so your strike price
is the predetermined price at which you
can do something, right? So if in in
this picture, right, the 19250 call is
saying that this person can buy shares
at the predetermined price at 19250.
Okay, you always have an expiration
date. That's fairly simple. And the
premium, okay, the premium is what you
are paying for the call option or if
you're selling, it's what you are
receiving for the call option. Okay, so
some basic terminology there.
Now, call options. We talk a lot about
LEAPS here in this community. Okay. A
call option gives you the right, okay,
the right to purchase shares at a
predetermined price. It's almost like a
placeholder or like a rain check, right?
Like if you buy the $300, right? James
bought a ton of $300 calls on Tesla.
What does that mean? Well, no matter
what the price goes to, assuming it's
above 300, right? If you have the $300
call, if it goes to 2,000, which we all
hope it does, then you can still buy
shares at 300, right? So, this would
have an intrinsic value of $1,700,
right? And the reason why we would want
to do this is there's a lot of leverage
in this, right? You you you pay a
smaller amount to control a 100 shares.
Uh and then in the in in hopes of price
going up. Okay? Now, nobody gives you
this contract for free. Okay? You must
pay a premium upfront. So maybe the $300
call costs you $100
debit per share. Let's say remember that
everything is times 100. So, if it's
$100, it' be $10,000 for this contract.
Okay? If you buy a $300 call and you
paid $100 for it, you need price to be
at least above 400. At least above 400.
Okay? Because if we go up, let's say we
only go to 350. This only has an
intrinsic value of $50. Well, you paid
100red and you made 50, right? So, that
that wasn't great. That that's not a
winner there. Okay. So, you need this to
go up quite a bit. All right. So, this
is again this is a buying a call option
is that you have the right to purchase a
100 shares at the predetermined price or
at your strike price. Okay. So, let's
keep rolling here. Now, there is this as
we know and as James always says, this
is a zero sum game. There's always a lo
for every winner there's a loser. Okay?
And so um so let's talk about this and
key takeaway here. Before entering any
trade, ask yourself why would someone
take the opposite side of this trade?
This perspective helps you identify risk
and opportunities you might otherwise
miss. Okay, so one more example here.
Actually, let's keep let's go one more slide.
slide.
Selling calls is the other side. Okay,
so let's go to my my whiteboard here
that I like to use.
There is always a a buyer and there's
always a seller. There's always two
people. Buy, sell. Let's say that there
is a contract, right? We used our $300
call. Here's our $300 strike. If you're
buying this leap, right, you are paying
the seller the premium. Let's call it
$100. And in return, the seller is
giving you this contract. They're the
ones that is signing up to give you
those shares, right? So, let's say,
let's say, let's just pretend price
actually does go to 2,000 one day. Okay?
And you're like, great, I'm going to
exercise my contract, right? And I'm
going to buy these shares for 300 even
though price is 2,000. Well, who is
giving you those shares? And it's the
seller, right? It's the seller that has
signed up to deliver those shares to
you. Okay? So, there's always a zero-
sum game. So if if we look at like some
of the risk here, right? If and let's
let's type this down here.
Um [clears throat]
your break so if you paid $300 for your
call and you paid $100 for it, your
break even break even on this trade is
$400. Your risk again as a buyer is 100.
It's what you paid.
Your max profit
is infinite. Okay, this is the profile
of the buyer. Well, this equation needs
to be balanced. If there's if you can
win infinitely, that means someone can
lose infinitely, right? On the other
side, because they have to deliver those
shares to you. So, if we think about
this from the perspective of the buyer
or of the seller, sorry, of the seller,
okay, if price goes to 2,000, what do
you need to do as the seller? Well, you
need to go out to the marketplace,
right? The marketplace, whatever. And
you you need to buy shares for 2,000.
And you got to turn around and sell them
to this guy for 300. So, you lost 1,700,
right? So, this equation is always
balanced. If you win, someone else is
losing. If you lose, someone else is
winning. Always, always, always, always,
always. Okay? And this is why, right?
This is a good example, by the way, of
why we don't sell. We don't sell leaps,
right? We don't sell two years out
because we don't know where price is
going to go. Like we don't even know
where price is going to go 30 days from
now, let alone 600 days from now. Okay?
And so we don't when we're selling
options, when we're acting as the
provider here, we want to sell short
time. Okay? [snorts]
All right. So that's a quick overview of
buying versus selling calls. Now, a few
notes here. Um, selling calls is
directional. Okay, it's you price,
right? You don't want price to go up.
So, you either want it to be neutral or
or go down slightly. Now, it is a
limited hedge. It's okay at hedging.
It's not perfect. It's but it's okay,
right? So, for example, if we were to
jump into the charts here and we go look
at this major major draw down, right?
Like we uh went up to 480 all the way
back down to 220. Let's say that you
sold calls up here and let's say you
brought in $30 on the calls that you
sold. I mean, you know, we went down
$250 from there. And so, yes, yes, you
you brought in some money and you hedge
yourself a little bit, but right, if we
have if we have a huge huge draw down,
then selling calls is not a great hedge,
but it brings in something. Okay, so
just keep that in mind as well. And as
one of one other thing I want to mention
there too is that was a very unusual
circumstance because of Doge and the
retaliation against Elon Musk.
>> But what when the even though it may
seem like you sell a covered call for 25
bucks against like a $500 stock,
>> if you're doing that every six weeks, it
really adds up a lot. That frequency
really supercharges your bags. So focus
on again not waiting for some people
make the mistake of I'm going to sell a
cover call every 30 days. No, you wait
for the chart to tell you and we'll
we'll show you exactly how to do that in
a while as well. But just those big fat
pitches that come along and I use the
term from Warren Buffett, may he retire
in peace. Um but he waits for those key
moments and that's what again one of the
biggest virtues in investing is
patience. Patience. Patience. Have a
sticky on your bathroom window.
Patience. Wait. Because then your ROIs
is so much better when you're so much
more patient. Don't let Don't think you
have got to sell covered calls on a
regular time basis. You sell when the
market tells you to do that. The same
thing. Same thing for a dip in price.
That's when you sell a put. Spike in
price. You sell a call. It's all you
need to know. It's not hard.
>> Yep. Yeah. And I was I forgot to mention
that. A lot of people ask me like,
"Well, I want I want a I want a covered
call strategy that I can do every 30
days no matter what because I'm trying
to replace my income or whatever." And I
think that's and and then people have
shown me like spreadsheets before of
like, well, Tesla never moves more than
x% a day or whatever. And that I I just
completely disagree with that. So, like
James said, look at the chart. You have
to use mean reversion, right? And and we
don't just sell every 30 days no matter
what with our eyes closed. Like you have
to wait for the prime opportunities.
>> And and and by the way, another quick
question here. Yes, it's not a if if you
have a stock that's going to fall 50%. A
covered call will not save you. It'll
alleviate the damage, but it's not going
to save you. If you think something
really bad is going to happen, odds are
the whole market knows that as well. And
odds are things like insurance, which
would be a put to buy, will be very expensive.
expensive. >> Yeah.
>> Yeah.
>> But if you do feel that something is
going to come, that could be really ugly
or really nasty, then instead of selling
a cover call, you could actually sell a
cover call and you could buy a put as
well if you want to protect yourself.
And you could buy that put out of the
money, too. So, imagine imagine you got
a $100 stock. This get probably getting
a little too deep here, but for the
advanced traders, they'll get this.
Imagine a $100 stock. Um, you sell a
call for 20 bucks. That'll take you down
to 80. But then, if you think some
something really is going to happen
over the next 12 weeks, you buy the put
with an $80 strike or below. And that
way, you insure yourself down below that too.
too.
>> If you have that information.
>> Yeah. Like if you had a like so we'll
we'll go back to this Tesla here. Let's
just say you had a crystal ball and you
knew this was the exact top. Would you
sell a call or would you buy a put? And
the answer should be both. But let's
just say you should buy a put to hedge
yourself. And the reason for that is
when you sell a when you sell you sell a
put or you sell a call, the most you can
make is the premium you received. That's
it. Like you think about the car like
you think about car insurance company.
How do they make their money from you
paying them a premium every month?
Right? That that's how they make their
money. And so it's the same thing when
you sell a call or you sell a put, you
are capped on how much you can make and
you're capped to the premium. So in this
case, right? Again, if you sold a call
for 30
uh and we dropped 200, then you only
made 30, right? But if you buy a put,
then you you make as much as the put
goes down, right? As much as price goes
down. Okay. So, that's [snorts] why
covered calls are neutral strategies to
slightly bearish. If we're like super
mega bearish, then you know, you should
be buying puts. Uh, sell a call, buy a
put, whatever. Okay. [snorts] All right.
[clears throat]
Okay, perfect. Thank you.
All right, great question. And options
goddess. Yeah, shout out to Options
Goddess by the way, Laura. Um, great
options trader callers, right? So, look,
if you if you want to learn more about
how to protect your portfolio, callers,
she also has a great class. And I also
shout out Josh, by the way. Josh trades.
He also trades for a living and he sells
calls all day long. So, Josh is a great
options trader as well. Okay. [snorts] All right.
All right.
So I wanted to go through an example of
just a just very very basic example of
how you would do this in in practice. Um
okay so I I brought up a uh this I think
my wife this was my wife's old
retirement account when she was working.
Um all you have to do so you have to one
you have to make sure you have options
permissions. Okay that's that's number
one. Number two, the way that I would do
this is for under Fidelity, there's a
news and research um tab. You go to
options here. And now you have your
options chain.
Once you're on your options chain, okay,
we can type in Tesla or whatever,
whatever you're you're going to sell it
on. And this brings up the options
chain. Now, I know the options chain
looks kind of scary when you first look
at it because there's all these things
going on. This is always true. This is
pretty much always true no matter what
options chain you look at. Calls on the
left, puts on the right, strikes down
the middle. Okay, what we care about is
open interest and delta. That's really
the only things we care about. And of
course, the price. But if I scroll down
and we can pick our different dates that
want to that we want to pick from. Okay,
and so this expires in four days. So our
typical threshold is 30. when we get
these big mean reversion spikes, we
we're looking for 30 to 45 days. Okay,
so maybe I would pick I mean, we're
going into some nuances here with Tesla,
but if all all things aside, here's our
32-day expiration. Maybe we would want
to go out to February 20th to have a
regular instead of a weekly. There's
going to be more open interest on the
regulars. Now, uh we can scroll down
here and again, this is just very basic.
All I'd have to do is if I click on,
let's say I want to sell a $500 call on
Tesla. This is a 33 delta and I'm going
to get $15. Okay, let me highlight this
so everyone can see. Um,
sorry. Right here, this box here. Okay,
$500 call. [snorts] I'm going to get
about six $156 for it. Okay, plenty of
open interest. If I look at 13,000
contracts, okay, you want to make sure
that there's plenty of open interest.
You don't want to be trading by
yourself. Okay. And the delta is 33.
Typically, we would say 20 to 30 delta
when we're picking this. So, this this
might be a little bit aggressive. Now,
what when we do this, what are we
saying? We're saying I don't think price
is going to go above 500
plus the premium we received. Okay? So,
500 plus I'm covered. Remember, I'm
covered for $15 more dollars up to 515.
So, I don't think price is going to go
above 515. Okay? And how would we know
that? Well, we'll get there in a second,
but with mean reversion. Okay? So,
[snorts] this is the very very basics of
doing this on Fidelity. I would hit sell
here. Okay? This would bring up your
order window and this is really
important here. Pick your account. Okay.
This your action here is sell to open.
You are opening a new position. I know
people get confused with this, but you
are selling to open a position. Okay?
So, sell to open. One contract controls
100 shares, sell on a call, pick your
expiration, pick your strike, and here's
your limit price. Okay? Now, remember,
let's look at this. Make sure this looks
right. Does this look right? And I'll
say yes. Your max gain, the most you can
make is the credit received. The most
you can lose is infinite. Okay? and your
break even is at 5:15. Okay. Now, if our
max loss is infinite, this is why we
don't do naked calls. Okay, this is why
we always do covered calls. So, let's
look at the math behind and and what
does it mean to be covered? Well, if you
own the shares that if you own 100
shares, that is a covered call. Okay,
you're selling a call against your
shares. Okay, let's go back to our
example here. [snorts]
Um, if I have a if I decide to sell a
$500 call and I paid and I got $15
credit for this, right? Remember, I'm
short here minus one. I'm short a
[snorts] call. If price goes up, let's
say it goes up to 550 hypothetically,
right? What is this contract now worth?
This contract is now worth 50.
Okay, 500 to 550. This has an intrinsic
value of 50.
I am now losing $50. Okay, I'm losing
$50. I received a $15 credit upfront.
So, the total loss on this trade would
be $35.
Okay. Now, remember, if you you have you
also would have a 100 shares and let's
let's just hypothetically say you you
bought a 100 shares immediately and you
bought 100 shares at $500. Well, what
happens if this goes up to 550? Well,
you're right up to 550. Your shares are
up 50. Your contract is down 50, right?
So, those cancel out. So, this is what
it means to be covered is you own the
shares and your shares are appreciating
at the same rate that your call is
losing. Okay? So covered calls, you only
you only want to sell calls on shares
that you own. And I'll add to that as
you're getting started here, like don't
if you have a thousand shares of Tesla,
don't sell don't sell 10 contracts,
right? Like don't sell contracts on your
entire position. Sell if we're if we're
following the 8020 rule, right? 80%
hold, 20% trade. Following the 8020
rule, you should only sell two
contracts, right? Because two contracts
controls 200 shares. That would be 20%
of your position. So as you're getting
started just be very careful because
because what if you lose right like if
you lose this and price does go up to
our 550 remember remember our two people
right buyer and seller you have to
deliver those shares to the buyer right
and so you're going to take your 100
shares you're going to sell them and
you'll be forced to sell them at 500.
[snorts] All right. So, um,
let's take a look at a few examples here.
here.
Okay. So, we're about we're about to get
into mean reversion. Now, James, feel
free to jump in here as the math guy,
but standard deviations. Okay, mean
reversion measures standard deviations.
And here's my silly example that I
thought of, which I think is accurate.
If you're at an airport and you're just
people watching, [snorts] how many
seven-footers are you going to see? Not
very many. 7- foot tall guys, right?
You're not going to see very many,
right? And so there there is an average
height for uh males and for females,
right? And 95% of people are going to
fall within two standard deviations of
the mean. Okay? So if you see a
sevenfooter that's a that's a major
outlier right there are not many
sevenfooters in the world and so
similarly when we see price
two standard deviations or higher right
that's that is a anomaly typically now
caveat to that if a basketball team
walks off the plane you might see more
sevenfooters right and so similarly mean
reversion right two standard deviation
you got you have to you have to
understand like did I just see five
sevenfooters because there was a
basketball team or was that just crazy
or what? And [snorts] so was there a
major news catalyst, right? Did Tesla
blow earnings out of the water and were
ripin face, right? So you have to be you
have to be careful about um just because
it's plus two doesn't mean it's for sure
going to go down, right? So [snorts]
just be aware of that. Um but those are
standard deviations. So when we look at
the chart and we look at mean reversion,
okay, mean reversion is the gold
standard. It's our northstar for selling
calls. Okay, mean reversion is going to
tell us when price is out of the
ordinary. Okay, significantly out of the
ordinary, right? And so IDs is what mean
reversion comes from.
And so um let's go take a look at the
charts here. Okay, now the way So
[clears throat] here's our The way I
like I like to explain mean reversion is
real simple that you know everybody can
relate to it's like a rubber band. So if
you imagine the rubber band is say a
ring this big and you can stretch it to
double the size. But how often do you do
that? U but if you imagine the normal
size of the rubber band being that ring
if it doubles that's an unusual
situation means a lot of pressure is
happening. And what happens after you
release it? It mean reverts. So
[laughter] the easiest way to think of
it is just the rubber band. And the more
it stretches, the more it's going to
snap back. That's it. And and w with all
this stuff like there was another
question that came up in the chat is um
I still don't understand covered calls.
I gave the Coacella example. Mhm.
>> You know, if it's a big it's a big
concert in near Los Angeles every year
and people rent out their houses for 10
times what they normally get for it. If
you get 250 bucks for your house a night
regular off season, that's okay. But
during Coachella, you can get two and a
half thousand. Think of those you you
you own the house which is the stock and
then when there's a busy weekend like a
big spike the rubber band like the
concert that's when you rent out you
sell the call you rent out your house
you get the money up front and then
everybody's gone a weekend later or a
week later and then the price mean
reverts you take your cash and you walk
away. So just a simple way to think
about in two crude ways. Mean reversion
and cover calls. Think of mean reversion
being the rubber band and the cover
calls being the house renting it out. >> Yeah.
>> Yeah.
>> Is that too crude?
>> No, I think that's great. And you and
really like think about the conf the
confluence model is same idea, right?
Like m start to lower. Here's your
rubber band, right? Here's it's tight
and look at this major expansion. Your
rubber band expands a ton. Then it has
to cool off, right? So it cools off. It
goes sideways, sideways, sideways. Great
covered call here, by the way, because
we just go sideways. It's great. We get
a dip. Okay. And then we pop again.
Okay. And so, same thing back here,
right? We're narrow, narrow, narrow.
That huge huge expansion.
I know this was crazy, but
>> yeah, by by the way, um I I look at all
the charts
almost every hour of every day, and we
had exactly that. You can almost tell,
you can see some of my posts about
Bitcoin over the last week. you know,
the loose trend all of a sudden, you
know, for the first time since 1010
October 10th, black swan day for crypto,
it went blue. Another thing you saw on
the confluence model was it was
contracting. And when you have the
cloud, the confluence cloud contracting,
it's only a matter of time before it
breaks. It's either going to break to
the upside or the downside. And that's
where macro comes in to really analyze
all of the different data points to tell
you which way it's going to break. And I
was very certain it's going to break to
the upside. So there's the compression
of the cloud. So these are little things
that um you have in your in your back
wallet. And remember as well the the
more data points you have that are
mathematically backed with back tests,
the higher the odds of you winning. It
puts the gods on your side and that's
what we're going to get into right now.
>> Yeah. So, if we were just to take a look
at the back test, right? Like I think
Tesla Tesla's such a good example and
we've had great examples uh recently of
James selling covered calls. Okay. Um
we'll take this as an example. Okay.
Well, first if you look at the back
test, 100% win rate on the back test. If
you look down here on the mean
reversion, 71% on the mean reversion.
Now, [clears throat] by the way, this
this the mean reversion is is even
better, I would say, than the actual win
percentage that is shown because this
win percentage, and James, correct me if
I'm wrong, is is accounting for every
single signal here.
>> Yes. Exactly. Yeah.
>> Yeah. So, if you were to just and not
just eyeball, but you should go back and
do do your own handested back test. If
we set our our range right to plus two, minus2,
minus2,
if you look, if you just eyeball this
right here, here, anything that's plus
two, this is like a 100% win rate. Every
single one of these, like look at this.
Every single one of these has been a
good signal. It's been a great signal.
Okay, [snorts] so um back test is even
higher than I would argue than what is
shown uh here. So, make sure you're back
testing, even if you're doing manual
back testing and or or practicing by
yourself, right? Go into the replay
tool, play it out. What What would I do
here? Sell a call. How would that go?
And um practice practice practice
practice. Okay.
>> Yeah. You can also play with the ranges,
too. So, if you want the big fat
pitches, you can change your red and
your green bands to your number of
standard deviations. And you can say,
you know what? I'm going to wait. I
don't mind having four or five big
trades a year because I know they're
going to pay me a ton of money. And you
can tweak those ranges down with
standard deviations and wait for those
exact big fat pitches in baseball or if
there's another like what was an easy
layup shot in basketball or a touchdown
in football. I'm really bad at sports,
but those types of sports. Um, but
that's what you wait for and then you
just wait for those big special moments
and they're key. We've got options
goddess here too. She knows exactly what
I'm talking about as well. So,
>> yep. And so, you can the way that you
can change this and again, if you just
wait for the plus twos and I would
really highly recommend this for people
that are just getting started started.
We're not here to trade every day. We're
not here to Right. Yeah. We're not here
to trade every day. We want to wait for
the the prime moments. Okay. What are
the prime moments? Well, when you look
at Tesla, like let's just eyeball this.
Where are the major spikes? Right? Like
all this stuff in here like we don't
really care about. But this guy, this
guy, this guy, right? All of these
things up here have one thing in common
and they're all above two standard
deviations. Okay, so if you change you
can change your upper level here to two.
Okay, and similarly you could go minus
two um for the buy signals. Okay, here's
and now you filter out all this crap in
the middle, all this noise, right? We
don't care necessarily about all this
stuff in the middle. We only want these
major major spikes and then we sell. And
on by the way on top of this another
great reason to be selling here as well
is the premiums are much much larger
right like if you look
uh in this area sure it can be
consistent you know if you're selling at
the tops here fairly boring you're not
going to get very super rich premiums
what happened here we had this we okay
we had a break of a key technical level
right here 365 we then had Elon buying a
billion dollars worth of stock, right?
And then everyone's going crazy.
Everybody's going crazy. Everyone wants
to buy by by the stock. And so call
options go up, right? So when you sell a
call during these crazy times, you can
also think about it as you're selling to
the gamblers, right? You're you're
selling to the people that think it's
just going to go up to a thousand from
here, right? And if it doesn't, then you
just get to keep the premium. Okay? So
rich premiums when we have these big
mean reversion spikes as well. All
right? Now
um here a few examples that I wanted to
go through as well. If we come back to
here, okay, [snorts] big mean reversion
spike. This comes down and we end up
taking a second leg here. Okay, [clears throat]
[clears throat]
what do we do here? Well, I want to
first say that you probably won honestly
because if you are selling in this area,
okay, we're going to sell out of the
money. So, likely a 20 to 30 delta is
going to put you somewhere like at 380
or something like that.
>> Okay, this and by the way, from here to
the move of the breakout, that's 24
days, right? If you sold 30 days, you're
good. price went flat. It might not feel
good because you want you want price
just to tank and then you want to see
your call win, but this is still a
winner, right? This is still a winner
because 24 days passed and and and you
should close on weakness. Okay? So, this
is still a winner. Same thing over here.
Like if we come uh over to recently,
this here, let's say you're early, okay?
Right? James is the best. So, he sold he
sold the very top here. But let's say
you're not the best. That's okay. Like
me, right? Maybe you're selling anywhere
in here, 440. You're going to sell out
of the money. Maybe you sold a 470, 480,
something like that on this spike. Sure,
it'd be a little bit scary. You'd be
losing. But then this this ends up mean
reverting and going completely sideways,
right? And this goes sideways what for
three months. And so because price did
not go or exp the price didn't expire
above your strike 480. That's a winner.
That's a good winner. Okay. So, [snorts]
just keep that in mind. You don't necess
You just need price to not expire above
your strike.
>> Yeah. There's one other thing as well
that I learned a little bit later after
the 90s um when I was selling coal.
Sometimes I get nervous if I didn't nail
the top and say I sell a $100 coal and
the price spikes to 110, but I'm covered
up to 115. I used to get nervous and
roll up, but now because I trust the
data so much, I don't get nervous. Even
if Tesla spiked to 520, 524,
I would not sweat it at all. And that's
one of the things where people screw up
is they don't trust the model and they
don't trust the data and they panic buy
back. not a panic sell moment, but a
panic buyback of the call that they've
sold. Let the thesis give it time to
work out. You may not nail the top.
There might be a bit of volatility for
the next 24 or 48 hours, but chill,
relax, let it come back down to earth
because that rubber band will always
work. So, there's a little little inside
baseball tip there. Trust the model.
Don't trust your emotions.
>> Yeah. Thank you. And and we're going to
have a good example of that. uh coming
up in a second. Okay, so let's go
through some real examples here. [clears throat]
[clears throat]
Um so we have we have three examples
that I pulled from Patreon. Um Tesla
$500 call and and by the way, selling
calls also is right. There's lots of
different strategies and reasons why you
might sell a call. Okay, so [clears throat]
[clears throat]
uh and and here's three different
examples of when selling calls uh worked
out and was good. So, we have Tesla uh
just a few weeks ago, Galaxy back in
September. [snorts] Um and then ALAB
also just a couple of weeks ago, which
today Yeah. Anyways, this is a good
chart. It's a good chart. Okay.
>> Yeah, we did we did Tesla twice in the
last couple months, too, by the way.
>> Yeah. Right. Right. So, um this most
recent one, December 15th, uh James sold
a Tesla $500 call. This is like the most
vanilla I would say the most vanilla
classic standard normal strategy that
you can do. Okay, sell 20 to 30 delta
calls. We're on the 4hour chart and then
we're going to sell 30 to 45 days. Okay,
so you can see on the trade alert big
size this if we can um expiring in 39
days. Uh sold the $500 calls. We'll call
it $25 is what he got. Okay. Okay. And
then you'll see uh the stock needs to
rise another 10% for him to start
losing. So 525 was his losing point.
Okay. Let's go to the charts. This is
very very classic, very basic. Is big
spike here. I believe it was here. No, I
think it was here. Oh, sorry, sorry,
sorry. No, right here. December 15th.
December 15th. Big spike here. Mean
reversion comes on. Sold a $500 call.
Okay. [snorts] A lot of resistance round
numbers. We're going to have resistance
that everyone's eyeing 500. Likely we're
not going to go through a blast through
500. Even if we did, likely going to
mean reverts. Okay. And obviously this
has worked out and Tesla has turned over
from here. Okay. So that's your your
classic basic example. If you look at just
just
>> by the way, those leaps or those calls I
sold were trading for 180 on Friday and
I thought I could have bought them back
but I decided not to
>> just because I'm so confident in the
position. Are we going to break above
500 in the next couple of trading days?
The answer is probably not. High degree
of certainty. Um but but that was also
sometimes I do it to kind of showcase
what I do. If if I was an individual
investor, okay, if you make 80% on a
trade, don't be me. I do it for for fun.
You take your money off the table. You
sell something for $10, you buy back for
two every time. Don't wait and then you
wait for the next opportunity to sell
again. Very important to look at.
>> And you can even, by the way, you can
even you can just set a limit order,
right? Set a limit order. Buy to close
for $2 or whatever whatever 80% is on
your thing. And that way you don't have
to be looking at your chart and it'll
just go off when when price hits that.
Okay? So, that's a great great practice
closing once you are up 80%. All right.
Um, now that being said, a few a few
things about this call as well. The
expiration date was um January 23rd.
Earnings is January 28th. Okay. So, we
if we can Well, yeah, not if we can, we
should. You don't want to sell past
earnings because earnings is always a
toss up. And so, we want to avoid that
volatility, right? And let's just say
that James did sell post earnings,
right? Let's say maybe he sold in
February over here and we just go
sideways here and then something crazy
happens in earnings and we go like this.
Okay, he went from winning being up 80%
90% to now losing because he decided to
hold through earnings. Okay, so just or
like any other major events like the Wii
robot event or like whatever just be
aware of major catalysts, major news and
you don't want to cross over earnings
being the main one. Okay. [snorts] Um,
few other great examples on Tesla. Just
look at the mean reversion here. Great
sell here. Right, this one's a little
bit early. That's okay. Right here, your
mean reversion comes on at 350. We get
one more push higher to 365
and then we roll over. Okay. So,
>> yeah. By the by the way, uh, the
earnings note is very very important. I
don't give every reason for the times I
choose but it was very very important
for me for that strike expiration to be
inside of the earnings date because with
Tesla it's about 72% of the time after
earnings the stock will fall. I've
analyzed every single earnings call and
even if the news is great the stock
sometimes still falls. If the news is incredible
incredible
or the forward guidance is off the hook,
the stock can pop. But remember, 72 73%
of the time the stock will fall.
>> So, but it's also very dangerous because
we're going into unknown territory where
the world is changing very fast and
Tesla is about to do crazy things over
the next two years. So, be very careful
of what I call jumping in front of a
freight train. This thing could pop to 650
650
if something happens. If they say, "Oh,
we just deployed 3,000 cyber cabs across
Texas and California." Boom. Game over.
Wall Street will have a freak out and
they'll be buying bags like there's no
tomorrow. And then you're on the wrong
side of the trade. So, be very careful.
This is the this is the dark side of
cover calls, getting caught out. Okay?
So, make sure you're when you're selling
a coal, make sure you look out say 45
days and it's going to be a choppy quiet
period without anything that can rock
the boat. [clears throat]
>> Okay, great. Thank you. Yeah. And well,
and we what Elon and Trump and Trump are
we're at dinner again recently. Like you
just never know, especially Tesla. Like
especially Tesla, you just never know.
Government contract, whatever. Who
knows? Okay, that is Tesla. Let's go
into ALAB. Maybe we can get some
commentary on here as well. This is more
of a range rider. Okay, this was a range
rider. So, we look at the chart here.
Pretty clear that ALAB continues to
range between our bands here. Okay,
somewhere in here. So, you can see up,
down, up, down, up, down, up, down. And
by the way, look at what happened today,
right? Come up and then we're, you know,
right back down into the range. Okay, so
this is not your typical your basic
4hour strategy, right? This is not your
plus two mean reversion, major spike,
whatever. This is a little more calm.
This is going to be when price is stuck
in a range and I believe James used the
15minute chart for uh for this. But you
can see if you 63% win rate on the
confluence model. You can see good sell,
good sell, good sell like all of these
cells. good sell as we come out of the
range and back down. Uh 15 minute chart
ends up being pretty good here as well.
And I believe yeah, if we look at the
mean reversion here, see, and by the
way, shorter time frames, you'll want to
adjust your standard deviation uh
levels, right? Like you're not really
going to get a plus two.
>> It was the one hour on AAB.
>> It was on the one hour. Okay.
>> And it's just it's shooting fish in a
barrel. You're not seeing a lot of
signals firing. I see a lot more than
you. Is your noise suppression on zero? Um
Um
>> maybe. Anyway, not to worry.
>> Anyways, yeah, I Yeah, I've noticed
that. But anyways,
>> my trading style is always aggressive,
too. So,
>> you had it on neutral.
>> So, [clears throat] anyways, range rider
coming into resistance. Resistance
usually continues to be resistance here.
And if it didn't work out, right, he was
covered until 198. Okay, where's the gap
fill on the chart or where's the
resistance likely going to be? And the
next one is right at 200, right at 198,
right? So, this is a lowrisk. This is
very likely going to work out unless
something crazy happens, which usually
it doesn't. Okay, last example here is
Galaxy back from September 11th.
>> Open up the three. Didn't realize it was
911 every day.
>> Yep. So, opened up the third leg of the
stool. Um, sold the January. So, maybe
talk us through this one a little more.
I'll bring up the chart to refresh your
memory. This one's a little bit further
out. This was 90 days out. Okay. So,
this was September. Sold January of 2026.
2026.
Sold Galaxy for 550. Huge premiums.
Stock was 29. So, he's covered down to
18. So, let's look at the chart. This is
an interesting chart because if we look,
I drew my arrow here. Uh, big move to
the upside. There's your mean reversion
spike. Okay, so everything's going to
plan. This is this is the what we're
doing for you'll notice though, by the
way, he said, "I hope to get called out
if it keeps going." So, he's okay,
right? If we kept going, it doesn't
matter. That's what we wanted. We wanted
to sell this position anyways. And I
would recommend that for some people,
too. Use it use covered calls as a way
to exit your position, right? Because a
lot of us have a hard time selling. Sell
a covered call. maybe sell at the money
and just plan to get called out. Okay.
So, maybe talk us through a little bit
about this. What What were you thinking
as this kept going up? Um,
>> yeah, nothing at all. Again, don't sweat
it because the goal was to get called
out, but you know, that's just what
happened. But I do want to say something
as well is not only you can let the
market help you exit a position aka
profit take but also the opposite of
doing that is you can build a bag by
selling puts. Even if you sell a put too
you may not get put the stock if the
stock doesn't fall but if it does you do
and you get it cheap. So I want people
really to wrap their heads around
selling selling selling puts selling
calls selling puts selling calls there
huge amount of money to be made in that
buying and holding it works for
asymmetric assets but there are things
uh behind the scenes that you know like
for example Galaxy I personally think
Mike Novagratz
is a bit of an idiot so I don't want so
I look very I'm very focused on the
leadership of companies I got into that
position because they had a very good um
crypto basket but above 30 bucks $35 it
wasn't that attractive for me and was
it's 2650 now so I don't know but also
you have to bear in mind um again taking
into timeline I thought there would be
the end of a bull market as well by then
which didn't happen because we never had
one in the first place so that's why
it's important
yeah also this question here from coin operated
operated
Selling puts is the same as selling
calls. It's just a different end of the
mean reversion. Can you show that on the
chart for some other assets?
>> Yeah, we can show this even on G. Now,
now selling puts I would I would say
>> like Broadcom today is a great example.
>> Great example. Broadcom Avgo.
>> Oh, okay.
>> I did this morning is a classic example
of the opposite of selling calls. I sell
calls on price spikes. I sell puts on
price dips
>> and I've I've wanted to get a piece of
Broadcom because uh I analyze I AI a lot
and their TPU business is huge.
Um and that's why I need some exposure.
I have Nvidia but I wanted some hedge
for my Nvidia and that is my Broadcom.
So even though it's not rock bottom,
I'll go in twice the size, three times
the size of the allocation, uh today was
doubledigit leaps in terms of number of
contracts. If it does dip to 300, that's
my next next layer. And my next layer
after that is about 271. So sorry,
there's a dog here in my lap. Hello,
dog. Say hi. Uh if people wondering. Um
so that's kind of uh the the exact same
thing. coin operated selling puts. Same
as selling calls, but just use the
meaner version to do that.
>> Yeah. And
>> you have to go in a much shorter time
frame too to see the broadcast like 3
minutes, five minutes. We'll get it to you.
you.
>> Yeah. Short time frame on this one. And
it but it Yes. So, and and this is a
good example too because right James
maybe talk us through I I about this as
well. You pick January 2027 only a year
and normally Tesla things like that you
pick uh two years or more. Why? Why just
a year? Uh the pricing for the puts was
really generous. I looked at a year uh
and I looked at another two years. Uh it
didn't matter. I know what's going to
happen in 2026 will be where I want to
be, but I also want to get allocated
broadcom in January 2027 and I try to
minimize my cash outlay all the time. So
I again I do this for sport. Um but it's
also a lot of fun. It's for me it's an
intellectual challenge to trade the
markets. I entered a position today
where as long as the price stays above I
think was it
>> 34 myself. I got a lot of numbers in my
head. Um
here we go. As long as the price stays
above 336 I make money. The price is 342
right now.
Okay. Because the pricing on and I know
Jacob when you looked at it later it had
already gone up six bucks. Mhm.
>> And also when when you have a stock that
tanks 15 bucks in minutes at the open,
[clears throat] it just ted. Zoom into
like the one minute or the two-minute
chart, you'll see that huge tankage. All
of a sudden, the market makers that
price the options and the volatility of
the stock spikes up the put price.
Everybody's panicking. Everybody's
buying insurance. Imagine you're in
Florida and there's a hurricane coming
your way and you're uninsured. What are
you going to do? You're going to call
your insurance agent. I need to buy
insurance. It's the exact same thing
that happens with stocks. Big spike. I
don't know. Can you go into the one
minute or something?
>> Yeah. Yeah.
>> You'll see it or the five minute. You
see that huge spike? Uh
>> let's see. Right here
>> at the open. That big.
>> Yeah. This is your opening.
>> This is This is the hurricane coming to
town. This is people scrambling to buy
insurance and freaking the hell out.
This is when I sell the put. And then I
look at the uh call options and try to
find the right balance. So no matter
what happens,
I can make a profit. Even if the stock
stays at where I sold it at 326, 327 for
the next year, I'm not losing any money.
That's what I try to do. And minimal
cash outlay as well to have exposure to
this asset that I was looking for.
>> Yeah. And there and and reminder for
everyone here too there's like there's a
difference to he sold puts as part of
buying a call like doing a synthetic
long you can so that that's longer time
frame right and that and that that
selling the put really helps pay for
that call that that's why the break even
is so low okay you can also sell puts
similar to covered calls for 30 to 45
days same idea right is like if we were
to go to back to the Tesla chart like
when was the last opportunity to sell
puts And it was perfect. It was right
here. Okay. Right here. It's just the
exact opposite. Minus two. Okay. And and
quick lesson right on puts here. Buying
a put buying. Okay. Buying a put means
you can sell. Let me get my pencil out
with my people. Okay,
here's my people. What is buying a put?
You got a buyer and a seller. And let's
say you have a $100 put. Okay. [snorts]
What is buying a put? Buying a put is
insurance. And so it's if you buy a
call, that means you can buy shares. If
you buy a put, that means you can sell
shares. Okay? So if you buy a put and
price goes, let's say you bought a $100
put and price goes down to 70. Well,
great. You protected yourself because
you can still sell your shares at 100.
Okay, great. Sell your shares to who?
Sell your shares to this guy, the
seller, right? Okay. So, when you're the
seller, the car insurance, I think
analogy is better here than it is for
calls because when you buy car
insurance, you pay the premium and they
insure your car in case of disaster,
right? And then it's disaster hits and
then you can you can cash in on your
premium or on your um insurance policy.
Okay? Same thing here is if price
crashes, well, you are the insurance
company, so you have to cover the
difference, right? So, when you sell
puts, when do we want to sell? Well, we
want to sell during peak panic. Like,
like James mentioned, peak panic. When
the hurricane's coming, insurance is
really, really expensive. Okay. So, when
we get down here, everyone's freaking
out. Everything's everyone thinks we're
going to go lower. Mean reversion prints
the perfect dot at the bottom. Okay. And
same thing, you can sell a little bit
out of the money. 2030 delta out of the
money. And this ends up turning back up
and you win. Okay. So, it's the same
idea. So if you wanted to do this, sell
puts here, sell calls here. Sell call,
sell call, sell put.
Okay. Um, so two different ways to sell
puts. Either go the long term for the
synthetic longs like James or the 30 to
45 days with the same idea here. Okay.
Right. So that's selling puts. Um,
just going to wrap up our slides here
and then and then we can just take
questions from the chat. Uh, if we want
to keep rolling. Um,
so, uh, a few reminders here on our pos
on our position management. Okay, avoid
your major catalyst. I know I mentioned
this before, right? Avoid selling past
earnings, right? Make sure you go look
on the calendar. Trading View is really
good for this. Just look at little E
down here at the bottom. This is where
earnings is every time there's an E.
Okay, so the next one coming up is
January 28th for Tesla. Okay, so just go
look for your E. Um, so avoid your major
catalysts like that or like if we have a
major announcement and then we keep
spiking like you just have to be aware
like is this is this asset really going
to keep going because this time is
different. Is this time actually
different? It's hard to decide. Take
profits early. Okay, take profits early
like James said 80%. So we want to avoid
round tripping, right? Where we were
winning and then we were losing. Okay,
so you set your limit order. Um, if you
sold it for 10, buy it back for two.
Okay. And then the last thing that we
didn't really talk about, but we'll just
touch on real quick is rolling. Like
James said, if you trust the tools, then
he doesn't really roll anymore because
usually we do come down. Um, now if you
if you really have to roll or you want
to roll, how do we you need to get
enough credit to cover the loss, right?
So, how do you do that? Well, the way
that you do that is you sell more time.
Okay? You sell more time and rolling is
just fancy term for buy a closing your
position and opening a new one. That's
it. Closing a position, opening a new
one. So, if you need to um you can roll
further in time, although these tools
are quite good. And and on that note too,
too,
um also only sell sell on things you are
willing to get called away on. Okay. Um
[clears throat] so just be very careful
when when you're doing that. All right.
So that's it for the slides. Uh key
takeaways here. Mina version is great.
Okay. You can you can use your existing
bag. You can use your house to generate
rent. You can use your your shares to
generate return. Okay. Uh what can we
then do with the return? Fine. If you
have to use it for day-to-day expenses,
whatever. But if not, right, what can we
do? We can take that like let's go back
to the chart. If you would have sold
calls up here,
okay, up here at 500
or actually back here, let's say we sold
back here in September, right? On this
on this mean reversion dip, you just
take all your premium and you go buy
more shares, right? That's a great this
is a great way to continue to grow your
bag. Okay? Uh is it is a slight hedge,
right? If you're neutral to slightly
bearish, it's good, too. And every time
you sell premium, you're kind you're
effectively lowering your cost basis on
your shares just by over time collecting
more and more and more premium. Okay, so
that's it for the slides. We're happy to
take questions um from the chat, but
what delta do you like to sell? Uh
James, what yeah, I I'll leave that one
to you. 20 to 30 delta is usually what
is uh usually what we sell, but I know
sometimes, James, I've noticed you sell 45.
45.
>> It it it depends. Uh, literally I I will
scan an option sheet like you showed earlier
earlier
>> and I will find the optimal juiciest
price. I don't even need to look at
Greeks because I can calculate it all in
my head because I've been doing it for
35 years. So, um, yeah, the higher the
better, the higher the spike the better,
the juicier the premium. Don't get too
bogged down in the Greeks.
>> Uh, because every asset has different
volatility. Like for example, if you
look at mean reversion on the S&P 500
versus Tesla, I mean, you can only play
tiny tiny movements in the S&P 500
because it's so stagnant compared to
something like Tesla. So, this is
probably if you go on a lower time
frame, you'll see what I'm talking
about. But it doesn't move a whole heck
of a lot. You see, it doesn't never goes
outside those bands unless of course you
get a black swan. So again, the point is
every asset is different and once you
know how the black shores model works,
you know how the market makers price
things and you can see I like to focus
heavily on pricing anomalies. For
example, this morning the puts were so expensive
expensive
uh and I could get a big position of an
in the money call by selling time. So
yeah, I look at this and I'll be able to
tell you in a second which are the best
ones to buy and sell because I've been
doing it for so long.
Yep. So,
yeah, good answer. I would I would say
if you're if you're just getting
started, like be conservative. You can sell a 10 delta. That's like way that's
sell a 10 delta. That's like way that's that's like way conservative if you sell
that's like way conservative if you sell a 10 delta. Um, and [clears throat] so,
a 10 delta. Um, and [clears throat] so, and as you get more experienced and you
and as you get more experienced and you start to understand how the pricing
start to understand how the pricing works, you can slowly inch your way
works, you can slowly inch your way closer. Um, now remember
closer. Um, now remember like the $500 call that James sold
like the $500 call that James sold [clears throat] sounds aggressive at the
[clears throat] sounds aggressive at the time, but you have to remember that he's
time, but you have to remember that he's the closer to at the money that you're
the closer to at the money that you're selling or in the money, the larger your
selling or in the money, the larger your premium is going to be. So that also
premium is going to be. So that also gives you more wiggle room, right? Like
gives you more wiggle room, right? Like if you sell at 500, we immediately think
if you sell at 500, we immediately think like, oh, I mean price went to like 498
like, oh, I mean price went to like 498 or whatever, like oh, like James is in
or whatever, like oh, like James is in trouble. But remember, he got $25. So
trouble. But remember, he got $25. So he's good all the way up to 525, not
he's good all the way up to 525, not just 500. Okay? And so like let's say we
just 500. Okay? And so like let's say we get close to 515. By the way, this is
get close to 515. By the way, this is really important. [clears throat] If we
really important. [clears throat] If we get to 515, all right, you cannot you
get to 515, all right, you cannot you you can't let that option expire because
you can't let that option expire because then you'll be exercised and you will
then you'll be exercised and you will sell your shares and you'll have this
sell your shares and you'll have this like taxable event blah blah blah. So
like taxable event blah blah blah. So you have to close your position. Okay?
you have to close your position. Okay? You have to close your position. So when
You have to close your position. So when we get close a day or two before close
we get close a day or two before close your position
your position um because again if he's good up till
um because again if he's good up till 525 we get to 515 he still won still won
525 we get to 515 he still won still won $10 but because that contract is now
$10 but because that contract is now intrinsic $15 intrinsic that will be
intrinsic $15 intrinsic that will be exercised if you don't take any action.
exercised if you don't take any action. So just keep that in mind. Most
So just keep that in mind. Most brokerages unless you like tell them
brokerages unless you like tell them specifically most brokerages
specifically most brokerages automatically exercise any options that
automatically exercise any options that are in the money. Okay? Okay. So just
are in the money. Okay? Okay. So just keep that in mind.
keep that in mind. >> Yeah. And one other thing as well that
>> Yeah. And one other thing as well that people forget. So if you imagine you you
people forget. So if you imagine you you sell time, I sell things out of the
sell time, I sell things out of the money. As imagine we could talk about
money. As imagine we could talk about that 515 example. As the the stock goes
that 515 example. As the the stock goes to 515 and you look at the call option
to 515 and you look at the call option you sold and there's only like 10
you sold and there's only like 10 trading days left, what happens is the
trading days left, what happens is the time value goes away and it all becomes
time value goes away and it all becomes intrinsic value.
intrinsic value. So the more it goes in the money, the
So the more it goes in the money, the more a time value goes away. So that's
more a time value goes away. So that's another another mattress cushion you
another another mattress cushion you have for selling these things. And it's
have for selling these things. And it's very very important to wrap your head
very very important to wrap your head around that.
around that. >> Yes. Do you sell calls as soon as the
>> Yes. Do you sell calls as soon as the mean reversion prints or wait for the
mean reversion prints or wait for the sell signal on the confluence model
sell signal on the confluence model chart?
chart? So the charts I look at and the things I
So the charts I look at and the things I trade um like because I'm I obsess
trade um like because I'm I obsess uh obviously I'm 56% 58% Tesla now that
uh obviously I'm 56% 58% Tesla now that was my big gambit to rotate and build an
was my big gambit to rotate and build an AI position and I was able to do that
AI position and I was able to do that thanks to micro strategy but now it's I
thanks to micro strategy but now it's I think was uh a guy called Steven
think was uh a guy called Steven Dreameiller he said have very few assets
Dreameiller he said have very few assets in your basket and watch your basket
in your basket and watch your basket very carefully. I watch my basket like a
very carefully. I watch my basket like a hulk. There isn't an hour that goes by
hulk. There isn't an hour that goes by that I can't tell you exactly what
that I can't tell you exactly what Tesla's doing, even in after hours. So
Tesla's doing, even in after hours. So when you watch something so obsessively,
when you watch something so obsessively, you understand how it moves. I used to
you understand how it moves. I used to talk about how charts and assets
talk about how charts and assets actually move like animals. they have
actually move like animals. they have their own DNA, their own personality and
their own DNA, their own personality and you can almost predict what it's going
you can almost predict what it's going to do even without you know these
to do even without you know these technical analysis tools and back tests.
technical analysis tools and back tests. So from that perspective uh I I can
So from that perspective uh I I can anticipate if I see a big mean reversion
anticipate if I see a big mean reversion spike that's the first thing it's like
spike that's the first thing it's like okay now I know my premium is going to
okay now I know my premium is going to be juicy then I look at the trend model
be juicy then I look at the trend model across different time frames like the
across different time frames like the daily like the 4 hour like the 1 hour
daily like the 4 hour like the 1 hour the 15 minute the 5 minute and get a
the 15 minute the 5 minute and get a feel for when it's going to turn and
feel for when it's going to turn and then I look at the confidence model I'll
then I look at the confidence model I'll be able to anticipate when it's about to
be able to anticipate when it's about to flash a signal to sell um because I know
flash a signal to sell um because I know the model so well I know the assets so
the model so well I know the assets so well so I actually front run the signals
well so I actually front run the signals sometimes by a few minutes or an hour or
sometimes by a few minutes or an hour or so because I know what the asset is
so because I know what the asset is going to do next. You can you can see it
going to do next. You can you can see it as clear as day every single day. So
as clear as day every single day. So >> yeah, good question. Yeah, I mean
>> yeah, good question. Yeah, I mean [clears throat] I would I would say mean
[clears throat] I would I would say mean reversion for the the e the basic answer
reversion for the the e the basic answer I think is um mean reversion is the
I think is um mean reversion is the is the one is the dot like yes ideally
is the one is the dot like yes ideally we get other signals as well like you
we get other signals as well like you know over here we had a cell and and the
know over here we had a cell and and the mean reversion dot but if you were to go
mean reversion dot but if you were to go off the mean reversion only I think that
off the mean reversion only I think that that is a good place to start and then
that is a good place to start and then but yes ideally you are looking at
but yes ideally you are looking at different time frames and looking at all
different time frames and looking at all the different models to look for when
the different models to look for when the turn is going to happen.
the turn is going to happen. >> Yeah, very important here point here for
>> Yeah, very important here point here for Hobbit as well. Great question. Selling
Hobbit as well. Great question. Selling tolls is nothing to do with confluence
tolls is nothing to do with confluence model. Your Bible is mean reversion.
model. Your Bible is mean reversion. Everybody get that clear.
Everybody get that clear. Mean reversion is [clears throat] your
Mean reversion is [clears throat] your indicator to take money off. The rubber
indicator to take money off. The rubber band stretching big stretch. Think about
band stretching big stretch. Think about exiting. The only caveat to that is if
exiting. The only caveat to that is if you think the asset is going to go on a
you think the asset is going to go on a rampage and continue to going up, then
rampage and continue to going up, then you look at your optimized trend line
you look at your optimized trend line across shorter time frames. And there
across shorter time frames. And there are times where I'm very very
are times where I'm very very conservative and I could have sold a ton
conservative and I could have sold a ton of calls, but I don't because the
of calls, but I don't because the optimized trend keeps me in the trade.
optimized trend keeps me in the trade. That is so important. The blue thing you
That is so important. The blue thing you see there will keep you in the trade.
see there will keep you in the trade. The orange thing will keep you out of
The orange thing will keep you out of the trade. wait for that to turn and
the trade. wait for that to turn and zoom into closer time frames. That is
zoom into closer time frames. That is super. So, you get your your signal to
super. So, you get your your signal to maybe sell a covered call on your mean
maybe sell a covered call on your mean reversion, but it doesn't mean it's not
reversion, but it doesn't mean it's not going to stop going up. So, watch the
going to stop going up. So, watch the optimized trend.
optimized trend. >> Yep.
>> Yep. >> Like, there's a good example right
>> Like, there's a good example right there. You're looking at whatever that
there. You're looking at whatever that dot is. Um,
dot is. Um, >> like you see the trend is going blue all
>> like you see the trend is going blue all the way up and you have a mean reversion
the way up and you have a mean reversion cell. Mhm.
cell. Mhm. >> And then the second one is what you wait
>> And then the second one is what you wait for and then you hang tight until you
for and then you hang tight until you start seeing the trend chart getting
start seeing the trend chart getting thin. The girth disappears. That's when
thin. The girth disappears. That's when you know it's about to turn. The other
you know it's about to turn. The other thing is a little simple little trick
thing is a little simple little trick and these things the best things in life
and these things the best things in life are simple things. Everybody look at
are simple things. Everybody look at these lines. We're looking at a time
these lines. We're looking at a time frame here. I can't see the bottom of
frame here. I can't see the bottom of your chart because Hobbit's covering it.
your chart because Hobbit's covering it. Can you hide the current comment? Yeah.
Can you hide the current comment? Yeah. So if you look at this time frame, you
So if you look at this time frame, you have months and months where it goes up
have months and months where it goes up blue and then it goes down orange for a
blue and then it goes down orange for a month, then it goes up blue for five
month, then it goes up blue for five weeks. Think of that time frame. When
weeks. Think of that time frame. When you see it getting thin, you know it's
you see it getting thin, you know it's about to turn. So also just frontr run
about to turn. So also just frontr run that amount. And again, if we're already
that amount. And again, if we're already on a downturn too, as well, very
on a downturn too, as well, very important to remember the options
important to remember the options premium will suck because the spike has
premium will suck because the spike has gone out of it. And this is the magic of
gone out of it. And this is the magic of the science is being able to anticipate
the science is being able to anticipate that spike know the options pricing is
that spike know the options pricing is high after a big move up sell. Even if
high after a big move up sell. Even if it continues but it's continues at a
it continues but it's continues at a slower rate of change the option price
slower rate of change the option price will dissipate. So you won't actually
will dissipate. So you won't actually lose money. So, for example, um talking
lose money. So, for example, um talking Tesla again, imagine it's 475 after a
Tesla again, imagine it's 475 after a huge spike from 450 and then you sell a
huge spike from 450 and then you sell a call for 500 at 475. Even if it goes up
call for 500 at 475. Even if it goes up 20 bucks more, but if it goes up
20 bucks more, but if it goes up gradually, the options pricing will be
gradually, the options pricing will be the same. The options pricing is a
the same. The options pricing is a function of the violence of the move.
function of the violence of the move. You trade the violence of the move and
You trade the violence of the move and make sure you're on the right side of
make sure you're on the right side of the trade and keep an eye on the trend.
the trade and keep an eye on the trend. So there's like everything you need to
So there's like everything you need to know about making money is what
know about making money is what everything I said in the last 60
everything I said in the last 60 seconds. It's not hard. And options
seconds. It's not hard. And options goddess, we should have her on too and
goddess, we should have her on too and join our drop a comment if she if she's
join our drop a comment if she if she's listening to that because it's
listening to that because it's >> don't overthink it guys and gals.
>> don't overthink it guys and gals. >> Yeah. And [clears throat] Yeah. Like so
>> Yeah. And [clears throat] Yeah. Like so ba easy rule two, you got you got to
ba easy rule two, you got you got to sell on a green day or you want to sell
sell on a green day or you want to sell when it's green, right?
when it's green, right? The difference between selling on this
The difference between selling on this day and two days later once this goes
day and two days later once this goes down is major. Right? When you have this
down is major. Right? When you have this major spike
major spike >> versus selling down here, it's too late.
>> versus selling down here, it's too late. >> I don't know if it's too late. You're
>> I don't know if it's too late. You're not going to get as much. That's for
not going to get as much. That's for sure.
sure. >> So, all right. [clears throat]
>> So, all right. [clears throat] I don't do race call spreads, by the
I don't do race call spreads, by the way.
way. >> Um, one thing I do recommend,
>> Um, one thing I do recommend, I always say find your rhythm. If you
I always say find your rhythm. If you find something you have success with and
find something you have success with and you like doing, whether it's the wheel
you like doing, whether it's the wheel or ratio call spreads or callers, do it.
or ratio call spreads or callers, do it. I wait for the big fat moments. That's
I wait for the big fat moments. That's my thing. And I sell a call. I sell a
my thing. And I sell a call. I sell a put to buy a call or I sell a call on
put to buy a call or I sell a call on the spike. That's pretty much all I do.
the spike. That's pretty much all I do. But I do it again and again and again
But I do it again and again and again and again for decades. Real simple.
and again for decades. Real simple. Yeah, good question from Bear. Regular
Yeah, good question from Bear. Regular trading hours or extended? And
trading hours or extended? And >> I always use extended.
>> I always use extended. >> Yeah.
>> Yeah. >> Extended.
>> Extended. Okay.
Okay. what what's your what's your opinion on
what what's your what's your opinion on if you're doing
if you're doing >> by the way one of the things that I want
>> by the way one of the things that I want to say as well it's kind of peculiar but
to say as well it's kind of peculiar but um if you look at what happens to a
um if you look at what happens to a stock during any given day okay they
stock during any given day okay they tend to open strong dur during the
tend to open strong dur during the midday you get the slump and then they
midday you get the slump and then they close strong so always anticipate that V
close strong so always anticipate that V if you're going to sell something do it
if you're going to sell something do it either at the beginning of the morning
either at the beginning of the morning or at the end of the day trading Okay.
or at the end of the day trading Okay. And also a lot of the real action for
And also a lot of the real action for price happens after the market close.
price happens after the market close. That's when the big news is released. So
That's when the big news is released. So if you look at say I always talk about
if you look at say I always talk about the 10 trading days a year where it
the 10 trading days a year where it really matters to be in a trade. That's
really matters to be in a trade. That's so important because that action
so important because that action [clears throat] happens typically after
[clears throat] happens typically after hours and you get a spike at the open
hours and you get a spike at the open the next day. If you're not in the
the next day. If you're not in the position before the spike, you're
position before the spike, you're stuffed.
stuffed. Very, very important to know. Okay. So,
Very, very important to know. Okay. So, understand the rhythm of the day.
understand the rhythm of the day. Absolutely critical. Same thing with the
Absolutely critical. Same thing with the rhythm of the week. Monday and Friday,
rhythm of the week. Monday and Friday, all the action midweek dead.
all the action midweek dead. Great nuggets there.
Great nuggets there. Um, [clears throat] on the Tesla January
Um, [clears throat] on the Tesla January 2027 leaps, would you cash out at 80%
2027 leaps, would you cash out at 80% profit or wait till expiration and buy
profit or wait till expiration and buy the shares? My entire focus since 2017
the shares? My entire focus since 2017 has been to build a big Tesla bag and I
has been to build a big Tesla bag and I have converted every single one of my
have converted every single one of my leaps and I have hundreds and hundreds
leaps and I have hundreds and hundreds and hundred of leaps. I've never had so
and hundred of leaps. I've never had so many highric leaps in my life for an
many highric leaps in my life for an asset and I'll be converting them all.
asset and I'll be converting them all. That's why I've got such a huge margin
That's why I've got such a huge margin bag. I never use 10% of my margin
bag. I never use 10% of my margin because I've got a massive massive
because I've got a massive massive numbers of leaps I need to convert in
numbers of leaps I need to convert in January and then same thing in summer
January and then same thing in summer and then same thing at December and
and then same thing at December and January 2027. So I'm always keeping an
January 2027. So I'm always keeping an eye to build that bag. And remember my
eye to build that bag. And remember my goals are not your goals. I'm about
goals are not your goals. I'm about growing stuff slowly. I know where
growing stuff slowly. I know where Tesla's going. I just need to be patient
Tesla's going. I just need to be patient and accumulate as much as I can. That's
and accumulate as much as I can. That's my whole mission. And I advise everybody
my whole mission. And I advise everybody to do that. get to 300 shares, then get
to do that. get to 300 shares, then get to 500 shares, then get to a,000 shares,
to 500 shares, then get to a,000 shares, that would be very life-changing. So,
that would be very life-changing. So, all of my leaps I convert. But if you're
all of my leaps I convert. But if you're a trader and you made 80, you made you
a trader and you made 80, you made you tripled, quadrupled, quintupled your
tripled, quadrupled, quintupled your money, you want to take some profit and
money, you want to take some profit and take a flyer on crypto, go ahead and do
take a flyer on crypto, go ahead and do that. But that's not my goal.
that. But that's not my goal. >> Yep. And and on that note, too, leaps
>> Yep. And and on that note, too, leaps [clears throat]
[clears throat] are are like they're different than
are are like they're different than calls than than selling. Like but if you
calls than than selling. Like but if you bought a Culver Sun, they're very very
bought a Culver Sun, they're very very different. And so you said that should I
different. And so you said that should I cash out at 80% profit? Your leaps
cash out at 80% profit? Your leaps probably depending on where what your
probably depending on where what your strike is can be up far more than 80%.
strike is can be up far more than 80%. 200 300 400 500%. Um so a little bit
200 300 400 500%. Um so a little bit different there. The rules are are not
different there. The rules are are not quite the same when you buy. And and
quite the same when you buy. And and two, another great thing about LEAPS is
two, another great thing about LEAPS is when you go to exercise, [clears throat]
when you go to exercise, [clears throat] it's a great tax advantage, right? If
it's a great tax advantage, right? If you sell your option, your contract
you sell your option, your contract back, you have to pay capital gains. If
back, you have to pay capital gains. If you exercise your option and just buy
you exercise your option and just buy the shares, there's no there's no that's
the shares, there's no there's no that's not a taxable event, right? So, just
not a taxable event, right? So, just keep that in mind as well.
keep that in mind as well. >> Yeah. Uh the other thing people ask, how
>> Yeah. Uh the other thing people ask, how can I calculate things in my head? It's
can I calculate things in my head? It's very simple. Just look at the at the
very simple. Just look at the at the money straddle price of the options
money straddle price of the options pricing. Look at the time, look at the
pricing. Look at the time, look at the probability, and look how far the stock
probability, and look how far the stock can realistically move. And that's it.
can realistically move. And that's it. How likely is the strike going to hit?
How likely is the strike going to hit? And that's all you need to do. And
And that's all you need to do. And that's how you can do it easily. It's
that's how you can do it easily. It's not it's not hard, but it does take it
not it's not hard, but it does take it does take time. And uh I used have to do
does take time. And uh I used have to do this for a living by the way. So
this for a living by the way. So currencies and commodities.
currencies and commodities. >> Do you find that delta is an is a uh
>> Do you find that delta is an is a uh accurate approx right? Because people
accurate approx right? Because people say delta is a good proxy for that the
say delta is a good proxy for that the probability that this stock is going to
probability that this stock is going to expire or this option is going to expire
expire or this option is going to expire in the money. So 20 delta it's only 20%
in the money. So 20 delta it's only 20% chance you're going to lose. Do you find
chance you're going to lose. Do you find that to be accurate or not?
that to be accurate or not? >> No. Because when people say that it's
>> No. Because when people say that it's like saying well TA says this I always
like saying well TA says this I always say FA is for what and TA is for when.
say FA is for what and TA is for when. FA is fundamental analysis and TA is
FA is fundamental analysis and TA is technical analysis. Technical analysis
technical analysis. Technical analysis is your timing. Fundamental analysis is
is your timing. Fundamental analysis is keeping your head out the window,
keeping your head out the window, looking at the macro, understanding
looking at the macro, understanding where the stock goes in a seasonal
where the stock goes in a seasonal basis, etc. You cannot just look at
basis, etc. You cannot just look at deltas. You have to look at everything.
deltas. You have to look at everything. And that's why I laugh when people are
And that's why I laugh when people are just TA only traders or FA only traders.
just TA only traders or FA only traders. You need to be extremely well-rounded.
You need to be extremely well-rounded. You need to have that tool belt with all
You need to have that tool belt with all the different things in your bag and be
the different things in your bag and be able to recognize
able to recognize uh seasons and patterns and know when
uh seasons and patterns and know when earnings are going to hit and know what
earnings are going to hit and know what that earnings is going to look like and
that earnings is going to look like and all that type of stuff. Absolutely
all that type of stuff. Absolutely critical.
critical. >> Great. I feel the same. I never felt
>> Great. I feel the same. I never felt like Delta is a great
like Delta is a great >> it's a great
>> it's a great proxy for expiring in the money or not,
proxy for expiring in the money or not, but a lot of people ask that. So,
but a lot of people ask that. So, >> yeah. And there good question here.
>> yeah. And there good question here. extended trading hours. So, I think
extended trading hours. So, I think Robin Hood uh they're gunning for what
Robin Hood uh they're gunning for what they call 245.
they call 245. So, 24-hour trading 5 days a week. Um
So, 24-hour trading 5 days a week. Um and but that won't apply to options of
and but that won't apply to options of course. So, it doesn't really impact me.
course. So, it doesn't really impact me. But everything again once everything
But everything again once everything goes to 24-hour trading the whole news
goes to 24-hour trading the whole news cycle for stocks will change. uh assets
cycle for stocks will change. uh assets like you know whoever company it is they
like you know whoever company it is they always wait till after the market closes
always wait till after the market closes to announce big news or announce
to announce big news or announce earnings or whatever once we go 247 245
earnings or whatever once we go 247 245 the whole news cycle will change people
the whole news cycle will change people will just release news as it happens and
will just release news as it happens and we're going to move to a re realtime
we're going to move to a re realtime world where you need to be ready 24/7
world where you need to be ready 24/7 and that's going to bring about a lot of
and that's going to bring about a lot of sleepless nights my friends but hey
sleepless nights my friends but hey that's
that's >> yeah I was wondering about that you
>> yeah I was wondering about that you Think do you think when when 247 or 245
Think do you think when when 247 or 245 trading comes, which it sounds like it's
trading comes, which it sounds like it's going to, do you think volume overnight
going to, do you think volume overnight is still is going to be lower and it's
is still is going to be lower and it's still kind of dead and people people
still kind of dead and people people still do the regular cycle or or no?
still do the regular cycle or or no? It's all the time whenever.
It's all the time whenever. >> Well, the the big the big money and the
>> Well, the the big the big money and the hedge funds and Wall Street, they all
hedge funds and Wall Street, they all use algos anyway. So, the algos will be
use algos anyway. So, the algos will be doing 70 80% of the trades. There'll be
doing 70 80% of the trades. There'll be the schleps who turn up to their 9-to-f5
the schleps who turn up to their 9-to-f5 and go to the job or the market and
and go to the job or the market and trade there. That will be the big chunk
trade there. That will be the big chunk of the volume. But I think we're going
of the volume. But I think we're going to do move much more towards
to do move much more towards tokenization and algo stuff. And that's
tokenization and algo stuff. And that's how the the whole convergence between
how the the whole convergence between crypto and AI and Treadfi are all
crypto and AI and Treadfi are all happening and it's just going to be
happening and it's just going to be wild. And that's why I always stress as
wild. And that's why I always stress as well, this is the kind of like the next
well, this is the kind of like the next two years is our window of opportunity.
two years is our window of opportunity. After that, the machines take over.
After that, the machines take over. That's it. You'll be able to do swing
That's it. You'll be able to do swing trades. You might be able to do covered
trades. You might be able to do covered calls over medium terms and you'll be
calls over medium terms and you'll be able to get positioned in assets early,
able to get positioned in assets early, but all the short-term trading
but all the short-term trading opportunities going to go away. Gone.
opportunities going to go away. Gone. Done.
>> Nice. or not. Nice. >> An interesting time. [laughter]
>> An interesting time. [laughter] >> Stealing money from a baby won't be as
>> Stealing money from a baby won't be as easy as it has been for the last two
easy as it has been for the last two decades. Put it that way.
decades. Put it that way. >> Now, we got to steal candy from
>> Now, we got to steal candy from teenagers. [laughter]
teenagers. [laughter] >> Or, as I said, zero sum game. I mean, if
>> Or, as I said, zero sum game. I mean, if you have an idiot on the other side of
you have an idiot on the other side of the trade that doesn't have the tools we
the trade that doesn't have the tools we have, you're going to smoke them.
have, you're going to smoke them. >> There's still going to be opportunities.
>> There's still going to be opportunities. >> Oh, yeah.
>> Oh, yeah. >> But yeah, scalping and whatever.
>> But yeah, scalping and whatever. >> It's already hard. If anyone's tried
>> It's already hard. If anyone's tried scalping, it's very hard.
scalping, it's very hard. I'm not a good scalper.
I'm not a good scalper. >> So,
>> So, >> all right.
>> all right. >> How do I know if
>> How do I know if >> I do have to wrap in about one minute or
>> I do have to wrap in about one minute or so? So,
so? So, >> okay.
>> okay. >> Oh, yeah. Well, last question I'll take.
>> Oh, yeah. Well, last question I'll take. Um, how do I know if the puts or
Um, how do I know if the puts or [clears throat] calls are expensive or
[clears throat] calls are expensive or cheap again? I'll go back to what I
cheap again? I'll go back to what I mentioned before, how you can eyeball
mentioned before, how you can eyeball it. You know, if you look if you think
it. You know, if you look if you think of the position as a, you know, well,
of the position as a, you know, well, first of all, first question you ask
first of all, first question you ask yourself, how far do you think the stock
yourself, how far do you think the stock can move either up or down? Are you at a
can move either up or down? Are you at a support level or resistance level? Look
support level or resistance level? Look at the at the money straddle price, and
at the at the money straddle price, and that's the market's estimate of the move
that's the market's estimate of the move by the expiration date. You look at the
by the expiration date. You look at the time. How much are you getting paid for
time. How much are you getting paid for your time if you're selling a call? more
your time if you're selling a call? more time the the options would be more
time the the options would be more expensive and therefore the the optimal
expensive and therefore the the optimal window is kind of four to six weeks and
window is kind of four to six weeks and if you think of that in trading days
if you think of that in trading days it's about 30 35 trading days okay and
it's about 30 35 trading days okay and the last 30 days absolutely rapid time
the last 30 days absolutely rapid time decay like if you imagine I sell a
decay like if you imagine I sell a quarter of a million dollars worth of
quarter of a million dollars worth of covered calls on Tesla I know I'm making
covered calls on Tesla I know I'm making 30 grand a day at least at least in time
30 grand a day at least at least in time decay and that's enough to pay for my
decay and that's enough to pay for my mortgages for 3 years, you know, so or
mortgages for 3 years, you know, so or something along the lines of that
something along the lines of that effect. But that that's the way you
effect. But that that's the way you think about it. And also, how likely is
think about it. And also, how likely is the strike to be hit? You look at your
the strike to be hit? You look at your again your mean reversion, your chart,
again your mean reversion, your chart, your historical patterns, how how many
your historical patterns, how how many standard deviations does it actually
standard deviations does it actually need to move beyond where it is today to
need to move beyond where it is today to be hit? That's your age, your edge.
be hit? That's your age, your edge. Everybody, don't overthink it.
Everybody, don't overthink it. >> Practice. We've got lots of great
>> Practice. We've got lots of great coaches and tons of videos that both
coaches and tons of videos that both James and I have made. So, lots of lots
James and I have made. So, lots of lots of resources and I think today's been
of resources and I think today's been great. I think lots of lots of great
great. I think lots of lots of great nuggets today. Um, [clears throat]
nuggets today. Um, [clears throat] got to practice.
got to practice. >> Yeah. And take the time. Don't don't be
>> Yeah. And take the time. Don't don't be intimidated. People sometimes have a
intimidated. People sometimes have a hard time wrapping their heads around
hard time wrapping their heads around options.
options. Um, as I stress, understand margin,
Um, as I stress, understand margin, respect it, understand options, get
respect it, understand options, get started with covered calls. Don't
started with covered calls. Don't overthink it. Think about renting your
overthink it. Think about renting your house out at a very special weekend or
house out at a very special weekend or week or summertime period at a high
week or summertime period at a high premium. And then let the time expire.
premium. And then let the time expire. Get familiar with your TA and have your
Get familiar with your TA and have your head out the window and understand how
head out the window and understand how stocks and assets move. And don't don't
stocks and assets move. And don't don't don't
don't do what Lin Alden does. She's got 65
do what Lin Alden does. She's got 65 positions in her recommended portfolio.
positions in her recommended portfolio. That's complete
That's complete idiocracy. Okay? Literally, I never like
idiocracy. Okay? Literally, I never like to have say 90% of my portfolio, 85% in
to have say 90% of my portfolio, 85% in just four things because I look at the
just four things because I look at the markets 24/7. I can't I can't be deep in
markets 24/7. I can't I can't be deep in more than four things. Okay? Think about
more than four things. Okay? Think about that. If you have a full-time job and
that. If you have a full-time job and kids and wives and husbands, you can
kids and wives and husbands, you can barely look at one asset. So remember
barely look at one asset. So remember that everybody. Very important. This
that everybody. Very important. This probably probably the most nuggetfilled
probably probably the most nuggetfilled session we've ever had, Jacob.
session we've ever had, Jacob. >> Yeah, that was a great
>> Yeah, that was a great >> But literally people should watch this.
>> But literally people should watch this. Write this stuff down. This is a
Write this stuff down. This is a lifestyle a li a lifetime of experience
lifestyle a li a lifetime of experience and scars that we're sharing here. Okay?
and scars that we're sharing here. Okay? learn this so you don't have to make the
learn this so you don't have to make the same mistakes that I did over the last
same mistakes that I did over the last 35 years and practice practice practice
35 years and practice practice practice paper trade all the time. Okay? Then
paper trade all the time. Okay? Then when you get confident when when you're
when you get confident when when you're winning 70 to 80% of the time, watch the
winning 70 to 80% of the time, watch the back tests. Then you're confident enough
back tests. Then you're confident enough to unleash and start printing money in
to unleash and start printing money in your own personal money printer.
your own personal money printer. That's it. Easy peasy.
That's it. Easy peasy. And if I can do it, anybody can do it.
And if I can do it, anybody can do it. >> All right.
>> All right. >> All right.
>> All right. Thank you. That was great.
Thank you. That was great. >> Great score. Great class. And thank you
>> Great score. Great class. And thank you Options Goddess for being here too. Um,
Options Goddess for being here too. Um, Options Goddess actually trains people
Options Goddess actually trains people advanced options and she is brilliant.
advanced options and she is brilliant. So,
So, >> we'll have her we'll have her on next
>> we'll have her we'll have her on next next month about
next month about >> Yeah, let's do that.
>> Yeah, let's do that. >> Yeah, let's let's let's uh take this to
>> Yeah, let's let's let's uh take this to the next level
the next level uh around what we can do. maybe do more
uh around what we can do. maybe do more around kind of the barbell of the put
around kind of the barbell of the put selling with the call selling and range
selling with the call selling and range riders and identifying those because
riders and identifying those because that's also an extremely good thing to
that's also an extremely good thing to do to build a bag selling your puts like
do to build a bag selling your puts like every time I sell a put I do a synthetic
every time I sell a put I do a synthetic long I'm technically building a bag so I
long I'm technically building a bag so I sell the put because I do not want to
sell the put because I do not want to pay the ridiculous cost of the leap for
pay the ridiculous cost of the leap for Tesla it's just way too expensive and
Tesla it's just way too expensive and Another simple little rule for people to
Another simple little rule for people to know and I see this happen all the time.
know and I see this happen all the time. Um people spend too far too much on
Um people spend too far too much on LEAPS. Leaps are not a silver bullet
LEAPS. Leaps are not a silver bullet unless the you have an asymmetric asset.
unless the you have an asymmetric asset. But when I see people spending 150 bucks
But when I see people spending 150 bucks on a $250 stock on a LEAP, that's
on a $250 stock on a LEAP, that's ridiculous. Don't ever do that. Never
ridiculous. Don't ever do that. Never spend more. I have all these little
spend more. I have all these little rules and limits in place. More than a
rules and limits in place. More than a third of the asset price. So, if it's a
third of the asset price. So, if it's a $300 stock, never spend more than 100
$300 stock, never spend more than 100 bucks on a LEAP. Ever, ever, ever. And
bucks on a LEAP. Ever, ever, ever. And that's why I love selling puts. If you
that's why I love selling puts. If you can nail the bottom
can nail the bottom or get very close to a bottom and get
or get very close to a bottom and get all that spike revenue from the dip to
all that spike revenue from the dip to fund your leap call, you make a fortune.
fund your leap call, you make a fortune. Okay, real simple.
Okay, real simple. >> Great.
>> Great. >> So many things. I'm going to go back. I
>> So many things. I'm going to go back. I got to go back and watch this now, too.
got to go back and watch this now, too. [laughter]
[laughter] >> All right. Maybe we'll put together a
>> All right. Maybe we'll put together a cheat sheet of some of the
cheat sheet of some of the [clears throat]
[clears throat] >> Yeah, we should put Yeah, I can put
>> Yeah, we should put Yeah, I can put something together.
something together. >> And if it's okay, uh, we'll share your
>> And if it's okay, uh, we'll share your deck in PDF form later as well, Jacob,
deck in PDF form later as well, Jacob, with the community.
with the community. >> Is that okay?
>> Is that okay? >> Sounds great.
>> Sounds great. >> All right. Thanks all.
>> All right. Thanks all. >> Okay. Thanks everyone. Thanks, James.
>> Okay. Thanks everyone. Thanks, James. >> Bye.
>> Bye. >> Good week, guys.
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