My GOD-TIER investment strategy

[Anonymous No.24453714]

For simplicity, I'm making up the exact numbers, but the % increase is the same

>Buy stocks for $10
>Sell options with a premium of $1.4 and strike price of $9 set to expire in one month
>Earn 4% return monthly doing this process, that's a 60% annual return assuming all goes well (which it usually does, how often does a stock crash 10% in 30 days? occasionally but not too much).

>Not satisfied ENOUGH
>Sell puts on this exact stock for a premium of $1.4 and a strike price of $11 that expires the same day as the covered calls
>Earn another 4% monthly return on this alone, yearly that's 60% EAR a year

>If the calls are not exercised when the puts are exercised, money automatically gets borrowed to purchase the stocks but it doesn't matter since later that day the calls will be exercised and capital will flow into my account to cover the borrowing.

>Adding those two strategies together, a 152% yearly return

Now here's where it gets good

LEVERAGE

>Borrow to invest
>TFW only 1/4 of your assets are not financed by debt
>4x the return
>Literally a 608% return investment strategy

B-BUT YOUR TAKING ON RISK WHAT IF THE MARKET CRASHES

The risk to reward ratio DWARFS any possibilities of risk. To not continually make money doing this, your stock will have to drop 10% within the month. Yes that's possible, yes that happens, but all that means is ONE MONTH of not making this profit. This strategy works most months and that's all that matters.

>Also: Even if the stock drops 10%, you still earn money because the premiums > capital loss ($1.4 is greater than ($10 - $9). The stock needs to $8.6 for you to BREAK EVEN, and even below that if you are going to start losing.

And if you doubt this strategy, just look up option quotes for stocks. You can pick any stock, sell an IN-THE-MONEY covered call and make 3% monthly returns, so this is easily possible.

[Anonymous No.24453788]

Man this is complicated. We are a retard riddle solver board here, ront overdue it

[Anonymous No.24453991]

>>24453788
I'll simply it in one sentence

>Buy stocks and immediately sell calls on it that you know will be exercised in a month because the strike price is lower than the market price. At the end of the month your stocks will automatically be sold and you'll have your principal + 4% because the premiums you get will dwarf the capital loss and you'll make a high return just repeating this.

Doing this every month will net you very high returns.

[Anonymous No.24454137]

>leveraged theta gang
This is a strategy that works fantastic until one day it goes tits up in a horrific way and you get margin called. You are not the first person to down this path thinking you have found easy wealth, and you will not be the last to lose everything on it. Unironically read Nicholas Nassim Taleb, you clearly do not understand antifragility.

[Anonymous No.24454282]

>>24454137
I just explained why this doesn't apply.

[Anonymous No.24454302]

>>24453714
isn't this called an iron condor?

[Anonymous No.24454743]

>>24453714
if you did this with GLITCH when they go live id say you 10x at least. would be surprise if not. dyor

[Anonymous No.24454906]

>>24453714
Also, I just want to be clear, does it matter if you actually buy the stock? This appears to be step 1, but why is this neccessary? How much would you need to buy?

Second question: Why bother with leverage? If you're making 60% gains, why would you risk your entire financial future for this? Sure you can 600% gains with leverage, but you can also get 600% losses if the stock shifts enough, right? So why risk it?

[Anonymous No.24455024]

>>24453714
>what is spread + broker's fee...

Enjoy going into bottomless life long debt next time the elites launch a hoax terror attack/killer virus/sovereign debt default, RETARDO.

[Anonymous No.24455224]

>>24454282
Anon literally every time someone is dumb enough to sell options on leverage they say the same thing about how their specific strategy is fool proof. If you do a quick dip and stop after some nice gains congratulations. But if this turns into a long term strategy, one day you will get bogged so fucking hard and you will remember my warnings and kill yourself.

[Anonymous No.24455296]

literally can't go tits up

[Anonymous No.24455426]

>>24454906
You technically don't have to buy the stock, but when the puts get exercised you're forced to hold them.

[Anonymous No.24455454]

>>24455024
>retarded conspiracy theories

Ok RETARD

Also i already factor broker fees into this.

>>24454906
Because I don't earn enough money for 60% to be satisfactory for me, I want to be a multimillionaire before im 30.

[Anonymous No.24455958]

>>24455454
>>24455426
Forgive me for being a newbie on options..
So for every PUT you sell, you need to have 100x shares of that option in your account? I probably sound like a retard, but I just want to understand the strategy.
Let me just try to say how I think it works then
>there is a stock that costs $10/share
>buy 100 shares of this stock at $10
>now sell calls for the stock with a strike of $9
>now sell puts for the stock with a strike of $11
>if stock stays above $9 and below $11 (at the time of option expiration) you keep the premiums, because the options expire OOTM

I think I get it, but why can't you just sell the options like 2 days before expiration, and avoid buying the security altogether?

[Anonymous No.24456084]

>>24455958
So then
>you sold the calls for $1.4 (x100 = $140)
>you sold the puts for $1.4 (x100 = $140)
>you spent bought 100 shares (x$10 = $1000)
so for a $1000 investment, you make $280 assuming the stock stays exactly at $10, right?

How come you said originally this only equates to 4% per month? What am I fucking up?

[Anonymous No.24456253]

>>24456084
You basically have it right.

So to simplify it, let's forget about the bundles of 100 stock, and just pretend we're talking one stock.

I buy the stock for $10

I sell a call for $1.4 that allows me them to buy the stock from me in one month for $9

I lose $1 on capital loss, but I make $1.4 in option premium.

That's a $0.4 profit on a $10 stock, that's 4%

[Anonymous No.24456278]

>>24456084
You're forgetting the capital losses that are inherent in the option. I buy the stocks for $10 but have them sold at $9

>>24455958
Sometimes they are more expensive.

[Anonymous No.24456762]

>>24456278
Hmmm.... Let's dumb this down more to see if I have it right.
-buy stock for $1.
-open a one month long on it.
-if price goes up, you make money.
-if price goes down, sell stock you bought for $1.

[Anonymous No.24457051]

>>24456253
where does the inherit capital loss come from in the options trading? Just from letting them expire?

[Anonymous No.24457883]

>>24456762
Yeah exactly

[Anonymous No.24457913]

>>24457051
I design the contracts so i sell my stocks at a capital loss

but the premium makes up for it

[Anonymous No.24457951]

>>24453714
This is an excellent way to get liquidated, good job anon! You've managed to expose yourself to volatility in BOTH directions!

[Anonymous No.24458228]

This is basically just a worse version of the Wheel strategy. When selling options you want them to expire worthless, and if you're starting capital is small the gains are small. If your wheel stocks generally go up you can make some peanuts but when they go down you get wrecked. Adding leverage on top of that... good luck and godspeed.

[Anonymous No.24458441]

Or just buy crypto

[Anonymous No.24458465]

>>24457951
How did I expose myself to volitility in both directions?

>>24458228
>When selling options you want them to expire worthless

You're an idiot.

My risk is very low because it requires the stocks to drop very fast in one month, which is quite unlikely ngl.

[Anonymous No.24458622]

>>24453714
Fuck I need to do some research.
I wish I understood all of this.

[Anonymous No.24458778]

>>24458622
It took me a while, i started knowing nothing.

[Anonymous No.24458824]

>>24458778
That makes me feel better.
I like to think one day that I also will be superior all knowing business cow.

[Anonymous No.24458866]

>>24458465
You obviously haven't been in the market very long. Most stocks in the $10 area are very vulnerable to volatility, that's why the premium is higher. And by selling an ITM call you're completely cucking any upside gain you could have made.

[Anonymous No.24458924]

>>24458824
If you keep at it you will, when i first heard of options i thought "oh god it makes no sense i'll never understand this".

[Anonymous No.24458956]

>>24458866
I'm not buying $10 stocks, that was just for an example.

I'm buying blue chips like Apple, Pfizer, Facebook, Proctor & Gamble, etc.

[Anonymous No.24459025]

>>24453714
I'll be here holding ETFs while you gamble on options and lose it all

[Anonymous No.24459121]

>>24459025
Enjoy your shitty returns and paying half to the ETF manager.

[Anonymous No.24459241]

>>24459121
enjoy your losses retard

[Anonymous No.24459342]

>>24459241
You clearly didn't read my post you dumbfuck.

I'm SELLING options.

I COLLECT the premiums in advance. It's the opposite of gambling.

[Anonymous No.24459416]

what the fuck is the difference between your strat and the wheel strat?

[Anonymous No.24459502]

>>24455454
http://thelondonpost.net/dianne-feinstein-3-us-senate-members-sold-off-stocks-before-coronavirus-crash-reports/

Lol yes I'm sure a financial genius like you have factored slippage and broker's fees and zero buy side liquidity in a crash into your little back-of-the-envelope theory, bud. Morons like you are what keeps wall street in hookers and prime blow for all eternity.

[Anonymous No.24459505]

>>24459416
The wheel tries to price options out of the money so they expire worthless.

I intentionally price them so my stocks get called away every month.

[Anonymous No.24459561]

>>24458956
Try it then. You will see why as an option seller targeting OTM contracts is always better.
>>24459416
Not much

[Anonymous No.24459568]

>>24459502
The fees from where I use is $16 per trade.

It's more than worth it.

Also, you're a massive retard, a stock market crash is EASILY dwarfed by my massive returns.

[Anonymous No.24459598]

>>24459561
I've been doing it and making 5% monthly on average.