Martin Lee @ Sg
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Selling Weekly Options for Income

I attended a seminar yesterday where the speaker spoke about how we can make money from options.

Since the majority of options expire worthless, he would rather be a seller than buyer of options.

After a long session introducing the concept of options, calls, puts, strike price, premium, in-the-money, at-the-money, out-of-money, the speaker revealed that his strategy involved the selling of weekly options which could generate a potential income of 2-5% every week month.

And he used only three stocks, the names of which would be revealed if we signed up for his course. ๐Ÿ˜€

The speaker said that weekly options were a Godsend as you could now get income every week instead of every month (with monthly options). Weekly options would start trading on the Thursday the week before it expired.

The speaker also mentioned a few other reasonable rules, such as setting a cut loss level, never trading around major events such as price earnings reporting, and only initiating the position from Tuesday onwards (and not over the weekend) to minimize the risks.

At the end the session, there were many questions from the audience, many of whom were intrigued enough to want to consider signing up for his course.

I just want to highlight that such a strategy of selling options without owning the underlying shares (otherwise known as naked selling) is a risky one and should only be attempted by advanced traders with a proper risk management system in place.

The trade might look deceptively easy and you might be able to get away with getting income week after week for a long time. But if you do not consider factors like the volatility, the delta and the gamma, you might be getting underpaid for selling the options and when the trade goes against you (matter of when and not if), the losses might wipe out all the income you have made so far.

So, trade with care. ๐Ÿ™‚

On a side note, my friend was asking me whether there were weekly options on Berkshire. It so happened that Berkshire weekly options were available since a few weeks ago. However, the trade volume on them were quite low compared to other companies out there.

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6 comments
Mr X says 7 years ago

This statement is downright laughable. A 2% return per week will snowball to $297million within 10 years with just $10,000 outlay. Similary a 5% weekly return reaches $1,043 trillion within 10 years.

Even with capital drag setting in at the later stages, this guy could easily be worth at least $10 billion by now if he can really generate 2-5% weekly.

Reply
    Martin Lee says 7 years ago

    Now that I recall, I think he said per month and not per week. Nevertheless, still ridiculous numbers. ๐Ÿ™‚

    It’s always that one strike that will wipe out all the gains.

    Reply
Createwealth8888 says 7 years ago

Even the Speaker has discovered relative “safe” way to sell options week after week to make money; why is he that stupid to announce to the world to introduce more sellers. He should keep the secret method in his family and close relatives and friends and everyone in his family doesn’t to work anymore.

Do some thinking for ourselves before opening our wallet to attend such easy money making investment or trading courses.

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nuts says 7 years ago

I bet the fellow earn a few thousand % more from giving training courses than actually trading options on his own. This is the modus operandi of all trading seminars and training, whether for stocks, futures, forex, options, warrants and whatnot.

There is a relatively “safe” way to sell options, but it’s not naked selling. And you need to have some capital first because you need to have the underlying stocks. The stocks also need to be those super blue-chip boring types with many years of increasing dividends. Easy to implement in US markets.

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Dave says 7 years ago

It is indeed possible to generate a cash flow from the above mentioned strategy. I have been doing that too.

However, I am using this strategy on commodities as it provides me with a wider range of “safetyness”. Which means that I can sell some 20-50% away from current price.

I believe that the weekly option teacher has executed his trades well. What he needs now is to infuse his investment with more capital in order for a larger return per week/month.

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Createwealth8888 says 7 years ago

“The speaker said that weekly options were a Godsend as you could now get income every week instead of every month.”

I hope those attendees at seminar have some common sense.

As we know that in the market there are limited buyers at favourable price. Why would the speaker be that stupid not to earn all the money for himself and encourge more sellers to eat into his lunch.

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