So that's the money that we're targeting like 18 to 54% per year. So that is our fast money. and right after the election, the volatility drop and the stop price go up. Both work in big favor so that was like 100k.

that. Okay, if you only have a $1,000 don't trade option because most people would be like, you know what? that's $1,000 I can lose. So I just going to go and gamble but guess what? as $1,000 you work hard to earn and that's why that's keeping you from becoming a millionaire is because you have those kind of mindset. How can stock Traders improve the profitability by using options options? Trading is certainly not a Brand New Concept However, it can feel like a brand new world out there for Traders Such as myself who only trade shares today, we're going to be learning from a full-time options Trader Who makes seven figures with his passive income monthly strategy? You can expect to learn how do profitable options Traders make money, how to analyze options, when is the right time to buy, call options versus put options? How can stock Traders maximize their profits using options, and finally how to manage your risk when you're options trading.

The Humble Traders Podcast is made for Traders Who are very serious about learning the reality of trading? You're going to be getting a lot of practical trading tips and knowledge from these trading convers ations. If you appreciate them, please remember to smash the like button and share this video with your trading partners. Hi! Cody Welcome to the Humble Traders Podcast Yeah, thanks for having me. You're officially our first options Trader on our podcast.

So oh okay, what do we Fist bum fist bum? Yeah! Okay, so since our first ever options Trader on the podcast can you describe to our Traders what kind of strategies do you trade? Um and we'll start from there Yeah, so um. options comparing to stocks. The major difference is that option has something called volatility so it has a a index called Vex usually the higher the Vex That means that if you're a buyer of the option, you got to pay more money to get into the option contract. I seller of of the option then you get paid more if the vix is higher.

So that's a major difference right? Because in stocks the stock could go up down. go in circles. You make the percentage that you make, but in options a little bit as an extra layer of complication is the volatility. and that's a lot of stock.

Investor doesn't know that when they first come in. So what do you do with options? Like what kind of style do you trade in terms of uh, using options? Yeah! so I I mostly do selling options. That just means that I always introduce it as I'm the casino owner okay, I'm the insurance broker So When you buy your car insurance or your home insurance, you pay a premium every month and I am the guy that's collecting that premium on the other side because I sell you an insurance contract, you make your bet on whether the stocks are going to go up or down and you're going to pay a fee for it and I collect that fee and that's my cash flow. So I Love like selling options.

Okay so what is what does that look like in comparison to day trading options? So I I think I know a lot of people day trade and scalp options all the time. I've done that before it didn't work. So if you could explain to our viewers what's the difference and why which way is more beneficial and make more more profitable. Yeah! I Think like day trading or you can day trade the stocks out right? I used to day trade um the Taiwanese S&P 500 Index equivalent.

Okay, um I use future options. so I just buy and sell sell ticker Point difference and make the money. but if you're want to exponentially increase the leverage, right? If you want to use $1 to control $10 worth of stock or $1 to control $100 worth of stock, then you can use option and most of these scalper because when they may usually they have a smaller account. That's why their mentality is that.

Yeah, they want to make the maximum amount of profit. They want to be more leveraged. They want to be more leveraged so they will buy that lottery ticket for example. They think Apple stock is going to go up today.

they buy a call that's going to expire tomorrow. Okay, they spend 10 bucks on it, but by tomorrow the price has to be a certain point and then the time has to happen within tomorrow. So two things has to go right for them to make money. Otherwise they lose the entire $10 so probably probably that's why you know I get a bad reputation I See Yeah, that's the major difference for that.

Okay so the way you trade you sell options premiums. Yeah, the reason why we sell option and this is why I Waren Buffett Secret Weapon. Like if you look at their financial statement all the way back like the last 10 years he makes billions of dollar selling option and back in the days when he was trying to get hold of more Coca-Cola he was selling put options on Coca-Cola stocks waiting for it to come down so he can buy at a cheaper price. but if it does doesn't come down, he will keep collecting the premium.

I See and that's his cash flow in that case. in your case, then if the stock does come down and you do get to buy the stock the underlying Equity at a cheaper price, Do you do you own the shares and or do you kind of roll and then keep trying to leverage it on the way down? Yeah, or they sell the shares. Sorry, that was question. That's a really good question so maybe let me back it up a little bit.

I Think a lot of people might get confused if I keep answering that. So uh, we talk off record that we have our set and done strategy. That's what we call our fast money. This is where a lot of our students or myself.

we use this strategy to replace our full-time income a lot of your students goal as well, or to, uh, support our monthly expense. Usually our trade close about every 10 to 20 days, sometimes shorter a few days. So that's the money that we're targeting like 18 to 54% per year. So that is our fast money.

So once we have that fast money taken care of, we use those money to say buy more real estate or buy uh, or sell more options on individual stocks cuz selling options on individual stocks. we have a different mentality. Now that's what we call a medium speed money. It's that we are not trading anymore.

When I sell options on individual stocks I'm preparing to own it. Oh, I see, that's a separate strategy separate strategy. So when I prepare to own it. What if I's say I sell a put options on Apple All of a sudden Apple dropped by 30% and I'm back holding Apple for a few months or a few years, right? So it's not really a cash flow strategy.

I See So this is more like I going to hold it for long term, but I wanted to buy in at a good price. For example, if Apple's right now at 170, I can sell an option contract to agree to own Apple 160 m. So by the expiration day if Apple stocks is above 160 60.1 I get to keep all the premium I don't need to do anything and I can rinse and repeat I See Okay, so that's fast money medium money and then the slow money is just buy and whole real estate. buy and whole stocks, buy and whole ETF I see I see Okay so obviously all of these three, which one's your favorite? I wouldn't say anyone's my favorite, but I think most people when they're starting out um, where they have a big chunk of money where a lot of my student it's have like like 100k and up right? 100K minimum all the way up to 5 million something has like 8 million right? So if they have the money and they want to replace a full-time income or just supplement it, work less or supplement their wife's income.

they use their S Down strategy. Once they take care of that, they can start building the medium and the slow money because if you haven't solved a cash flow problem, you don't have money to invest. That's true. Yeah, yeah, just what you talk about day trading.

Is that Why if you only have $1,000 are you can't really do much right? Might as well learn the skills that require you to make more money so you have a sizable amount to make an impact. So what got you into options trading and how long did it take for you to become profitable doing that? Yeah. so I started investing in stocks in 2011 and I was day trading between 2015 to 2017 while I was working a full-time job as an engineer okay project engineer and I started getting into like 2018 options And that's when we're stabilizing. We're selling options individual stocks and our set and done strategy is about 2 years old only.

okay and that's where we work all the Kinks from our students or myself. We take out all the risks that we think for example on picking stocks is really hard we take away that we take away the assignments. If you sell option individual stocks, you might get assign hundred shares of stocks. Yeah right.

So we work around that to come up with our set and done strategy and try to make it as consistent as possible. So yeah, that's kind of how how I get into the Journey of me stocks day trading, selling options to our set and done strategy where we try to lower the return but it's more consistent and stable. so you no longer trade the individual stocks options, you just trade said and done no but selling options I still sell on. you know the blue chiple Google and all that.

but that's the intention of I want? If I buy it, it's to buy and hole and I sell cover calls right? I See just to earn more premium while I'm waiting for it to go up right? So like you said, you're prepared to own those stocks. 100 shares of Apple Tesla Whatever. Well, Tesla is not exactly Blue Chip But yeah, that's the plan. Yeah, once you journeyed into options trading, how long did it take for you to to become profitable? Um, actually selling options like this is.

the funny thing is that um I was taught about day trading m and I had to make a decision back in the days before I start my YouTube videos is if I ever going to teach day trading and I make the decisions that I will never teach day trading because I know most people will lose money because it's not an easy job. Not to say that the people who make money will make a lot of money, but most people don't have the the skills or the discipline. The the hardest part? they're fighting against themselves, right? So as engineer, we're we're we're we're We're trained to perform well in a high pressure environment. like four years and all that Imaging a lot of money, projects and all that, but not everyone has that kind of background, right? So sure for me.

I don't want that reputation I don't want that kind of stress cuz all my students we have uh uh Excel sheet in the background everyone's name. when do they join every single month how much money they make? We know that and we hold them account. They hold us accountable. We have a structure within when they make certain amount we get paid certain amount as well.

So right I don't want I just it's just too much stress and I don't think it's worth it and most of my students that I'm serving now it's you know they usually invest in real estate, have their own business. it's kind of like your financial planning client kind of style so they just want more control and maybe they don't get such a great return from financial advisor. So they just like you know I want to take some back or I sold one property I sold one business here. What do I do? You guys are in for a treat today! So Cody is actually going to demonstrate how to execute a very simple options trading strategy selling put options.

It's a very passive strategy and uh I'm actually really interested in learning that as well. Pretend I'm a I'm a three-year-old explaining selling options to me. so I know you really want to know about s and done strategy, but because that will involve some spreads and most of your audience might get confused. So I only going to introduced our beginner strategy sure which is the medium-term money.

We are selling put options and our ultimate goal is that we're ready to buy a stock at a discount price. Okay, so we're going to demonstrate that on Warren Buffett's favorite stock Apple All right, let's do it. So now we go to my watch list I have a set and done watch list. We have Apple here so Apple dropped about 1.68% today.

That's fine. so we go in. You know I usually look at the chart here I don't know about you but these CHS kept getting smaller now. yeah I know or it's either that or we're getting older in the eyes are not good.

There's like more numbers here that I don't really need right? You know? like usually I go through the stock I'll you know I look at what's a onee high uh sry 52 weeks High 198, 198 and then the low is 123 so we know it probably went up by about uh 50% Yeah, what a move usually I look at fiveyear chart but I know it cuz I've done so many of it like okay Apple went from like 40 bucks to like right now about 180. Okay right cuz when you go and sell a put option, your understanding is that you want to own the stock for the next 10 to 20 years. Yeah, you're investing. Yeah, you're willing to own it.

Yeah, but in the meantime you get paid some cash flow on it. But you cannot pick a garbage stock and try to sell put option and be like Cody this is Financial Freedom I have a consistent cash flow you'll get Smash right? So you want to own Apple But you want to own it at a cheaper price And if you don't own it, just get keep getting paid premium. Okay, that's the mindset. Go in then I look at the chart I think up here like we can make this bigger.

let's see what this look like. Oh nice. Finally I can see Yeah. So I think data range fiveyear and one was sure five year like this doesn't make sense like look at that.

This is this is a 5year chart on Apple Yeah, this is not right I think they probably. Oh just say one year. Oh you were on the weekly chart. so now this is a daily.

This is daily for one year right? So usually um, Apple is one of those stocks is like Warr Buffett put 40% of burer haway portfolio in it. Yeah and then that means a lot so you don't really have to look at much. But if you really got to be like hey, I want to do some analysis on it Cool, You know the high of Apple was at around you know 198 know, pull back, went back up, come back down so you know 170 could be a good level right? There's some support here, you know, but even though there's not much going along here, right? it just kept going up. But I just say one.

Right now the stop price on the top left corner is at 176. that just say Okay Cody You know what? there's some resistance. sorry support here I'm okay I'm right below it I'm going to own some Apple shares of 170 so I get a six bucks off. Okay I just assume that okay, does that make sense? Like in case it drops there, you want to buy it I will buy it at 170 if goes below 170.

I'll buy a 170, I'll buy 100 shares of it I See Okay, so that we come back and then we go to the famous option chain here, right? So in case people never seen this at the top here, these are all expiration date right? September 15 and then I you know, two days N9 days out and usually I just say on average I go 30 days out. so there's a 30 days so expires October the 13 right and I think the Market's close so it might take some time to populate. but populate. Okay, so expiration day up top and then as you guys can see on the screen here, there's a call on the left side and there's a put on the right side and there's a strike price in the middle.

So strike price is the predetermined price where you're going to buy or sell the stocks at. Okay, it's like the insurance contract right? Like the criteria of the insurance contract. So you know in this cas Cas if I say Cody or I say shay I want to own hundred shares of Apple stocks at a cheaper price. Okay we look at the chart.

we say 170 is a good price. Okay we go here. pick 170. That's a strip price right? And then if you see a blue you know it's a buy or a sell right? Oh you don't look at anything like um, open interest or volume? Yeah we can look at that but it's Apple Oh it's Apple Oh so any price my I have like open interest.

Like for people know open interest. Do you want to explain open interest? You can explain it. No. Come on.

I Want to put you on the spot? No, don't put me on the side. it's options. Okay, so oh sorry. Okay yeah it's options.

So open interest is basically how much contract are out there waiting to be fill at this any specific spot. And most most people use open interest as the indicator of where the support and resistance are because a lot of people are agreeing to that price point. So in this point I don't really look at it because I just want to own Apple to the price right. Another thing is I can look at Delta right here on the chart.

right now it's showing negative 0.262 So don't worry about the negative right. 0.262 means that if I go ahead and sell this put option, that means that I have 26% that by October 13 I will have to buy 100 shares of Apple 26% of chance. Okay I need to prepare the money to buy shares of Apple So that's how Delta at this specific moment telling you okay and you know I look at that and I look at a bid and ass and usually I want to say okay, I'm selling the Apple put options at 170 how much have I getting paid right? So um, the bid is 193, the ask is 190. Again, the market is kind of closed so it doesn't really make sense.

But um, that just means that if I go ahead and sell this option I will get paid 1.93 Times by 100 because I control 100 shirt. Oh so you get $193 USD too. Oh Us doll, that means about like 1,000 Canadian right? I think that's closer to 210 maybe? But yeah, no. I go, it's 1,000 I don't care.

One person got offended once I said that joke I'm oh $20 us so that's like 1 million Yeah! Canadian I keep saying that. Yeah, it's okay. you have more followers so you get more haters too. So now you get paid 193.

So usually my rule of thumb is if you're going to do that, it's going to be worth it because on Interactive Broker you pay about $1 to $1.5 per option trade. but if you're using other platform you might be paying north of $10 So so you got to make sure you get paid more than $10 if you're going to make that. Yeah, otherwise you're losing money. stra right off the back.

Option trading could be a little bit more expensive than shares a little bit more. Yes, yeah. but on interactive brokers, not bad. It's still the I Want to say the best? Bu is the most cost efficient.

Yeah, it's about a dollar the most cost efficient in Canada and you a lot more option. Yeah right. So a lot more option, a lot more option no pun intended. So yeah, I usually at least want to get paid 1% as in per month right? I Want to make sure I get pay you.

You know if it's if the strip price is $170 I want to get paid $193 Anything north of 170 for it worth my time, worth my risk and I get paid enough. Okay right so this is a good price in my opinion. so that just say we're happy with the expiration day 30 days out the Stri price of 170. Based on our technical analysis, the Delta of 0.26 have 26% chance I might get to sign 100 shares of the Apple in 30 days I have money ready I have $170 times by1 I have like $177,000 USD sitting there ready to buy apples because at any time if Market drop you can get a sign a law earlier.

oh I you got have enough money. Okay, that's when a lot of people get into trouble during Co Oh they use the money they don't have and the broker let you execute that. the Interactive Broker allow you to leverage up to 3.33 times. but overnight I thought it's it's one.

It's two times, only overnight. no it's 3.3 three I think like maintenance Mark like again we we we're opening can of warm here cuz every strategy is different and then they do their old portfolio Marg requirement and do a trade Marg requirement. So so if if people are wondering you can do this you pull up you can see your you know the the you know right now we're buying so make sure it's selling. So you got to hit this button.

Now it's selling. Sell one option contract October 13 expiring one 170 Put Yeah. Okay with that being said, maximum return is 189 Break Even is 168. Why? Because you know if I buy 170 I can pay this amount.

So they do the calculation to bring down a cost of ownership right? and then here's a PML chart and scroll down here you will see the margin impact. where right? Oh I margin impact is you know was in this one. Yeah this is not like when you're selling PUD just just for it says 516 exactly. So this is very like basically margin impact is showing you 5,164 If you times up by 3.33 it's probably 170.

It's probably 177,000 so it's allowing to use 3.33 times. Okay, okay for beginners, even for experienced people, don't use margin. So if you sell a p of $170 on Apple have 17,000 sitting on the side. Yeah okay, that's even if Co happened Apple dropped to 100.

You just buying Apple shares at 170 and you can back hold eventually it'll come back. but you don't You're bwing money. You're going to get Margin Call SC Okay I See Okay, yeah so of that we're happy with that. We understand the margin requirement.

We go hit the order. This is where it comes in. you know? kind of reiterate that tell you what the Delta is. You know my account number and quantity like you know for the basics is like you know there's so many type of um, ways you can enter a trade but order type.

there's limit and Market uh Market basically means it will get filled right away regardless. But usually I use limit especially on Apple Because Apple is a wildly trade stocks have a lot of liquidity. so I just use limit and then I go to the limit price I just P mid mid okay and then you know time and force day display size I I play around with it I used to not show it but um it's harder to fill. but if you show it u a lot of the Quant trading will play of your trades.

Yeah so the moment you show it all of a sudden thousands of Trades will move their bid and ass. You like how the human do that but then like you you're buying one quantity of one probably doesn't matter right? if you were going to 100 I'm not trading I'm just like $1 I don't So and another thing is you can turn on the price management Elgo I don't know if you turn on your oh I haven't tried that yet I never I don't use I help big time. Really Elgo will help you to get the best price. Oh so you can hit on the information.

it'll tell you what price management Elgo is. but basically if you're selling option it will help you to get paid the most amount of Premium but if you're buying option it will help you to pay the minimum amount of bet. So day trading will help too. So what does what does that do exactly like adjusted your you get EX so if I put mid yeah if they can help me get instead of 1.91 I can get a 1.92 they will try their best to get 1.92 So I get pay $1 extra.

So does that mean you just kind of delay the execution time then like instead of getting filled right away you kind of the El go allows you to wait a little bit and get filled at 190 instead of 191. Yeah I know like is that what happens in the back end is like a black box so there's different p You know there's like different level more volume you have. You can like when I was back in the day trading days I had a coach so my coach was trading volume so big so he can tap into a VIP level so you will get you know the orders are bigger than 50 per lot kind of thing. so they get priority commercial I See so but anyway that this is like small stuff so it doesn't really matter just knowing that price management Al will help and then yeah you just you know do your Tinder swipe and then but in this case you always have to swipe right? Yeah, you swipe right and you wait for it to get filled and $191 will get paid right in your account.

Oh okay and then so what happens after this? So let's say in 30 days explain to our viewers what happens is Apple is yeah, what's the strike price? It's indeed at 170 in 30 days. So there's three scenario here. One scenario is that if in 30 days Apple St price Dro lower than one 170. Okay so by Friday around 5:00 P.m.

interruptive broker will force you to buy 100 shares of Apple at 170 so your money 177,000 would go out, 100 shares would come in okay. but if Apple stock is above 170 if it's 17.1 or 180 or 200, yeah, you basically keep the money get paid up up front of $191 Okay, and your put option just disappears. just dis and you just rinse and repeat. and in.

In this case, if you don't actually want to own the shares I Know you said to trade this strategy, you have to be prepared to own 100 shares of Apple at a cheaper price. And but what happens if you don't want to do that, they they really shouldn't sell options. Oh I see, but there are ways that you can close it earlier. For example, if tomorrow comes up Apple go up by 10% the premium price of 191 will probably drop to like 0.1 $10 So what does that mean is that I got paid 191, right? Yeah, But tomorrow when the stock price jump up like 10% the chance of me having to buy Apple shares at 170 goes down substantially right? So in terms of insurance, the risk is a lot lower.

Yeah, okay, lower chance. I I need to buy 100 shares of Apple right? So the premium price will drop as well. So what does that mean that means I can actually I can pay 191 I can go out and pay $10 to close the contract. Oh I See, So you keep the difference off and I keep the difference so you're closing it early I can close it early.

So that was a fun little demo about selling options. this really passive strategy. Cod Trad If you have any more questions for him, you can leave it down below and uh he can answer it I just put you on the spot. Oh my God you have to do it now I have I haven't answer a lot of comments but uh I'll do it for you just for this.

Do it for my view for the first hour. If you you know, I will sit there on the first hour so make sure you put the comment down on the first hour and I'll be there to answer just like Stephen Graham A Oh okay, good, good, good. Okay so now that people kind of have a an idea about what you trade and how you trade, how many you know what's your day-to-day life like as a option seller, let's say how many trades do you take per week or per month? Yeah so on average my account I was showing my account off record right the last year we make about 3% I thought was going hit 40 but nevering it. That's just by making one to four trade per month, one to four per month per month.

Okay yeah and that's on. Um this is on the strategy that s and done strategy. the fast money so not the individual stocks individual stocks. Yeah just I just go sell a put in 45 60 days out if I own it I own it if not I repeat kind of I see Okay so for trades oh per month to four okay and how many hours a week do you work so like like it's actually around 30 minute.

okay um per week but that's because I have the whole team support. So back in the days when I don't have coaches when I don't have analysts on my team I do all the research on my own I read the charts I continue to update on the news I draw the charts and I update my VIP But then once we have our Mastermind I start um you know have our bringing up the best student to be my coach. my brother start helping me I know even met him the other day. he's engineer as well and there's students been with me for four years.

so I just Elevate them. now they're day trader they love it. so they read all the charts. they come off the newsletter so even coming up like waking up in the day I can just read their report and make my decision based on that and I just share with my group.

not for people to copy but there's a beginner that are copying just because they're trying to learn the rope and I show the reason why. But I don't really spend that much time because most of my clients are doctors, accountants, busy individuals. so they want something that only takes about 30 minutes okay per week. So you're saying as a Trader who does that kind of option selling strategy.

they can realistically expect to only work 30 minutes per week. Um if they're picking individual stocks? No okay I used to individual stocks so my like what do you call watch list 30 stocks on it? Okay um and we we try to clean out the ones that we don't like and put in the new ones. but for a set and done strategy it's just S&P 500 future. So that's why only track one chart.

it doesn't move as fast. we just need to know the macro, draw the charts aliot waves, support resistance, what's percentage of scenario. Then we make make our trays accordingly. Okay it sounds like the only downside with that is that you you need a bigger account.

Like let's say, if you need to generate I don't know $10,000 a month to live on, you probably need a million dollars right? Just reverse engineer. Like if like if we're targeting 18 to 54% per year and reverse engineer that right every month's about 1.5% So if you want to make 10,000 10,000 divided by 1.5% what is that you're asking someone who doesn't do I think that's a million? Well well yeah, it's like 10,000 divide by 1% Okay, and you need about $700,000 and you also compound it over each month, right? Yeah, we don't. We don't really compound because you know this is our fast money right? We either take the money out or you take the money out to live or or we just leave it in. But like our minimum trade size is 5,000 but the ticker I'm using it's which is es is like 20K per tray.

Not that we need that much but because when we're selling option there's some margin requirement. Yeah, we're always preparing for another Co to happen. Make sure we do all the back testing. We have like 250 pages of research paper.

We continue to relive every day of Co to say if that happened again, index drops 30% and within that month what are we going to do right? So we we're reliving that on the back testing. That's a good question. So in this case, do you guys? how do you manage your risk? Let's say there is, unfortunately another virus and everything gaps down over 93% Correct. How do you mitigate that risk or get out? What's your exit strategy if it doesn't work out? So every time we make a trade the like, you probably know IB care? You know the bracket order? Yeah right.

we put in a bracket order so every time we put in there's a profit taking and there's a profit loss if we going to get out of the trade and we did our calculation and we used Tasty Trade to do do the back testing and all that and other software. Our win rate is about 98% like the software shows 99 but I don't believe it. Based on my my own calculations 98% chance we're going to win but that 2% chance it's going to lose. Why Yeah, because if the index moved more than 15% in 1 month we're in trouble.

So we probably going to take loss about 3 to 6% but you saw my account. if I'm up 36% I take a 3 to 6% loss every two to three years. So be it. Okay, so be it.

But you're also counting on the fact that there's only one such drastic event every two to three years. Based on the stats right? This is real fact. every four years there's going to be about a 20 to 25% correction whether up or down. So every two years is going to be about you know 10 to 15% like June we just experienced one that Gap up Yeah we actually got in trouble.

So my account that same account I show you went from 32% down to 24 because it Gap up too fast and I have I have like neutral position and move too fast. So with our active management strategy at that time I'm like okay do I want to take losses or do I want to active manage it So we active manage it. We roll it out and then my account went back after 34% in two weeks. So you will see a big like people want to see it they can see I can show it.

Yeah, okay I don't you probably know I day trade stocks sometimes I do some swing trading so I do a lot of uh, technical analysis and fundamental analysis pretty much every single morning. So how much of technical analysis do you need to do to execute your passive income strategy? Yeah, um, uh. like I said earlier now, my coaches are doing the heavy lifting but they do draw the charts every morning. and because our s strategy will only trade S&P 500 and doesn't move as fast, not as volatile.

True, we still have a percentage of going up what it kind of looks like or what if it goes down. Yeah, so we still do that analysis, but uh, other than that it just we're looking for big events coming up in the following in the week off or the following week to make sure that we try to dodge those and try to have less position. If that's the CPI coming out or is going to come out and talk about interest rate, we have less position cuz I don't need to bet on it. But the best part is that most of my position will not get into trouble unless the market move more than 10 to 15% in one month.

So our room for error is really big in my opinion. so that's why I'm not stressing as much. But but then it's because we have our active management skills so we have a choice of either we're going to 2% take stop loss or we're going to active manage it. So for people who are more passive doctors who don't have time, they just take the stop loss.

But for myself or more experienced people they just roll it out, keep getting paying credit and they I see they just like. Well if it takes me 3 months to break even, that's fine. At least it's not a loss. Okay, but is chart reading still a skill you need in order to trade the strategy effectively on your own? Yeah, I mean it will help.

It will help for sure. So technical analysis technical analysis is one. Um, but a lot of time. Technical analysis is just a small factor.

Um, fundamental analysis is for the big events. but I think the most important part between Technical and fundamental is to how do you integrate this. So like for us we have expensive subscription on the back end of where all the big corporations director are they selling or buying stuff how much right and we track all you know the famous Nancy Pelosi what is she doing right? So we and we track we think about where the money is Flowing So like for example, when when the market is really have a um risky appetite, it will flow to growth stock. Even more riskier, they flow to crypto but if people want to take risk off, they will flow from crypto to grow stock.

Even if if they if if they think the market is coming down they will flip it to like Coca-Cola McDonald's all this defensive stock right? So you can kind of. you have to kind of forecast and say if that happened, where would they move the money So I think that's the part that a lot of people thought the technical indicator will tell you but they didn't forecast. That's the main part right? But if you're day trading, you're fighting within a few hours of the day, then you know you I don't what's your trading strategy but that's a little bit more difficult, a lot, a lot more stressful. I used to do that and okay yeah so you still have to keep an eye out on like the fundamentals and economic data and the trends of the market, right? Okay, any indicators or that's not important at all, it's it's important I mean our our coaches use the typical RSI I see uh we use um uh EMA uh we have our proprietary uh technical um indicator I think you can actually find it on trading view if you type in say yay I Trad that so like it's basically just like we're we're finding the the trend reversal.

but it's EMA 520 and 40 so it might not be as applicable to you cuz you're probably looking at 5 Minute 10 minute and 30 minute or something like that. So different time frame right because of our trade position. Interesting what is still help? So in your opinion, how can stock Traders uh day Traders or swing Traders maximize their profits using options? Wow! such a loaded question. I Think I got to touch on that early on.

Uhhuh for options for you to make money. Like for example, if you're trading stock, if you're betting it to go up, you're not leveraging. Okay, you put in how much money you have, the percentage that gone up is the how much percentage you're going to make right? But an option is if you buy that option, that $10 going in is leveraging. You might be using $10 to control a $100 worth of the stock.

But two things has to be right for you to make money. The time has to be right and the stock price has to be right. Yeah, and most likely you're going to be raw most of the time. And that's why.

if you want to make more return using that, you have to be right on time. And the price. Okay, does that make sense? Yeah. Does that going to make sense? Yeah, Yeah.

But that you're talking about day trading Op options? Yeah, if you're day trading option. but if you're like are we talking about investing or trading no I think in general. yeah, if you're an investor, then I saw your portfolio on Blossom You know you have some Apple, you have some. Tesla Google Microsoft So if you have anything more than 100 shares of the stock, you can go ahead and sell a cover call.

I Just you know that just means that if Apple right now is 170 Okay right they you can go sell a cover call at 180. What that means is that hey, I agree to sell my Apple shares at 180 if by the expiration date the stock price is above 180 and you get paid a few hundred while you wait. Oh I See so you're right now. the price is 170, the cost of average is like 160.

you agree to sell at 180. So if that stocks get call away, you're forced to sell the stock. You profit the difference of $20 Times by 100. that's your appreciation.

You keep the premium of selling the cover call and you keep the the div in while you're holding the stock right every quarter. Oh I See, so that's that's a good way to maximize it. Do you do that yourself I Know people use that to hedge their long-term Investments too I Want to call it hedging? I Mean it's just to me. it's a very lowrisk way of free money cuz if you're going to hold that stock for the long term and if it's a boring stock, yeah, like Apple, Well, not that boring quad, you're not Bing Yeah so but it's a good way to get extra income cuz you you can't really control the stock price.

But as when you're waiting, if you have more than 100 shares of the stock, you can go sell a cover call and that can make you extra 1% to 12% per year just by selling a cover call. And that can bring down your cost of ownership right? Okay, and eventually you can own the stock for free. If you sell it every month, you bring down the cost of a for $2 Eventually, if you sell enough, you own Apple for free I Think the only downside is that becomes active Trading Oh, you can. Yeah, when you sell cover call, you can set it as an expiration day for 30 days, 60 days, even 90 day.

So every 90 days I put in alarm clock I come back and like my mom asked me to manage her account, I'm not going to be very active so I just set up an alarm clock every 60 day I go back and sell more cover call. Okay I just buy some SPX buy some Apple and I keep selling cover call every 60 day I come back and sell another cover call. Oh I lost it. Okay, make the profit and I sell another put to try to get back in.

I think that might still still be active trading though. No, do you do that in the same account as your the long-term investment account? yeah I mean depending got be careful and Canada if it's register account you can sell cover call but you cannot sell put option. Oh to buy stocks you can only sell cover call. it's fine and then every 60 day you make one trade it's that's okay.

Okay and it's a again I'm not accountant but if people want to look into to it, there is, um, a tax law that was set in in the 1970 I forgot it's called it 7455 or something. Don't quote me on that but ask your accountant. It's a very old law that will say that if you sell options, sell puts and cover call and if you maintain your your behavior every year then you can treat it as a capital gain. Oh so there is a tax law for that, but you have to be consistent, right? But you're right.

You got to be very careful. You got to be careful. Okay, so tell us about your biggest wins or losses trading options if you care to share the stories. Yeah, I mean um, my biggest losses will be on the buying side of options.

So okay I Remember, you know you probably know the stock called TSM right? The Taiane Semiconductor we're pride of Taiwanese Yeah yeah Yeah semic you bought the stock or the option no I bought the option I bought like I don't usually buy options I take my profit and then only search amount of that I used to buy option and when I buy options I buy the expiration days of two years out. oh you're buying leaps I'm buying leaps. Okay so I bought it right at the hype of around like November 2021 hoping that within two years it will work out I see. But then as we all know Texas start coming down so you know all that's kind of in vain right? I could have cuz I couldn't really do much of it.

you know I can roll it all that. but you know yeah, two years is coming up right? Yeah yeah, two years is is coming up and I'm like looking at it like well I spend 10K 20K on it hoping that you TSM would gradually go up in 2 years but it was a correction I'm like well yeah that's my losses and usually the big losses on the buying side of things and I know it going in. so if I make let's say 100K on this account I only take 10% of the profit to go buy options. so I know if I lose it all.

Okay, it's fine, but if I win it will actually contribute to the 100K instead of only making 100K I might be 120 140 160. But if I lose okay I make 80k I see So okay, but that's not really your regular strategy buying options. No that's like that's a one thing you do once or twice a year. Yeah yeah like if I see like a good stock I'm like okay I think it's a good point there on support, there's a Momentum.

let's go I see. But then so then you're almost Momentum trading at that point two years out it's two years out and then you know you can the the op. The good thing about options is that I can actually sell cover. call against it to you know I pay 10K but I can sell cover.

call against it to get paid 400 bucks per month to bring down bring down the cost basis. Yeah yeah so it depend how active you want to be. but at that time just like you know what this is going to be a leap are going to buy I didn't do much management so I look at it I'm like 100% I realized losses. Okay well I never seen that before TSM that's TSM Yeah so it kind of hurts but but but you know I'm using a minimum amount of money to control 100 shares of TSM Yeah, okay and 100 uh, 10,000 in that one position I mean in a big grand scheme of things, not usually it's like a quarter.

So if you want to buy 100 shares of TSM right now is that I' say 100 bucks? Yeah, you need 10,000 Yeah so usually you only need to put in 2500 to buy the leap depending on how close to the money. I Know we're not going to get into the technicality of things, but you really all the money. No I'm really in the money. Okay I'm really in the money as in um if TSM was at 100 I bought a a call at 60 50.

Okay I'm like so in the money I see so in the money. So the reason why I want to buy in the money is because I want less extrinsic valy I want less time value going against me I want all the value to be on the intrinsic side. so I see Okay, maybe it's confusing. a lot of people on you might yeah, but you're going to let it expire work L then at this point yeah I can roll it but there's no point.

really just means I close it open a new TR Okay so what about your biggest win Biggest win I I as far as I remember like selling option is boring like you don't get big win yeah the big one might be. Yeah I close in the same day. 60% profit. Okay okay I don't get excited like when when with my strategy I have no emotional attachment to any of my game or losses especially on the said and done I I train kind of like a day trading cuz I went through those days.

Yeah so now I'm trying I look at a S figure account. oh down 20% Holy cow 200k you know, doing like pullback and all that. but I'm like okay but it's going to come back right? But you kind of treat it as a video game in real life. but when you treat as a video game and you have it more rationale right I almost treat it like a paper trading account and you do much better things.

And I show my trades to all my students so that I make more risk adverse trades I See so and coming back to my biggest win October 2020 Right before the US election uh there was a big drop I don't know if you remember October October 2020 I don't remember a big drop Donald Trump sorry that was like reliving the past Donald Trump got elected around November I think the third. Yeah yeah. okay so October everyone was really worried Donald Trump is coming up. the war is coming to the end.

They're going to build a wall. Um so the volatility Skyrock maret it the stock price drop a lot. So at that time I went in and sell puts I put in big position on selling puts on Blue Chip stocks some the growth stock and right after the election right the the volatility drop and the stock price go up. Both work in big favor.

So that was like 100k that month. But but that's a that sounds like a short-term trade then? Yeah, that's why 10% in the month. So put into context 10% a month? We don't usually get that, but you know on those days when every all the stars alive Goes Down star goes up, we're like yeah, we make 10% So you do take these momentum trades once in a while that's kind of outside of the passive. back in the yeah now I'm more think about how do I avoid those risks.

So if I now relive that Yeah, I might actually only put on life position. So like the strategy right now is whenever everyone's really greedy outside, it's kind of like the Bu Bu Bear Trader Right when everyone's really greedy outside I put on less position. but when everyone's really afraid, that's when the volatility is really high, there's actually a less chance that the stock would drop more because it's already been. Yeah, a lot of sellers already sold, right? So that's when we're going to go out and sell more options.

That makes sense. But like right now, when like Sunshine Rainbow actually put on less position. Okay where you have no direction of the market. Really right? So so for all your different strategies, um, let's say take the most your most commonly traded one.

the the passive Income strategy. How how long do you usually hold those positions? Um, it could be a day, could be 20 days. Yeah, sometimes if the market move in our favor, what a volatility drop, right? It's a selling option, less risk so we will be able to close our Prof close our position at a profit. but usually it's between like 5 to 20 days.

Okay, so usually go for the monthly, then uh, maybe like 45 days. 60 days usually qu okay, Got it? Got it? I just want less trouble right? A Lot of people like Cody why don't you sell a shorter period? You can get more return. but I'm like I want less trouble I only want to make a few trades less risk too. Yeah I want to say less risk I just want to get want to get paid more money managing less and I still hit my 18 to 45.

sorry 54 so I'm good enough like I don't need to make more. Okay, so on average each month, how what's the percentage you're aiming for? We're targeting like 1.5 to 4.5 So you saw my account was at 36 Right on. like 11 months. That's this year, right? Yeah, that's well.

it's not even one year yet like this account was created September 23rd. So almost one year 23rd. Oh okay, almost one year a year ago. Yeah.

and I only started trading this account in October 7th. so I didn't Let's see. Okay yeah, put in 18,000 and yeah, now it's like 25,000 Okay, got it. So what? What's your personal risk tolerance like I said I know earlier you mentioned you want? You don't want a lot trouble like what does that mean? What's your risk tolerance? Um, like for a set and done strategy, we have to bracket order so we know how we going to take profit and how we going to take losses.

In case I don't even have internet if I'm in a jungle I'm in a rainforest I have trades gone like it will take profit or losses for me, right? So like when we take losses, it could be anywhere from 2% to 6% right? But when we take profits a lot smaller right? And the way we target for 1.5 to 4.5% is not like every trade we put on. we try to make 4.5% because every trade put on sometimes 0.5 per month, sometimes 1% But because we rotate the capital, we take the same amount of risk and we close it and we put on again. Right then then we we basically I wouldn't to say double down, but we rotate our Capital so that we make double or triple of the 05% Okay, so we don't take more risk, we take the same amount of risk. but then we make more money because we're better at doing this right based on the chars.

So at any given time you only have that one position. Then if you're trying to close it, Then rotate the capital every time at sorry I'm trying to understand that question. Oh because you said you close it and rotate the capital so use the profits to put in more and then to make those monthly returns. So does that mean do you only hold one position at a time? then cuz your cap, there's Capital limit right and requirement.

Yeah, so we never go above the margin requirement that you know that's for example, each trade is about 20,000 for for my bigger account for people bigger account. but usually you only need 5,000 to 8,000 to open it. But the reason why we put 20,000 is because if Co ever happened, we have much more margin. If Interactive Broker do reduce the amount of mar requirement, we have that room right? I See So we always look at the worst case scenario and we want to survive the the Blacks One event, we're not trying to make the maximum, but we want to be the last one standing.

Okay, so coming back to a Full Circle Back to trading stocks. Do you think options trading is riskier than stocks? I think what's your opinion on that I Think it's definitely riskier because um, there's more variables for example, volatility, margin requirement, and all that. It's not for the lighthearted like if you're going to trade option A Lot of people get into trading option and get hurt because they just know enough and they just follow other people like Momentum stocks and they don't really know that for it to work out, time has to be right. Price has to be right, right? So they get into a scalping game.

Yeah, they get into a scalping game and the probability of winning that is really low. So they might put on 10 trade and even if they win six which is 60% win rate, they could still be losing money. Yeah, based on the math, right? So um yeah. I think options.

Definitely one step ahead of stock trading. Okay I think you should Master stock trading and then option. Really just give you the option to leverage or to be more flexible. but you should Master stock trading if you ever do.

But for me I only sell so so I don't Yeah I don't try to day tray. Okay, interesting. so as a full-time options Trader you still recommend people to understand 30 minutes call full time. Okay, you still recommend people to learn at least understand stock trading first before before trying to trade options.

Yeah, so like even for my beginner course. I I Bring people who are totally green yeah to the Stock Investing right? Let them know what a stock is yeah, that Mak what all that means and then transition them to option right? cuz they have to know what the underlying is to understand the potential risk and how much leverage they're taking. So what do you think about Cuz obviously we're both on YouTube You Know YouTube Tik Tok There's a lot of people who talk about if you have $1,000 just it's okay. just start with options trading like to brand new beginners.

Yeah, what do you think when you see those kind of advice and what like the risk associated with that? Yeah, it's funny actually just make a short form video. it'll probably come out in a few days. Oh yeah, but um, if you only have a $1,000 don't trade option. Okay, um, got it because most people would be like, you know what? that's a $1,000 I can lose So I just going to go and gamble it.

But guess what? that's a $1,000 you work hard to earn and that's why that's keeping you from becoming a millionaire is because you have those kind of mindset, right? So like he said on other videos, if you have $1,000 go buy, go on YouTube University Or go buy a free book or go buy a book and understand that first and then take those skills. make more money. Yeah and find a lower risk way to trade option like most preferably I think selling option but you you need at least $5,000 right? So get to 5,000 But before that, don't go. And you know, get into the hype of gambling or speculating you a lot of time is that you go to a casino.

The only time I win is I play a new game I never played before and I look I look at this is a funny thing. That's my strategy when I go to casino. just okay in case people wonder I go to casino I sit on a table I ask around I say who lost the most amount of money and whatever that guy does I do the opposite. That's my highest win.

Yeah, that guy is not on a roll and I just do what the opposite he's doing and I make most money and I walk away after two three wins, right? Yeah, you have to walk away the longer you stay the odds. Yeah, and then that's the same thing with trading. They're going to get some rookies luck, but after two three trades they might get all the profit back. Yeah, and they'll be like yeah, it's only $1,000 just going to make it come back.

but that's a $1,000 because the math works this way, if you lose 10% of the $1,000 you need to make 11% to get it back. Makes sense if you lose 50% you need to make 100% to get it back. If you lose 90% you need to make 900 times. Yeah, and people don't get that.

So if you start having the right mindset about money, it's not about growing, it's about protecting first. Yeah, for sure you will become a millionaire. Very cool. Thank you so much for the Insight Yeah, thanks for having me thank you.

Cody We're going to do the fist B I've never done fist bonbs before. No, what do you do? High five high five I was a high five. Okay, one more. Okay good uh where can people find you on social media I have Instagram account? okay it's Cody A _ yay or have a YouTube channel called Cody Yay Investing Okay, you can find me there or you just Google me I've been on like 80 podcast Yay us in like y a y right? Yeah yeah C yay C yay yeah it's y E H sorry it's pronounced as yay Cody Uncore Ye H on Instagram and Cody yay on YouTube yeah Cody Investing Okay, yeah, thank you Cody yeah thanks for having me.

So today's session is definitely very fun and informative. Cody Made it very simple for you and I to learn more about options trading. however I hope you guys can also hear the music beneath the words. Always be careful with risk management and stay close to your Edge and do not deviate from your process for Cody he's back tested his options trading strategies for years and now he only focuses on trading the major indices and futures for spy.

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