Earning 73% Return Selling Puts on Margin Called Stocks

Рет қаралды 5,111

3 жыл бұрын

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Пікірлер: 76

@JakeBroe 3 жыл бұрын

Thanks for watching everyone! If you found this video interesting, be sure to give me a LIKE to support my channel! Also, check out my entire playlist on trading options here: kzfaq.info/sun/PLscTZuOqKWIxSZzy4ObKWDznEsCot_1HU

@Alvin_1914 3 жыл бұрын

I am just in awe of the investor that Jake has become. He has really taken off and seems to have a grasp of what it takes to be successful in the market. He has left this old Boglehead behind who just maxes out his Roth IRA yearly via DCA into VTI. I've said it before and feel that I will say it again; Jake is becoming well versed at chess while we are all playing checkers.

@JakeBroe 3 жыл бұрын

Haha, that's funny you mention chess since I was a state scholastic champion for Wisconsin when I was in high school. My mind loves puzzles and challenges and the stock market is just one giant puzzle to solve. Making money is just a byproduct of me solving the puzzle. Cheers!

@JacksonWelch 3 жыл бұрын

Love these types of videos. I swear I learned more from you than my actual MBA degree lol.

@newsnowadirondacksredux360 3 жыл бұрын

Lol a MBA can be overrated.

@JakeBroe 3 жыл бұрын

Glad I am capable of providing useful information! Cheers Jackson!

@stevenbi7495 3 жыл бұрын

Hi Jake, another great video! Hope you best of luck on those two put!

@JakeBroe 3 жыл бұрын

Thanks Steven! Cheers!

@Bangpaulxu 3 жыл бұрын

Jake you have and are teaching me so much. Thank you again as always for your insightful vids.

@JakeBroe 3 жыл бұрын

Thanks for watching as always! I always appreciate it!

@snoproperties9100 3 жыл бұрын

Thanks for sharing the details and I certainly like the way you approached selling the puts.

@JakeBroe 3 жыл бұрын

Thanks SNO! Cheers!

@corywooten2698 3 жыл бұрын

Thanks again for another great video, really appreciate the full thought process of you buying these put contracts.

@JakeBroe 3 жыл бұрын

Thanks for watching Cory! Cheers!

@TwoStupidGuysTradeStocks 3 жыл бұрын

Great video Jake. I remember Buffett talking about how IV goes up when a stock drops significantly and how that makes no sense. The risk drops as the price drops according to Buffett as long as the underlying company is solid.

@JakeBroe 3 жыл бұрын

Exactly! If a stock craters, then my risk in owning that stock also drops, yet when selling a put, people are willing to pay me MORE money to own it. It truly is a contradiction and one I am happy to take advantage of.

@fongluo677 3 жыл бұрын

Another awesome video Jake, I really enjoy watching your channel 🙂

@JakeBroe 3 жыл бұрын

I am glad to have you with us! Cheers Fong!

@AnaG 3 жыл бұрын

Great video!

@JakeBroe 3 жыл бұрын

Thanks Ana! Cheers!

@aaahoang 3 жыл бұрын

Definitely a thumbs up! Today marks the day I am no longer an option virgin lol thanks to you Jake!

@JakeBroe 3 жыл бұрын

Congrats Mai! Best of luck!

@hawk5410 3 жыл бұрын

Another great video. I agree 100% with your analysis....the stocks themselves fell for no reason other than Archegos. Good pickup!

@JakeBroe 3 жыл бұрын

Well... they were definitely overvalued at $100, haha. But at $40 a share they seem more reasonable.

@deadleague3618 3 жыл бұрын

This is great here!

@JakeBroe 3 жыл бұрын

Thanks deadleague! Cheers!

@newsnowadirondacksredux360 3 жыл бұрын

Great analysis!

@JakeBroe 3 жыл бұрын

Thanks Redux!

@godsvengeancedm 3 жыл бұрын

My favorite thing to do now is selling puts thanks to watching you. Only thing is my account isn't as big so I get handcuffed on what I can do.

@JakeBroe 3 жыл бұрын

That's awesome JDion! Selling puts is amazing. People are paying you to buy stock you wanted to buy anyways. Double win!

@magsaleh2000 3 жыл бұрын

Thank you for sharing all these info !! Is VRTX is good opportunity now or we should wait for moving average

@JakeBroe 3 жыл бұрын

Looks like a very well rested stock trading between $210 and $220. The 200 moving average is falling down to it. I would say if this breaks $230 then it is probably back in an uptrend. It's hard to say with drug companies since what they got coming out next matters so much.

@MegaTxDude 3 жыл бұрын

I'm too leveraged on other positions but this looks like a good buy. I happen to like disca a lot more. Great research

@JakeBroe 3 жыл бұрын

Thanks Dude! Cheers!

@KyotoMelody 3 жыл бұрын

I picked up some stocks and a mutual fund. The fund and I got a “deuce” at this moment! So, I’m at least as good as the fund! Ha ha! I didn’t trade, just picked up some stocks and leave them there. By far, this is already a HUGE step for me. I’d have to learn much more to be an investor. Thanks for your videos!

@JakeBroe 3 жыл бұрын

That's awesome KM! You are making goo progress!

@danieleohmailbox 2 жыл бұрын

Wondering what is after story. After 5 months later, DISCA is still in down trend, priced around 26.79, more likely those contracts were assigned at 41, and down -35% if held. Are you keeping those for another year? or already sold with loss?

@ahmadabood9414 3 жыл бұрын

Hi , jake great , any recommendations to learn more abut selling options 👍

@JakeBroe 3 жыл бұрын

Hey Ahmad! Sure, watch the videos in my playlist: kzfaq.info/sun/PLscTZuOqKWIxSZzy4ObKWDznEsCot_1HU

@pvsrinivas100 3 жыл бұрын

Great video btw, since you are saying that this is the bottom for these stocks - wouldn't it be better to buy calls to get more profit?

@JakeBroe 3 жыл бұрын

The problem is I don't really see an uptrend occurring yet. I just think these stocks have bottomed out and won't go any lower. The problem with buying a call on them is that the premiums are crazy expensive. Meaning my break even price will be very high and I might never reach it. I think selling puts in this scenario is the better plan than buying a call.

@mrwsilva1 3 жыл бұрын

Jake, what made you pick that expiration date? Why not earlier or later? Is that the best strategy to maximize theta decay or just personal preference?

@JakeBroe 3 жыл бұрын

Hey Mr Silva! Theta decay ramps up and wastes away the remaining amount of extrinsic value in the last 4-6 weeks. This is the sweet spot to capture the most value. So about 1 month out is where I traditionally pick to sell a put. One I capture most of the value of this premium (about 70%), then I will buy to close my position and move on to something else.

@mrwsilva1 3 жыл бұрын

@@JakeBroe Awesome, thanks Jake!

@westcoaststacker569 3 жыл бұрын

Thank You Jake for the share. You seem to be hitting Deltas higher than normally recommended for Wheel but then your following your bullish feelings. My account is too small to play with these though I thought there should be opportunity based on the circumstances of their price drops. Good Luck.

@JakeBroe 3 жыл бұрын

That is correct WCS! Because I am fine with being assigned, I was willing to select an ATM strike price.

@InvestorSheikh 2 жыл бұрын

Hey Jake, does Schwab allow you to use margin as collateral for cash-secured puts? If so, does the margin held in collateral accrue interest?

@JakeBroe 2 жыл бұрын

Yes, with margin enabled you can use it for selling puts. And no, the margin buying power held as collateral is not charged interest.

@discolemonade7716 3 жыл бұрын

Hi Jake. Do you have any expectations during earnings? DISCA reports on 4/28. Do you have any screeners to find options with high premiums to sell puts or low premiums to buy calls on your bullish stocks? I know you were using Vanguard and that you sorted the stocks you have by what was up that day and in an uptrend with good fundamentals, etc?

@JakeBroe 3 жыл бұрын

Hey Susanita! I use Schwab and no, i don't have any special screeners. I just click around and research on my own. Earnings reported and it was bad. Stock dropped and then recovered. I don't know what will happen come May! Haha, we shall see. Cheers!

@kendowarrior99 3 жыл бұрын

So from your other option videos I know that both selling puts and buying calls are bullish positions for a stock. But the reason that you decided to sell puts as opposed to buy calls in this case is because the IV has driven up the premiums in both cases and selling puts lets you capitalize on that vs having to pay more to open those call positions?

@JakeBroe 3 жыл бұрын

Correct! Buying a call would actually not be a good price since the IV shot up so much. When IV is high, then sellers are collecting more premium. I also am not buying a call because I am not very bullish on this stock. I just think it is done falling. I could be wrong, we shall see!

@kentsangkh 3 жыл бұрын

Glad I found you, I have learned a lot from your options trading videos. What do you think about Synthetic long strategy at further expiry date? Is it a good way of mimic long stock positions with "low cost leverage"? As we don't need to pay margin interest upfront with the selling put, I see this as a "free" leverage with existing portfolio. Is there any major risk involving? I am eager to learn more, any insights would be appreciated. Thanks again!

@JakeBroe 3 жыл бұрын

Hey Ken! Welcome to the channel! I am not sure what you mean by "synthetic long strategy". I have a video coming soon on LEAPs, is that what you meant?

@kentsangkh 3 жыл бұрын

@@JakeBroe I mean sell put and buy call at the same strike at furtherest expiry date. Thx!

@russellingram5309 3 жыл бұрын

Seemed like most of your cash was already leveraged from your previous videos. Did you free up some cash to make these cash secured or are you using margin buying power to secure them? If the latter, what level of options did you have to be to do that?

@JakeBroe 3 жыл бұрын

On Schwab I am just on level 1 and yes, I use margin buying power to sell puts because it doesn't cost anything.

@amherst2013 3 жыл бұрын

Jake so for stock option do you need to have cash on hand for 100 share in case you are assigned?

@JakeBroe 3 жыл бұрын

Yes, you need to set aside buying power equal to 100 shares at the strike price with your broker in the event you are assigned. But you can use your account's margin buying power and it doesn't cost you anything since you haven't borrowed anything yet.

@changxuedeng2060 3 жыл бұрын

Thanks I am trying to sell a put on VIAC too.

@JakeBroe 3 жыл бұрын

Solid! It will be volatile, good luck!

@catsdogswoof3968 3 жыл бұрын

Sry if you saw this already but Do you know how I can help people know something without getting marked? Its annoying all I want to say is how an update and when its going to release.

@JakeBroe 3 жыл бұрын

Not sure what you are talking about... sorry!

@matthewsherwin8741 3 жыл бұрын

Hey Jake I hope you’re doing well. Thanks for the video but this is too risky for me personally. I wish you success with this, though!

@JakeBroe 3 жыл бұрын

Thanks Matthew!

@Blk_pantherfit 3 жыл бұрын

jake I need help with my portfolio i panic sold when the market was dropping

@JakeBroe 3 жыл бұрын

Oh no Pac Man! Don't panic sell if you like the stocks you are in, haha.

@Blk_pantherfit 3 жыл бұрын

Yea ima rookie. I learned my lesson😞

@BluishLizard 3 жыл бұрын

Hey Jake, stumbled across your videos a few months ago and I have to say I've found them incredibly informative and enjoyable. I came in without any background in finance or investing and feel so much more knowledgeable of basic and intermediate topics in these fields. That being said I had a question for you, I am interested in investing some money into some low cost index funds but have some concern about jumping into the market now at such a high point and with the threat of inflation looming. I know you can't time the market and its better just to invest it and let it sit but I still have some apprehension about doing it now as it seems like the worst time to do so. What are your thoughts on this?

@JakeBroe 3 жыл бұрын

Hey Lizard! Welcome to the channel! If you are looking to invest on a timescale of 10+ years, then every time "time in the market beats timing the market". Yes, you could put it all in right now and the market could drop 20% this summer, but as long as you don't sell, it doesn't matter. In 10 years you won't remember this drop or care. If you want to put 20% of whatever you want to invest in to the account each month the next 5 months to be safe, you can do that, but if you are a long term investor it really doesn't matter.

@RobertSek512 3 жыл бұрын

Jake, why wouldn’t you buy a call instead?

@JakeBroe 3 жыл бұрын

I don't see the stock in an uptrend. I just don't think it will go lower. More than likely it will start trading in a narrow range. Maybe it will start drifting up, but if it doesn't and it goes down more then I am fine buying the stock at a discount. I'll then just sell covered calls on it to get rid of it.