Selling Covered Calls using LEAPS
In my latest video, I going further into covered calls, and I explain the concept of using LEAPS. Stay tuned!
Transcript:
Okay, so one of the questions I’m often asked in my program is, how can I get a little bit more bang for the buck by using LEAPS. Now, some people call them poor man covered calls, I don’t like that at all, I think that’s a stupid way to do it, there’s a lot more to trading covered calls and just buying a stock and selling an option against it. By the way, if you don’t know much about covered calls, take a look up here, I’ve got a link to my other covered call video that’s out there. And you can take a look at that. But most people don’t have a program around covered calls, we have a full system called the cash flow machine. And it’s got a system of rules around it to let you know, hey, if the markets doing this, you do this. If the markets doing that you do that, right? So there’s different things that we do with the market, right? Can’t just have a thing where you just buy the stock and sell the call. And that’s the only advice you get, there’s got to be a full system around it, right? Because we know that the market is emotional. And when you have emotions, emotions go up, intelligence goes down, right? So we don’t want to make stupid emotional decisions. And that’s what most traders do, even in covered calls. Now, what can you do with covered calls using LEAPS? Well, you can sell covered calls, using LEAPS, it’s really cool. The way it works is, you’re never going to get something for nothing in the markets, you’re going to give up a little something. But let me give you an example. So let’s say Tesla right now is trading at $1,100. And you can find a long term equity, anticipation, security and leap, right, it just means a longer term option, you find, let’s say an $800 strike price, okay, and it might go out a year, right. And so let’s say just for rounding the numbers off the for going out that year, you’re gonna pay $100 Time premium, okay, so you’re gonna pay $300 for the in the money amount, it’s the $800 strike less the amount that the stock is in the mind. Okay, so that’s $1,100. Right now, 1100 minus eight is $300. That’s the in the money amount. And then on top of that is going to be a little bit of a time premium. That time premium is the what you got to pay, to be able to play in that game, right, you can’t have something for nothing. And so that’s the price. But look what you get, instead of spending $1,100 on a stock on a share of stock, you only have to spend $400, to control that same share. So you can buy almost three times the amount. Now, you never get something for nothing. So you’re going to give up a little delta, which means it’s not going to quite move at one for one with the stock. But you’re going to be able to buy three times as much. Now you’ve got to have rules around it. And you got to understand there’s some accounting irregularities around it, we teach all of that in our cash flow machine program. And you should know that right, you’re not going to just get in this by three times the amount on a leveraged product, and everything’s perfect. There’s a lot more babysitting and rules around it, I want you to I want to make sure of that. And by the way, this isn’t financial advice. This is just an opinion. And just be smart, right? Just learn about what you’re gonna invest in no matter what it is. But you can use a LEAP. And you can sell covered calls using LEAPS. It’s really cool. So now you’ve got $400 invested. And let’s say you’re getting three, you know, at the money, you’re getting $30. Well, $30 over 400 invested is seven and a half percent, right? So you’re making seven and a half percent if you make $30. How often can you do that over and over again? Well, you can do it a lot. So you’re making a bit more, and you’re giving up a little bit of delta, a little bit of slippage, and a little bit of a counting security with it. But selling covered calls using LEAPS,it’s a really, really great strategy. Now, quick commercial here, we have a program called the cash flow machine. It’s a course we have a we have an introductory course for beginners, that just teaches the basics of covered calls. Then we have a program called the elite course, which is a fabulous course it’s got over 90 modules in it now. And it teaches you all the different rules, the market timing rules, the stock timing rules, what you do if the stock goes up down what you’re doing the different kinds of markets and teaches you like everything mindset, which is 90% of trading, as you probably know, and then it teaches you how to sell covered calls using LEAPS. Something that is called synthetic, we talk about synthetics quite a bit in our program, and people love them. If you want some more information, you’ll click on one of the links below and I’m sure you can, you can you can join one of our courses and we even have a mastermind group a whole community around it and make sure that you’re going to be applying the knowledge and the way that we teach it and not a single person has ever faltered in our program. So I’m really proud of that. I’d love to see in that but the point here is not to give you that commercial. The point here is to teach you that you can sell covered calls, using LEAPS. And it’s a really fantastic way to use covered calls to create income, that income creates defense, you lower your basis in the stock your basis in the in the in the synthetic position. And by doing that, you increase your iron, and you lower your risk a bit. Hope that helps I look forward to seeing you on the inside. By the way, if you want to learn more, if you want to join some of my ecosystems, we have books and courses and masterminds and mentorships. And all kinds of really cool things to get the probabilities in your favor. You know, I help wealthy investors play offense and defense by creating safe, reliable income. But it all comes from a system. And if you want to learn to do anything, right, you’ve got to have a system It can’t just be I watched a YouTube video, you need to learn a system. And I’ve been doing this for 44 years, I think I’ve got some really cool programs for you to learn. Anything worth doing is worth doing right? You might as well learn it right? You might as well put the time and effort into something that’s gonna make you money for the rest of your life. Go to one of my sites, the main one is called Hacking money.com you can click there, you can go to the products tab, you can see what we have to offer for you so you can take your trading to the next level. And maybe I’ll even see you at one of my events. In any case, I hope you join one of my ecosystems and I hope we see each other down the road.
