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Wealth Building With Options
Wealth Building With Options
38 episodes
1 week ago
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Investing
Education,
Business,
How To
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Investing
Education,
Business,
How To
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Ep24 - Commitment Issues
Wealth Building With Options
42 minutes 38 seconds
3 months ago
Ep24 - Commitment Issues
"There's the kind of stock you date, and the kind of stock you marry." In this episode of Wealth Building With Options, Dan explores what it means to have "commitment issues"—not in relationships, but in trading. Sometimes you don't want to marry a stock for life. You just want to take it for a profitable spin while managing your risk. That's where short-term buy-writes shine. What You'll Learn: The psychology behind "dating" vs. "marrying" stocks—and why everything is impermanent When short-term buy-writes outperform buy-and-hold strategies How to evaluate opportunities when you like the fundamentals but don't fully trust the stock The "money lying in the corner" approach—waiting for exceptional premium opportunities Why 3 weeks to 2 months is the sweet spot for short-term buy-writes Three exit strategies at expiration: roll, close, or accept assignment The three-way analysis method: always consider multiple approaches to any opportunity Real Trade Breakdown: The Perfect Setup: Dan walks through a $30 stock example where you can capture a 5% out-of-the-money call for 3% premium—creating potential 8% monthly returns (96% annualized when opportunities align). Okta (OTA) Case Study: How Dan rolled from a covered call assignment at $98 into cash-secured puts at $96, then down to $95 strikes, capturing $2.15 in additional premium while positioning for better entry points. Rigetti (RGTI) Quantum Play: A speculative quantum computing stock offering 10%+ monthly premiums—demonstrating how to play the "sweet spot" of risky stocks using short-term strategies. Key Insights: Log-normal distribution reality: Most individual stocks actually lose money over time (despite the S&P 500's 10% annual average) because index committees actively select winners Annualized returns truth: While 8% monthly sounds like 96% annually, you can't always replicate perfect setups—but the math still provides valuable baseline comparisons against risk-free rates Gap risk management: Why Dan prefers closing entire positions on expiration day rather than letting calls expire Value vs. speculation balance: How to capture meaningful premiums on stocks with mixed fundamentals The Bottom Line: Short-term buy-writes let you profit from stocks you like but don't fully trust, capturing meaningful premiums while maintaining clear exit strategies. Perfect for traders who prefer calculated risks over permanent commitments—and smart enough to know that in trading, as in life, everything is temporary. Support the Show: Love the podcast? Share it with a friend, leave a review, and consider a paid subscription on Substack (https://wealthbuildingwithoptions.substack.com) to access bonus episodes, detailed trade breakdowns, and monthly AMAs. Subscribe now so you don't miss Episode 25—another masterclass in confident, systematic trading is coming your way. Disclaimer: Options involve risk and are not suitable for all investors. Please read the Characteristics and Risks of Standardized Options before investing.
Wealth Building With Options