$Direxion Daily TSLA Bull 2X Shares (TSLL.US)$ one has to le...
$Direxion Daily TSLA Bull 2X Shares (TSLL.US)$ one has to learn to use volatility and profit from it when the opportunity presents itself.
investing in a company or a leveraged ETF and hoping that it's going to trade higher is what 99% of the world does. But low sell high that's what we are taught it's very simple binary you want to make money in stocks buy it when it's low sell it when it goes up.
options are an alternative.
90% of all call options and put options that are bought expire worthless. so if you are buying a call or buying a put betting that the stock is going to go up or go down statistic show 9 out of 10 times you will be wrong. and that's because you have a designated time that that movement must happen. and many of the times after our contracts expire worthless the stock moves but at that point it's irrelevant because you will not profit.
that means you need to flip the odds and play with the odds in your favor.
selling calls letting other people make the BET and you collecting the premium provides significant cash flow and the total return that can be achieved is in most cases Superior to buy and hold.
Tesla already came out with earnings they guided higher 20 to 30% growth next year the stock rallied I don't need to tell you it's consolidating now.
for those that can tolerate risk of a leveraged ETF you should consider doing this.
the premiums by selling at the money or slightly out of the money call options are enormous on tsll.
it offers weekly options that means four times in a month you can sell calls against your underlying position.
so if you were to buy it today 12.60 or wherever it's going to open in that area. immediately go out and sell November 1 call at $13 .
as of yesterday's close you're going to collect 25 cents. it's not a huge score but it gives you for 2 days $0.40 upside in the underlying stock plus 25 cents that's 65 cents on a $12.60 investment (or wherever the opening print is 12.57 right now)
tomorrow at 3:58 just before the close of the Bell if it's above 13 you don't need to do anything you're going to get called away if it's 12 70 12 80 1290 it's below the strike price then what you should do because I do is I go out and I immediately sell on November 8th call against my position. technically I'm naked for about a minute till the market closes. a November 8th call right now and it will change slightly in the next day but using the final print you're going to be able to collect at least a dollar for one week.
what this means is for total of 7 days of ownership, you profited $1.25 against your position.
in 7 days you've profited 10%
it doesn't matter if the stock gets called away because you can immediately turn around and buy the stock back and simultaneously sell a call against it for 50 cents higher than your purchase price.
and it doesn't matter if it gradually declines either because you're generating positive cash flow off of the underlying position.
I would strongly encourage people to look at the positions that they own obviously you need round lots of 100 shares because every 100 shares is one contract. you need to understand options thoroughly before you do this so if you don't know number one ask number two I would encourage you to look at moo moo they have excellent resources for understanding options.
volatility in stocks is an option buyer's dream but statistically they're going to be wrong 90% of the time so if you flip the odds and sell the calls give the Gambler the ability to take your stock you're going to keep that stock the vast majority of time and you'll be able to sell another call the next week generating even more income and a greater return than someone who just buys and holds.
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36 yrs in the trenches, raised 100mil for start ups, syndicate ipo's, yrs on trading desk mkt maker.
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Too Tall : What moo moo resources do you recommend for options buying?
Too Tall : For buying and selling “calls”?
10baggerbamm OP Too Tall : MooMoo has educational videos on understanding options.
if you do a search I'm sure you can find it or if you ask in their question section they'll provide you a link. additionally on YouTube there's very good resources available and it's a quick search options 101 understanding options. if you put in that you do a search you don't need somebody to tell you what stock to buy you need to understand the terminology you need to understand the risks associated with the different types of options. I routinely see people discuss options and they use the wrong terminology. I don't feel that they understand exactly what they're saying and that means they don't understand what they're doing.
in your top box just do the following search and you'll see this list and scroll down and find the link that I have circled and that's where you want to start.
Too Tall : Great advice. Thanks!