Tuesday 20 October 2015

Cash flowing Stock option trade example

Hey everyone, welcome to another blog from My Journey To The millions! Today's blog will be an example of a current trade I am placing on a demo account that is cash flowing from a dividend, as well as lasts months example of a cashflowing stock option trade. 

Recently, I started trading with a demo account to gain experience with stock options. So far, my account is up in its first month 5%- .03% for expenses. A total of 4.7%, which is pretty good compared to any mutual fund I know of. The first month, I sold options of $DIS and $GORO which both had options used on the expiration date. As of today, I have put in a bid for $GORO at limit of $3, which last trade was at 2.91 so I will probably get in a bit lower. I have bought put options for 15 cents a share, with a safety net at 2.5. My prediction is this could go up higher. I am a big silver fan and this company produces silver and other metals. I also like the big dividend on this company as well. These are my trades I am doing to start learning to cash flow on the stock market. Remember, cashflow is king. Capital gains is not as important as cashflow. Cash flow allows you to buy your time back. Time is everything, remember that. Capital gains is also taxed higher. I will do an update when the expiration date on november 15th comes to talk about the process I've made on this trade. Ill have one of two outcomes no matter what though. I will win, or i will win, by learning.

Update: The first months cashflow from stock options was made by risking money to sell an option for instant cash. If you do end up having to buy the stock, you can continue renting out these stocks by selling options for monthly cashflow. The second months strategy for cashflow is by buying a high dividend stock and paying for a safety net to reduce risk. Of course the value can go up and down but the cash flow is what is important. Just wanted to provide a bit more information to help others understand how its cashflow.

Update: The trade I used on GORO was terrible. I exercised my option, limited my loss which is good atleast, but it was a big loser. To make up for a bit of the loss, I bought call options of apple at 115 for I believe 5 dollars a share, So I now have the option to buy apple at that price and It is currently in a positive position at the moment. I am going sell put options for SLV to hopefully gain some percentage back. SLV is looking like its getting ready to hit its bottom or break through it perhaps, so I am waiting to decide when to sell the option depending if it breaks its support. A better, cheaper way to had profit on GORO could had been to buy call options which would have lost all of its value, but perhaps could had saved money. I will not be buying one month contracts anymore, 2-3 months will be the minimum I will buy for stock options after this lesson.

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