{"id":49595,"date":"2020-02-06T17:30:19","date_gmt":"2020-02-06T22:30:19","guid":{"rendered":"https:\/\/www.smbtraining.com\/blog\/?p=49595"},"modified":"2020-02-06T17:30:19","modified_gmt":"2020-02-06T22:30:19","slug":"options-blunders-ill-make-money-every-month-and-pay-my-bills-out-of-my-options-income-episode-4","status":"publish","type":"post","link":"https:\/\/www.smbtraining.com\/blog\/options-blunders-ill-make-money-every-month-and-pay-my-bills-out-of-my-options-income-episode-4","title":{"rendered":"Options Blunders: I\u2019ll make money every month and pay my bills out of my options income (episode 4)"},"content":{"rendered":"

Can you really make $5,000 a month trading options? This video covers the misconception that the term “options income trading” is often misinterpreted to mean that there will be monthly cash flow in every single month of an otherwise successful methodical trading strategy and the problems that can come from not understanding the realistic profitability patterns that encompass options income trading.<\/p>\nView Video Transcript<\/strong><\/span>

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okay so today’s video is the fourth in<\/div>\n<\/div>\n<\/div>\n
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our series that we’ve entitled huge<\/div>\n<\/div>\n<\/div>\n
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options trading blunders<\/div>\n<\/div>\n<\/div>\n
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we’ve decided to produce this series for<\/div>\n<\/div>\n<\/div>\n
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traders who are really serious about<\/div>\n<\/div>\n<\/div>\n
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trading options for living and taking<\/div>\n<\/div>\n<\/div>\n
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the proper steps to excel as an options<\/div>\n<\/div>\n<\/div>\n
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trader as opposed to chasing rainbows<\/div>\n<\/div>\n<\/div>\n
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only to find disappointment in the end<\/div>\n<\/div>\n<\/div>\n
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I’m the head trader of SMB capital’s<\/div>\n<\/div>\n<\/div>\n
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options trading desk and i can tell you<\/div>\n<\/div>\n<\/div>\n
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from many years of experience that the<\/div>\n<\/div>\n<\/div>\n
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pitfalls were going to be describing in<\/div>\n<\/div>\n<\/div>\n
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these videos are real and if you’re<\/div>\n<\/div>\n<\/div>\n
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serious about trading for a living you<\/div>\n<\/div>\n<\/div>\n
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really need to pay close attention to<\/div>\n<\/div>\n<\/div>\n
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these videos so that you can avoid<\/div>\n<\/div>\n<\/div>\n
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serious problems in your trading journey<\/div>\n<\/div>\n<\/div>\n
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so if you committed to trading full-time<\/div>\n<\/div>\n<\/div>\n
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as an options trader then I urge you to<\/div>\n<\/div>\n<\/div>\n
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watch this video and the rest of the<\/div>\n<\/div>\n<\/div>\n
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videos in this series so that you don’t<\/div>\n<\/div>\n<\/div>\n
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fall by the wayside like so many<\/div>\n<\/div>\n<\/div>\n
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aspiring traders who don’t want to spend<\/div>\n<\/div>\n<\/div>\n
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the time to learn the actual truth about<\/div>\n<\/div>\n<\/div>\n
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the challenges and rewards of options<\/div>\n<\/div>\n<\/div>\n
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trading we want you to take a realistic<\/div>\n<\/div>\n<\/div>\n
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path to your trading goals which are<\/div>\n<\/div>\n<\/div>\n
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attainable if you’re serious<\/div>\n<\/div>\n<\/div>\n
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[Music]<\/div>\n<\/div>\n<\/div>\n
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hi I’m Seth freudberg and I’m the head<\/div>\n<\/div>\n<\/div>\n
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trader of SMB capitals options trading<\/div>\n<\/div>\n<\/div>\n
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desk SMB capital is a proprietary<\/div>\n<\/div>\n<\/div>\n
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trading firm located in midtown<\/div>\n<\/div>\n<\/div>\n
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Manhattan and we provide capital for<\/div>\n<\/div>\n<\/div>\n
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options and equity traders from all over<\/div>\n<\/div>\n<\/div>\n
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the world trading both remotely and in<\/div>\n<\/div>\n<\/div>\n
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our offices here in New York City now<\/div>\n<\/div>\n<\/div>\n
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I’d like to suggest that you click on<\/div>\n<\/div>\n<\/div>\n
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our subscribe button right now so that<\/div>\n<\/div>\n<\/div>\n
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you don’t miss any of our free trading<\/div>\n<\/div>\n<\/div>\n
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videos that we produce for traders and<\/div>\n<\/div>\n<\/div>\n
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investors all over the world they’re<\/div>\n<\/div>\n<\/div>\n
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really very valuable ok so today we’re<\/div>\n<\/div>\n<\/div>\n
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going to be looking at options trading<\/div>\n<\/div>\n<\/div>\n
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blunder number four in our series on<\/div>\n<\/div>\n<\/div>\n
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options misconceptions and huge mistakes<\/div>\n<\/div>\n<\/div>\n
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that you can make as an options trader<\/div>\n<\/div>\n<\/div>\n
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so blunder number four arises from the<\/div>\n<\/div>\n<\/div>\n
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fact that the style of trading that we<\/div>\n<\/div>\n<\/div>\n
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practice on our options trading desk is<\/div>\n<\/div>\n<\/div>\n
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known as options income trading to<\/div>\n<\/div>\n<\/div>\n
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explain why it’s called options income<\/div>\n<\/div>\n<\/div>\n
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trading I’ve got to give you some quick<\/div>\n<\/div>\n<\/div>\n
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background for those of you who are new<\/div>\n<\/div>\n<\/div>\n
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to operating if you know something about<\/div>\n<\/div>\n<\/div>\n
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options don’t worry about this it’ll go<\/div>\n<\/div>\n<\/div>\n
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by quickly and then we’ll jump into the<\/div>\n<\/div>\n<\/div>\n
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guts of the lesson almost all of you are<\/div>\n<\/div>\n<\/div>\n
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probably familiar with equity options<\/div>\n<\/div>\n<\/div>\n
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where a call buys you the right to buy<\/div>\n<\/div>\n<\/div>\n
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100 shares of a stock at the strike<\/div>\n<\/div>\n<\/div>\n
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price of that option any time before the<\/div>\n<\/div>\n<\/div>\n
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option expires and a put option entitles<\/div>\n<\/div>\n<\/div>\n
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you to sell 100 shares of the strike<\/div>\n<\/div>\n<\/div>\n
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price of the put before that option<\/div>\n<\/div>\n<\/div>\n
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expires but there are also index options<\/div>\n<\/div>\n<\/div>\n
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which works similarly to equity options<\/div>\n<\/div>\n<\/div>\n
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except there’s no such thing as 100<\/div>\n<\/div>\n<\/div>\n
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shares of an index like the S&P; 500 you<\/div>\n<\/div>\n<\/div>\n
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can’t really buy or sell 100 shares of<\/div>\n<\/div>\n<\/div>\n
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an index but what you can do is get paid<\/div>\n<\/div>\n<\/div>\n
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in cash $100 per point if the index<\/div>\n<\/div>\n<\/div>\n
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expires above the strike price of an<\/div>\n<\/div>\n<\/div>\n
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index call that you buy or alternatively<\/div>\n<\/div>\n<\/div>\n
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you’d be paid $100 per point for each<\/div>\n<\/div>\n<\/div>\n
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point the index drops below the strike<\/div>\n<\/div>\n<\/div>\n
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price of your index puts so for example<\/div>\n<\/div>\n<\/div>\n
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if an index is trading at 1,400 if you<\/div>\n<\/div>\n<\/div>\n
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buy the 1410 call if that index goes to<\/div>\n<\/div>\n<\/div>\n
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1415 you’d receive $500 in your account<\/div>\n<\/div>\n<\/div>\n
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if the index closes at 1410 or lower<\/div>\n<\/div>\n<\/div>\n
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your call expires worthless on the other<\/div>\n<\/div>\n<\/div>\n
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side of the ledger if you buy a 1385 put<\/div>\n<\/div>\n<\/div>\n
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in the market sells off to 1375 you’d<\/div>\n<\/div>\n<\/div>\n
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make $1,000 but<\/div>\n<\/div>\n<\/div>\n
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the market just sold off to 13 85 or<\/div>\n<\/div>\n<\/div>\n
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higher the put would expire worthless so<\/div>\n<\/div>\n<\/div>\n
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those are the basics of index options<\/div>\n<\/div>\n<\/div>\n
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and remember you can buy options but<\/div>\n<\/div>\n<\/div>\n
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your broker will allow you to sell<\/div>\n<\/div>\n<\/div>\n
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options as well and your broker will<\/div>\n<\/div>\n<\/div>\n
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allow you to put together combinations<\/div>\n<\/div>\n<\/div>\n
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of options in other words options<\/div>\n<\/div>\n<\/div>\n
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strategies that involve both short and<\/div>\n<\/div>\n<\/div>\n
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long options purchased in a way that is<\/div>\n<\/div>\n<\/div>\n
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advantageous to you as a trader<\/div>\n<\/div>\n<\/div>\n
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so what many options income traders do<\/div>\n<\/div>\n<\/div>\n
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is they learn strategies that they<\/div>\n<\/div>\n<\/div>\n
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employ every month pretty much come hell<\/div>\n<\/div>\n<\/div>\n
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or high water and they study through<\/div>\n<\/div>\n<\/div>\n
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back testing how the strategies perform<\/div>\n<\/div>\n<\/div>\n
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over time doing the same strategy every<\/div>\n<\/div>\n<\/div>\n
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month so let’s say and this is a really<\/div>\n<\/div>\n<\/div>\n
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simplistic example that a trader decides<\/div>\n<\/div>\n<\/div>\n
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that he’s gonna do an index option<\/div>\n<\/div>\n<\/div>\n
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strategy every month where he’s going to<\/div>\n<\/div>\n<\/div>\n
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sell a call option very far above the<\/div>\n<\/div>\n<\/div>\n
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market price of that index let’s say 5%<\/div>\n<\/div>\n<\/div>\n
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above the market price of the index and<\/div>\n<\/div>\n<\/div>\n
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at the same exact time he’s gonna sell a<\/div>\n<\/div>\n<\/div>\n
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put 5% below the market so as we just<\/div>\n<\/div>\n<\/div>\n
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explained as long as the index closes<\/div>\n<\/div>\n<\/div>\n
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within a range of 5% above or below the<\/div>\n<\/div>\n<\/div>\n
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market then both options will expire<\/div>\n<\/div>\n<\/div>\n
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worthless now this very simplistic<\/div>\n<\/div>\n<\/div>\n
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option strategy is known as a strangle<\/div>\n<\/div>\n<\/div>\n
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and yeah I know<\/div>\n<\/div>\n<\/div>\n
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that’s a weird and creepy day but that’s<\/div>\n<\/div>\n<\/div>\n
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what it’s called and in general terms<\/div>\n<\/div>\n<\/div>\n
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it’s comprised of selling a call above<\/div>\n<\/div>\n<\/div>\n
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the price of a stock or an index and the<\/div>\n<\/div>\n<\/div>\n
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same time selling a put below the<\/div>\n<\/div>\n<\/div>\n
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current price so let’s say that a guy<\/div>\n<\/div>\n<\/div>\n
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decides that he’s going to sell a<\/div>\n<\/div>\n<\/div>\n
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strangle every month 5% above and below<\/div>\n<\/div>\n<\/div>\n
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the sp500 index which trades under the<\/div>\n<\/div>\n<\/div>\n
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symbol SPX and he gets ahold of<\/div>\n<\/div>\n<\/div>\n
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back-testing software and he tests that<\/div>\n<\/div>\n<\/div>\n
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protocol rigorously for 10 years and<\/div>\n<\/div>\n<\/div>\n
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reaches the conclusion that if he sells<\/div>\n<\/div>\n<\/div>\n
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12 calls and 12 puts both 5% away from<\/div>\n<\/div>\n<\/div>\n
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the market every month he’ll make<\/div>\n<\/div>\n<\/div>\n
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$60,000 per year in profit so that would<\/div>\n<\/div>\n<\/div>\n
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mean an average of $5,000 per month<\/div>\n<\/div>\n<\/div>\n
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which was his income goal so just as an<\/div>\n<\/div>\n<\/div>\n
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example let’s see what that would look<\/div>\n<\/div>\n<\/div>\n
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like so this is the SPX index on April<\/div>\n<\/div>\n<\/div>\n
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1st of 2019 and at that time it was<\/div>\n<\/div>\n<\/div>\n
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trading at 28 64 so 5% above the market<\/div>\n<\/div>\n<\/div>\n
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is roughly 3,000 and<\/div>\n<\/div>\n<\/div>\n
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options are trading for 97 cents and we<\/div>\n<\/div>\n<\/div>\n
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sell 12 of those and 5% below the market<\/div>\n<\/div>\n<\/div>\n
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is roughly 27 25 and those options are<\/div>\n<\/div>\n<\/div>\n
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selling for seven dollars and 63 cents<\/div>\n<\/div>\n<\/div>\n
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and we also sell 12 of those<\/div>\n<\/div>\n<\/div>\n
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simultaneously so now let’s do the math<\/div>\n<\/div>\n<\/div>\n
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on this trade we got paid 97 cents per<\/div>\n<\/div>\n<\/div>\n
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call option but remember for each point<\/div>\n<\/div>\n<\/div>\n
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above 3000 we could owe hundred dollars<\/div>\n<\/div>\n<\/div>\n
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so you multiply that by 100 and we sold<\/div>\n<\/div>\n<\/div>\n
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12 of those so we received a total of<\/div>\n<\/div>\n<\/div>\n
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1164 dollars for the calls now for the<\/div>\n<\/div>\n<\/div>\n
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puts using the same math we received 7<\/div>\n<\/div>\n<\/div>\n
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dollars and 63 cents per foot times one<\/div>\n<\/div>\n<\/div>\n
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hundred dollars per point times the 12<\/div>\n<\/div>\n<\/div>\n
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puts that we sold and we’ve received<\/div>\n<\/div>\n<\/div>\n
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therefore nine thousand one hundred<\/div>\n<\/div>\n<\/div>\n
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fifty six dollars for those so the total<\/div>\n<\/div>\n<\/div>\n
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proceeds for that strangle was ten<\/div>\n<\/div>\n<\/div>\n
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thousand three hundred twenty dollars<\/div>\n<\/div>\n<\/div>\n
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now let’s move forward to the day the<\/div>\n<\/div>\n<\/div>\n
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options are expiring and you’ll see that<\/div>\n<\/div>\n<\/div>\n
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midday both the calls and the puts that<\/div>\n<\/div>\n<\/div>\n
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we sold are nearly worthless they’re<\/div>\n<\/div>\n<\/div>\n
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down to three cents each and why did<\/div>\n<\/div>\n<\/div>\n
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those prices drop so low because it’s<\/div>\n<\/div>\n<\/div>\n
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expiration day and the SPX is trading at<\/div>\n<\/div>\n<\/div>\n
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twenty nine thirty nine so the market<\/div>\n<\/div>\n<\/div>\n
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has about four hours to either zoom up<\/div>\n<\/div>\n<\/div>\n
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three thousand dollars or crash down to<\/div>\n<\/div>\n<\/div>\n
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27 twenty-five or the options will have<\/div>\n<\/div>\n<\/div>\n
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no value at all as we explained before<\/div>\n<\/div>\n<\/div>\n
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by the end of the day so now at this<\/div>\n<\/div>\n<\/div>\n
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point most professional options traders<\/div>\n<\/div>\n<\/div>\n
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would close the trade as the options are<\/div>\n<\/div>\n<\/div>\n
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nearly worthless and so let’s analyze<\/div>\n<\/div>\n<\/div>\n
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what happens at that point so the cost<\/div>\n<\/div>\n<\/div>\n
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to buy back the calls is 360 dollars as<\/div>\n<\/div>\n<\/div>\n
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you can see from the calculation and the<\/div>\n<\/div>\n<\/div>\n
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cost to buy back and close those puts is<\/div>\n<\/div>\n<\/div>\n
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also quit coincidentally 360 dollars and<\/div>\n<\/div>\n<\/div>\n
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now the trade is over but remember we<\/div>\n<\/div>\n<\/div>\n
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initially received ten thousand three<\/div>\n<\/div>\n<\/div>\n
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hundred twenty dollars and we only had<\/div>\n<\/div>\n<\/div>\n
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to spend three hundred sixty each for<\/div>\n<\/div>\n<\/div>\n
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the calls and puts so we’re left over<\/div>\n<\/div>\n<\/div>\n
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with a gain of 9600 dollars and that’s<\/div>\n<\/div>\n<\/div>\n
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an example of a strangle trade that<\/div>\n<\/div>\n<\/div>\n
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worked out well and so now you can see<\/div>\n<\/div>\n<\/div>\n
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why they call it options income trading<\/div>\n<\/div>\n<\/div>\n
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because you made income by selling both<\/div>\n<\/div>\n<\/div>\n
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the puts<\/div>\n<\/div>\n<\/div>\n
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and the calls and they expired worthless<\/div>\n<\/div>\n<\/div>\n
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and so at this point you might be<\/div>\n<\/div>\n<\/div>\n
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tempted to become subject to options<\/div>\n<\/div>\n<\/div>\n
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blender number four which is the concept<\/div>\n<\/div>\n<\/div>\n
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that hey all I have to do is sell calls<\/div>\n<\/div>\n<\/div>\n
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and puts above and below the market<\/div>\n<\/div>\n<\/div>\n
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every month and I can pay my bills doing<\/div>\n<\/div>\n<\/div>\n
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that in other words options blender<\/div>\n<\/div>\n<\/div>\n
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number four is the concept that I’m an<\/div>\n<\/div>\n<\/div>\n
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options income trader so I’ll make money<\/div>\n<\/div>\n<\/div>\n
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every month and pay my bills out of my<\/div>\n<\/div>\n<\/div>\n
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options trading income before we explain<\/div>\n<\/div>\n<\/div>\n
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the fatal flaw in that thought and why<\/div>\n<\/div>\n<\/div>\n
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it’s so simplistic I wanted to let you<\/div>\n<\/div>\n<\/div>\n
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know that there really are sound<\/div>\n<\/div>\n<\/div>\n
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techniques for trading options for<\/div>\n<\/div>\n<\/div>\n
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income and in fact we’re currently<\/div>\n<\/div>\n<\/div>\n
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running a to our free intensive workshop<\/div>\n<\/div>\n<\/div>\n
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at the moment where we’ll be teaching<\/div>\n<\/div>\n<\/div>\n
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you three of the strategies that real<\/div>\n<\/div>\n<\/div>\n
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professional options traders use<\/div>\n<\/div>\n<\/div>\n
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including a really simple but incredibly<\/div>\n<\/div>\n<\/div>\n
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effective strategy that some of the<\/div>\n<\/div>\n<\/div>\n
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greatest investors in the world like<\/div>\n<\/div>\n<\/div>\n
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Warren Buffett use all the time plus an<\/div>\n<\/div>\n<\/div>\n
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option strategy that has a statistical<\/div>\n<\/div>\n<\/div>\n
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80 percent probability of profit month<\/div>\n<\/div>\n<\/div>\n
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in and month out plus an option strategy<\/div>\n<\/div>\n<\/div>\n
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that you can employ with the stock that<\/div>\n<\/div>\n<\/div>\n
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you like where you’ll make your target<\/div>\n<\/div>\n<\/div>\n
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profit whether the stock goes up goes<\/div>\n<\/div>\n<\/div>\n
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nowhere or even goes down a small<\/div>\n<\/div>\n<\/div>\n
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percentage so if those strategies would<\/div>\n<\/div>\n<\/div>\n
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be of interest to you then you should<\/div>\n<\/div>\n<\/div>\n
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check out the free options class that<\/div>\n<\/div>\n<\/div>\n
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we’re currently running just go ahead<\/div>\n<\/div>\n<\/div>\n
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and click the link that should be<\/div>\n<\/div>\n<\/div>\n
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appearing now at the top right corner of<\/div>\n<\/div>\n<\/div>\n
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your screen that will open the free<\/div>\n<\/div>\n<\/div>\n
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registration page in a new window so<\/div>\n<\/div>\n<\/div>\n
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don’t worry you won’t lose this video or<\/div>\n<\/div>\n<\/div>\n
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you can just head on over to options<\/div>\n<\/div>\n<\/div>\n
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class com to register for this free<\/div>\n<\/div>\n<\/div>\n
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intensive workshop it’s a rare<\/div>\n<\/div>\n<\/div>\n
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opportunity for retail traders and<\/div>\n<\/div>\n<\/div>\n
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investors to learn directly from Wall<\/div>\n<\/div>\n<\/div>\n
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\n
Street traders but that’s exactly what<\/div>\n<\/div>\n<\/div>\n
\n
\n
you’ll be getting through this free<\/div>\n<\/div>\n<\/div>\n
\n
\n
online workshop so click the link to<\/div>\n<\/div>\n<\/div>\n
\n
\n
sign up now and don’t miss it why do I<\/div>\n<\/div>\n<\/div>\n
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say that it’s simplistic and foolish to<\/div>\n<\/div>\n<\/div>\n
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think that it’s that simple let’s take a<\/div>\n<\/div>\n<\/div>\n
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look at what happened the next month so<\/div>\n<\/div>\n<\/div>\n
\n
\n
the April trade has ended and now we’re<\/div>\n<\/div>\n<\/div>\n
\n
\n
moving to the May trade so on May 1st<\/div>\n<\/div>\n<\/div>\n
\n
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the SPX was trading it 2923 and so 5% of<\/div>\n<\/div>\n<\/div>\n
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above the market is about 30 75 and 5%<\/div>\n<\/div>\n<\/div>\n
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below the market is about twenty seven<\/div>\n<\/div>\n<\/div>\n
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seventy five and so now this month if<\/div>\n<\/div>\n<\/div>\n
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you’ll notice the combined prices of the<\/div>\n<\/div>\n<\/div>\n
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calls and puts<\/div>\n<\/div>\n<\/div>\n
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actually higher than they were in the<\/div>\n<\/div>\n<\/div>\n
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April trade so here we can break that<\/div>\n<\/div>\n<\/div>\n
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down for you and you can see from the<\/div>\n<\/div>\n<\/div>\n
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calculation that in this case we<\/div>\n<\/div>\n<\/div>\n
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received cash flow from selling the 12<\/div>\n<\/div>\n<\/div>\n
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calls and the 12 foots in the amount of<\/div>\n<\/div>\n<\/div>\n
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fourteen thousand one hundred forty<\/div>\n<\/div>\n<\/div>\n
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eight dollars so that’s a nice chunk of<\/div>\n<\/div>\n<\/div>\n
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change however let’s move forward to the<\/div>\n<\/div>\n<\/div>\n
\n
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day the trade is expiring and you’ll see<\/div>\n<\/div>\n<\/div>\n
\n
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a different story this time you see SPX<\/div>\n<\/div>\n<\/div>\n
\n
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in May sold off to twenty seven fifty<\/div>\n<\/div>\n<\/div>\n
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seven and so on expiration day that<\/div>\n<\/div>\n<\/div>\n
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calls again all the way up at thirty<\/div>\n<\/div>\n<\/div>\n
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seventy five will be worthless but the<\/div>\n<\/div>\n<\/div>\n
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puts well they have absolutely blown up<\/div>\n<\/div>\n<\/div>\n
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in value to 18 dollars and three cents<\/div>\n<\/div>\n<\/div>\n
\n
\n
and that’s because the options are<\/div>\n<\/div>\n<\/div>\n
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\n
expiring in a few hours and the SPX is<\/div>\n<\/div>\n<\/div>\n
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trading at eighteen points below the<\/div>\n<\/div>\n<\/div>\n
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strike price of those puts so those<\/div>\n<\/div>\n<\/div>\n
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foots are what is called in the money<\/div>\n<\/div>\n<\/div>\n
\n
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and if the market closes around that<\/div>\n<\/div>\n<\/div>\n
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price we’ll be paying $1,800 per option<\/div>\n<\/div>\n<\/div>\n
\n
\n
and we got twelve with those options so<\/div>\n<\/div>\n<\/div>\n
\n
\n
we’ll be paying to settle those options<\/div>\n<\/div>\n<\/div>\n
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\n
and so now closing the trade on<\/div>\n<\/div>\n<\/div>\n
\n
\n
expiration is a hell of a lot more<\/div>\n<\/div>\n<\/div>\n
\n
\n
expensive than in April as you can see<\/div>\n<\/div>\n<\/div>\n
\n
\n
buying back the calls was cheap only 360<\/div>\n<\/div>\n<\/div>\n
\n
\n
like in April but closing the puts well<\/div>\n<\/div>\n<\/div>\n
\n
\n
that that cost is over $21,000 so when<\/div>\n<\/div>\n<\/div>\n
\n
\n
you do the math comparing what we<\/div>\n<\/div>\n<\/div>\n
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\n
originally received and what we ended up<\/div>\n<\/div>\n<\/div>\n
\n
\n
paying the month of May ran at a loss of<\/div>\n<\/div>\n<\/div>\n
\n
\n
seven thousand eight hundred<\/div>\n<\/div>\n<\/div>\n
\n
\n
thirty-eight dollars now hold on one<\/div>\n<\/div>\n<\/div>\n
\n
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second you’re probably thinking I<\/div>\n<\/div>\n<\/div>\n
\n
\n
thought you said this guy back tested<\/div>\n<\/div>\n<\/div>\n
\n
\n
this strategy and he was all set because<\/div>\n<\/div>\n<\/div>\n
\n
\n
he proved over a long period of time<\/div>\n<\/div>\n<\/div>\n
\n
\n
that he was gonna make on average sixty<\/div>\n<\/div>\n<\/div>\n
\n
\n
thousand dollars per year doing this I<\/div>\n<\/div>\n<\/div>\n
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\n
mean didn’t he back test it I thought he<\/div>\n<\/div>\n<\/div>\n
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was gonna make $5,000 per month trading<\/div>\n<\/div>\n<\/div>\n
\n
\n
this strategy and pay all of his bills<\/div>\n<\/div>\n<\/div>\n
\n
\n
that way what’s going on here I thought<\/div>\n<\/div>\n<\/div>\n
\n
\n
this was options income trading I<\/div>\n<\/div>\n<\/div>\n
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thought his year was supposed to look<\/div>\n<\/div>\n<\/div>\n
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like this making 5,000 dollars every<\/div>\n<\/div>\n<\/div>\n
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\n
month well I have some news for you this<\/div>\n<\/div>\n<\/div>\n
\n
\n
may be a perfectly valid strategy and it<\/div>\n<\/div>\n<\/div>\n
\n
\n
may make on average $5,000 per month but<\/div>\n<\/div>\n<\/div>\n
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it doesn’t happen smoothly it’s childish<\/div>\n<\/div>\n<\/div>\n
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to think that would happen some months<\/div>\n<\/div>\n<\/div>\n
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you’ll make a little bit of money other<\/div>\n<\/div>\n<\/div>\n
\n
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months you’ll lose a little bit of money<\/div>\n<\/div>\n<\/div>\n
\n
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some months you’ll make a lot of money<\/div>\n<\/div>\n<\/div>\n
\n
\n
other months you’ll lose a lot of money<\/div>\n<\/div>\n<\/div>\n
\n
\n
but it<\/div>\n<\/div>\n<\/div>\n
\n
\n
the end of the day when you add it all<\/div>\n<\/div>\n<\/div>\n
\n
\n
up you’ll hit that total but it’s going<\/div>\n<\/div>\n<\/div>\n
\n
\n
to occur in an uneven way perhaps<\/div>\n<\/div>\n<\/div>\n
\n
\n
something like this and so had you done<\/div>\n<\/div>\n<\/div>\n
\n
\n
this trade all year in 2019 let’s just<\/div>\n<\/div>\n<\/div>\n
\n
\n
suppose that you had these results<\/div>\n<\/div>\n<\/div>\n
\n
\n
you’ll see that we made a lot more than<\/div>\n<\/div>\n<\/div>\n
\n
\n
five thousand dollars in many cases and<\/div>\n<\/div>\n<\/div>\n
\n
\n
at the same time we lost money in four<\/div>\n<\/div>\n<\/div>\n
\n
\n
of the twelve months such as we just<\/div>\n<\/div>\n<\/div>\n
\n
\n
showed you in the May trade so what are<\/div>\n<\/div>\n<\/div>\n
\n
\n
the implications of this for you well<\/div>\n<\/div>\n<\/div>\n
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\n
last time I checked you can’t go to the<\/div>\n<\/div>\n<\/div>\n
\n
\n
grocery store and buy your groceries<\/div>\n<\/div>\n<\/div>\n
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with negative dollars it’s ridiculous to<\/div>\n<\/div>\n<\/div>\n
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rely upon an exact pattern of cash flow<\/div>\n<\/div>\n<\/div>\n
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from your trading account to pay your<\/div>\n<\/div>\n<\/div>\n
\n
\n
bills even with proven terrific income<\/div>\n<\/div>\n<\/div>\n
\n
\n
option strategies you can’t think of<\/div>\n<\/div>\n<\/div>\n
\n
\n
options income trading is some kind of a<\/div>\n<\/div>\n<\/div>\n
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bond or social security check or a<\/div>\n<\/div>\n<\/div>\n
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salary or something along those lines<\/div>\n<\/div>\n<\/div>\n
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that pays you steady cash flow each<\/div>\n<\/div>\n<\/div>\n
\n
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month instead you have to think in terms<\/div>\n<\/div>\n<\/div>\n
\n
\n
of annual returns and therefore develop<\/div>\n<\/div>\n<\/div>\n
\n
\n
a cash flow plan for your trading this<\/div>\n<\/div>\n<\/div>\n
\n
\n
is really practical stuff that we’re<\/div>\n<\/div>\n<\/div>\n
\n
\n
talking about here but you’d be amazed<\/div>\n<\/div>\n<\/div>\n
\n
\n
how many people completely miss this<\/div>\n<\/div>\n<\/div>\n
\n
\n
point before they start trading and you<\/div>\n<\/div>\n<\/div>\n
\n
\n
have to realize this a strategy that<\/div>\n<\/div>\n<\/div>\n
\n
\n
you’ve proven can make sixty thousand<\/div>\n<\/div>\n<\/div>\n
\n
\n
dollars a year on average unevenly means<\/div>\n<\/div>\n<\/div>\n
\n
\n
that there will be months where your<\/div>\n<\/div>\n<\/div>\n
\n
\n
account will temporarily drop below the<\/div>\n<\/div>\n<\/div>\n
\n
\n
capital level you needed to produce the<\/div>\n<\/div>\n<\/div>\n
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\n
sixty thousand dollars a year<\/div>\n<\/div>\n<\/div>\n
\n
\n
my rule of thumb is that options income<\/div>\n<\/div>\n<\/div>\n
\n
\n
traders should produce between two to<\/div>\n<\/div>\n<\/div>\n
\n
\n
four percent per month for an<\/div>\n<\/div>\n<\/div>\n
\n
\n
accomplished trader so you can do the<\/div>\n<\/div>\n<\/div>\n
\n
\n
math to figure out how much capital you<\/div>\n<\/div>\n<\/div>\n
\n
\n
need in order for your account to<\/div>\n<\/div>\n<\/div>\n
\n
\n
produce steady income if you become a<\/div>\n<\/div>\n<\/div>\n
\n
\n
high-quality disciplined consistent<\/div>\n<\/div>\n<\/div>\n
\n
\n
options income trader but if in the<\/div>\n<\/div>\n<\/div>\n
\n
\n
months where you lose you put yourself<\/div>\n<\/div>\n<\/div>\n
\n
\n
into a position where you’ve got to pay<\/div>\n<\/div>\n<\/div>\n
\n
\n
your bills from your trading account<\/div>\n<\/div>\n<\/div>\n
\n
\n
you’ll blow the math of your trading<\/div>\n<\/div>\n<\/div>\n
\n
\n
plan because you need that capital level<\/div>\n<\/div>\n<\/div>\n
\n
\n
each month to produce the income you<\/div>\n<\/div>\n<\/div>\n
\n
\n
were hoping for so therefore you may<\/div>\n<\/div>\n<\/div>\n
\n
\n
have the greatest strategy in the world<\/div>\n<\/div>\n<\/div>\n
\n
\n
but if you don’t have cash reserves for<\/div>\n<\/div>\n<\/div>\n
\n
\n
those month where your account goes<\/div>\n<\/div>\n<\/div>\n
\n
\n
negative temporarily you will fail<\/div>\n<\/div>\n<\/div>\n
\n
\n
because you won’t be able to replicate<\/div>\n<\/div>\n<\/div>\n
\n
\n
your back-tested returns if you keep<\/div>\n<\/div>\n<\/div>\n
\n
\n
changing capital levels that means in<\/div>\n<\/div>\n<\/div>\n
\n
\n
winning months where you make excess<\/div>\n<\/div>\n<\/div>\n
\n
\n
above your average<\/div>\n<\/div>\n<\/div>\n
\n
\n
monthly expected income you need to<\/div>\n<\/div>\n<\/div>\n
\n
\n
maintain that as a cash reserve for the<\/div>\n<\/div>\n<\/div>\n
\n
\n
losing months and when you first start<\/div>\n<\/div>\n<\/div>\n
\n
\n
out you should have a reserve equal to a<\/div>\n<\/div>\n<\/div>\n
\n
\n
few months of draw downs that you<\/div>\n<\/div>\n<\/div>\n
\n
\n
gleaned from your back tests so that if<\/div>\n<\/div>\n<\/div>\n
\n
\n
that losses happen to occur when you<\/div>\n<\/div>\n<\/div>\n
\n
\n
first get started you’ll have the<\/div>\n<\/div>\n<\/div>\n
\n
\n
reserves to temporarily replenish your<\/div>\n<\/div>\n<\/div>\n
\n
\n
account so by now I hope that you can<\/div>\n<\/div>\n<\/div>\n
\n
\n
see that a mature professional trader<\/div>\n<\/div>\n<\/div>\n
\n
\n
would never organize his life so that he<\/div>\n<\/div>\n<\/div>\n
\n
\n
fails to understand that your income<\/div>\n<\/div>\n<\/div>\n
\n
\n
will come in unevenly from otherwise<\/div>\n<\/div>\n<\/div>\n
\n
\n
outstanding option strategies that can<\/div>\n<\/div>\n<\/div>\n
\n
\n
produce two to four percent per month on<\/div>\n<\/div>\n<\/div>\n
\n
\n
your capital and that you can’t<\/div>\n<\/div>\n<\/div>\n
\n
\n
simplistically tell yourself that you’ll<\/div>\n<\/div>\n<\/div>\n
\n
\n
make money every month from your options<\/div>\n<\/div>\n<\/div>\n
\n
\n
income trading you need to have a<\/div>\n<\/div>\n<\/div>\n
\n
\n
sensible intelligent cash flow plan that<\/div>\n<\/div>\n<\/div>\n
\n
\n
establishes cash reserves in winning<\/div>\n<\/div>\n<\/div>\n
\n
\n
months and is initiated with a cash<\/div>\n<\/div>\n<\/div>\n
\n
\n
reserve at the outset of your trading<\/div>\n<\/div>\n<\/div>\n
\n
\n
journey so that should losing months<\/div>\n<\/div>\n<\/div>\n
\n
\n
occur initially you’ll be just fine<\/div>\n<\/div>\n<\/div>\n
\n
\n
that’s how professionals plan and then<\/div>\n<\/div>\n<\/div>\n
\n
\n
towel<\/div>\n<\/div>\n<\/div>\n
\n
\n
you should also if you want to truly<\/div>\n<\/div>\n<\/div>\n
\n
\n
make it as an options income trader now<\/div>\n<\/div>\n<\/div>\n
\n
\n
just to remind you as I said earlier if<\/div>\n<\/div>\n<\/div>\n
\n
\n
you enjoyed this video and learn<\/div>\n<\/div>\n<\/div>\n
\n
\n
something valuable from it would like to<\/div>\n<\/div>\n<\/div>\n
\n
\n
learn the details of three real-world<\/div>\n<\/div>\n<\/div>\n
\n
\n
option strategies that professional<\/div>\n<\/div>\n<\/div>\n
\n
\n
options traders use all the time<\/div>\n<\/div>\n<\/div>\n
\n
\n
then you should check out the free<\/div>\n<\/div>\n<\/div>\n
\n
\n
options class that we’re currently<\/div>\n<\/div>\n<\/div>\n
\n
\n
running just go ahead and click the link<\/div>\n<\/div>\n<\/div>\n
\n
\n
that should be appearing now at the top<\/div>\n<\/div>\n<\/div>\n
\n
\n
right corner of your screen that will<\/div>\n<\/div>\n<\/div>\n
\n
\n
open the free registration page in a new<\/div>\n<\/div>\n<\/div>\n
\n
\n
window so you won’t lose this video<\/div>\n<\/div>\n<\/div>\n
\n
\n
don’t worry<\/div>\n<\/div>\n<\/div>\n
\n
\n
or you could just head on over to<\/div>\n<\/div>\n<\/div>\n
\n
\n
options class com to register for this<\/div>\n<\/div>\n<\/div>\n
\n
\n
free intensive workshop it’s really a<\/div>\n<\/div>\n<\/div>\n
\n
\n
rare opportunity for retail traders and<\/div>\n<\/div>\n<\/div>\n
\n
\n
investors to learn directly from Wall<\/div>\n<\/div>\n<\/div>\n
\n
\n
Street traders but that’s exactly what<\/div>\n<\/div>\n<\/div>\n
\n
\n
you’ll be getting through this free<\/div>\n<\/div>\n<\/div>\n
\n
\n
online workshop so click the link to<\/div>\n<\/div>\n<\/div>\n
\n
\n
sign up now and don’t miss it and please<\/div>\n<\/div>\n<\/div>\n
\n
\n
don’t forget click on the subscribe<\/div>\n<\/div>\n<\/div>\n
\n
\n
button right now so you won’t miss the<\/div>\n<\/div>\n<\/div>\n
\n
\n
next episode of huge options trading<\/div>\n<\/div>\n<\/div>\n
\n
\n
blunders and all the other free trading<\/div>\n<\/div>\n<\/div>\n
\n
\n
videos that we’re posting constantly on<\/div>\n<\/div>\n<\/div>\n
\n
\n
our channel to help you to improve your<\/div>\n<\/div>\n<\/div>\n
\n
\n
game as an options trader<\/div>\n<\/div>\n<\/div>\n
\n
\n
<\/div><\/div>\n<\/div>\n<\/div>\n

\"\"<\/a><\/p>\n

* no relevant positions<\/p>\n","protected":false},"excerpt":{"rendered":"

Can you really make $5,000 a month trading options? This video covers the misconception that the term “options income trading” is often misinterpreted to mean that there will be monthly cash flow in every single month of an otherwise successful methodical trading strategy and the problems that can come from not understanding the realistic profitability patterns that encompass options income … Read More<\/a><\/p>\n","protected":false},"author":290,"featured_media":49597,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[4189],"tags":[],"class_list":["post-49595","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-free-daily-trading-video","post_format-post-format-video"],"yoast_head":"\nOptions Blunders: I\u2019ll make money every month and pay my bills out of my options income (episode 4) | SMB Training<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.smbtraining.com\/blog\/options-blunders-ill-make-money-every-month-and-pay-my-bills-out-of-my-options-income-episode-4\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Options Blunders: I\u2019ll make money every month and pay my bills out of my options income (episode 4) | SMB Training\" \/>\n<meta property=\"og:description\" content=\"Can you really make $5,000 a month trading options? This video covers the misconception that the term “options income trading” is often misinterpreted to mean that there will be monthly cash flow in every single month of an otherwise successful methodical trading strategy and the problems that can come from not understanding the realistic profitability patterns that encompass options income ... 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