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Selling strangles for income 2023
Maximizing your income potential is one reason to master selling strangles for income. Selling options that expire weekly can produce a serious income scale effect. Imagine earning $2,000 a week selling weekly strangles for income. Selling strangles for income on Robinhood can boost your income.
Strangles
What is a strangle? (Buying vs Selling)
- A Strangle is the purchase or sell of an out the money call option and out the money put option simultaneously.
- When you purchase a strangle, you need a big move up or down to yield a nice profit. Ex. TSLA stock is trading at 500. You could BUY a 400-strike-put/600-strike-call strangle on TSLA options if you expect a big move. In this scenario a big move above 600 or below 400 would bring either the put or call in the money. This can result in big profits.
- When you sell a strangle, you want a range or little movement in the stock to make profit. Ex. TSLA stock is trading at 500. You could SELL a 400-strike-put/600-strike-call strangle on TSLA options for income, if you expect the stock to stay in a defined range. In this case the range is between 400 and 600. If TSLA stock stays within that price range, both the out the money call option and out the money put option expire worthless. When you sell the Strangle. You receive cash upfront.
- Master selling strangles for income on Robinhood
How to sell strangles options efficiently
Choosing the stock
- A stock that is range bound. Moves in a certain range over an extended period of time
- A stock with liquid weekly options available. At least 500 open interest contracts for popular strike prices
- A stock that you can easily apply technical analysis to, based off past data. You want to be able to predict the movements with logic. Meaning no start up bio techs etc....
- A stock that out the money weekly options carry high premiums
Choosing the strike price
- The best way to choose strike price is good old fashion technical analysis.
- Identifying major support and resistance areas are good places to start
- Utilizing custom parameters on a technical indicator to give over 99.7% odds is another. Subscribe today to find out more on this.
Frequency
- Selling weekly will give you less premium upfront but will help you scale quicker.
- Selling monthly will give you more premium but leaves allot of uncertainty within 30 days.
- To take advantage of both, selling strangles bi-weekly gives a great deal of premium and expires soon enough to give a good scaling effect
Hedging
- Hedging the sales of your short term strangles is a great way to reduce risk. Simply purchasing long dated strangles is one of the best ways to hedge.
- Having a high ratio of cash available vs position size is another way to lower overall capital risk. Not the best way and will lead to smaller gains.
- Making sells way out the money in a stock that carries high premiums is another way to mitigate risk
Demonstration
- Follow the link below to see how we sell strangles for income to produce 4 figure+ profits a week
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