Day trading to make serious money

[SniXSniPe]

had to split my post for some reason

I've been looking into options but I feel that's a very easy way to blow money starting out. Part of my plan was to avoid losses as much as possible even if it meant reduced profits.

+$491 for the day

PLTR, TSLA, AMZN, BABA

You're probably thinking about naked calls/puts.

I'm talking about covered calls & cash covered puts. Literally, the only risk involved is if you are doing it on a stock that could end up in the gutter.



Example A (Covered Call):

I have 100 shares of stock in X company at an average price of $10. I sell a call using my 100 shares in this stock as collateral. Let's say, my call I sell has a strike price of $15 and expiration date that same week on Friday. Let's also say, I collect $200 of premium on selling this covered call.

Two results of this:
a) The stock never hits the strike price and never gets assigned. As a result, I collect $200 of premium and keep my stock.

b) The stock DOES hit the strike price and gets assigned. As a result, I sell my 100 shares of stock at the strike price of $15, and KEEP the premium. If the stock has a value greater than $15, I miss that profit.


Does that make sense? It's literally impossible to lose money on a covered call UNLESS your stock goes to zero. In that case, you shouldn't be doing this on risky stocks like that.


Example B (Cash Covered Put):

So let's say, option b) occurs in the scenario above. So I now have that cash ($15x100 + $200 premium) from above.

Now I can sell a cash covered put using the cash I have as collateral, to sell a put & collect premium. I set the strike price to $12.50. Current stock price is $16.

Here's what happens in a cash covered put instance:
a) The stock hits my strike price, and I now have 100 shares of this stock at a price of $12.50. I also keep the premium. Keep in mind, if the stock hits below $12.50, I still purchase it at the mentioned price.
b) The stock never hits my strike price. I keep the premium and my cash, and do not get the cash.

[SniXSniPe]

Do you understand from the examples I put above? Here it is again:

You literally:
1) Sell covered calls. Collect premium
2a) If not assigned, sell another covered call the following week (or whatever duration you want).
2b) If assigned, sell cash covered put and collect premium
3) If your cash covered put gets assigned, you now own 100 shares (per contract).
4) Repeat step 1


EXAMPLE OF A STRATEGY:
Let's say I have 500 shares of NIO at a price of $20.
Let's say current stock price is $50.
Let's say, I want to sell when NIO is at a price of $80.

So what I can do here, is sell a LONG TERM cash covered call to collect more Premium with that "out of the money" $80 Strike price. Remember, the longer the time period the higher the premium. The closer to in the money the strike price, the more the premium. We are using the premium & time to balance each other out.

In this instance. if NIO hits $80, I keep the buttload of premium + I earn a value of $80 x 500. Note, if the stock price is $100, I miss out on that extra money as my strike price was $80.




Let me know if you have any questions. I hope I made things clear/and didn't write anything incorrectly. Do you now get why I suggested covered calls and cash covered puts? Literally, the only way you lose is if:
a) you are not willing to hold a stock long in case of a bad recession
b) you pick a risky stock that has opportunity to go down to 0

Now go look at Tesla. Imagine how much money people are making doing the play of selling covered calls and buying cash covered puts on Tesla.

[Heaney]

I count it as 75, I mean a trade involves both buying and selling right? Just depends how you look at it.

It's nice because it's low risk, I usually cut my losses extremely quickly and cut my profits around the $30-$50 mark. If it happens to go beyond $50 I let it.. had a couple instances where I made $150+ per trade.

Adds up quickly. All in all if I cut myself off at noon I would've netted $800 for 3 hours or so of constant trading. Not bad at all.

Sounds like alot of work tbh but if its working for you then good stuff! I'm the opposite and put more capital in, for instance I bought today at 5pm and by 7pm I was up $4800 on that buy using 14K of equity.

[TugOfPeace]

Do you understand from the examples I put above? Here it is again:

You literally:
1) Sell covered calls. Collect premium
2a) If not assigned, sell another covered call the following week (or whatever duration you want).
2b) If assigned, sell cash covered put and collect premium
3) If your cash covered put gets assigned, you now own 100 shares (per contract).
4) Repeat step 1


EXAMPLE OF A STRATEGY:
Let's say I have 500 shares of NIO at a price of $20.
Let's say current stock price is $50.
Let's say, I want to sell when NIO is at a price of $80.

So what I can do here, is sell a LONG TERM cash covered call to collect more Premium with that "out of the money" $80 Strike price. Remember, the longer the time period the higher the premium. The closer to in the money the strike price, the more the premium. We are using the premium & time to balance each other out.

In this instance. if NIO hits $80, I keep the buttload of premium + I earn a value of $80 x 500. Note, if the stock price is $100, I miss out on that extra money as my strike price was $80.




Let me know if you have any questions. I hope I made things clear/and didn't write anything incorrectly. Do you now get why I suggested covered calls and cash covered puts? Literally, the only way you lose is if:
a) you are not willing to hold a stock long in case of a bad recession
b) you pick a risky stock that has opportunity to go down to 0

Now go look at Tesla. Imagine how much money people are making doing the play of selling covered calls and buying cash covered puts on Tesla.

I understand it nearly completely and may post a question about it later once I dig a bit deeper, but for now my biggest question is as follows:

If it were this simple, why doesn't everyone do it for easy money? Not doubting the method, just genuinely curious.

[TugOfPeace]

Sounds like alot of work tbh but if its working for you then good stuff! I'm the opposite and put more capital in, for instance I bought today at 5pm and by 7pm I was up $4800 on that buy using 14K of equity.

What's the downside of a method like this?

[TugOfPeace]

had to split my post for some reason



You're probably thinking about naked calls/puts.

I'm talking about covered calls & cash covered puts. Literally, the only risk involved is if you are doing it on a stock that could end up in the gutter.



Example A (Covered Call):

I have 100 shares of stock in X company at an average price of $10. I sell a call using my 100 shares in this stock as collateral. Let's say, my call I sell has a strike price of $15 and expiration date that same week on Friday. Let's also say, I collect $200 of premium on selling this covered call.

Two results of this:
a) The stock never hits the strike price and never gets assigned. As a result, I collect $200 of premium and keep my stock.

b) The stock DOES hit the strike price and gets assigned. As a result, I sell my 100 shares of stock at the strike price of $15, and KEEP the premium. If the stock has a value greater than $15, I miss that profit.


Does that make sense? It's literally impossible to lose money on a covered call UNLESS your stock goes to zero. In that case, you shouldn't be doing this on risky stocks like that.


Example B (Cash Covered Put):

So let's say, option b) occurs in the scenario above. So I now have that cash ($15x100 + $200 premium) from above.

Now I can sell a cash covered put using the cash I have as collateral, to sell a put & collect premium. I set the strike price to $12.50. Current stock price is $16.

Here's what happens in a cash covered put instance:
a) The stock hits my strike price, and I now have 100 shares of this stock at a price of $12.50. I also keep the premium. Keep in mind, if the stock hits below $12.50, I still purchase it at the mentioned price.
b) The stock never hits my strike price. I keep the premium and my cash, and do not get the cash.

In Example A (Covered Call):

Since an option is an opportunity to buy or sell a contract, and not an obligation, why would it matter if the stock price fell to $5 for example? You would just lose any profit from the covered call as well as the premium, and you're stuck with your shares at $10 right? That's the worst downside?

In Example B (Cash Covered Put):

I don't understand what the benefit of this is. You have shares in a stock whose share price is $16. Why would you want to put that up as collateral to buy in at $12.50? Are you exchanging the share price essentially, so you're gaining shares by doing this? So if you have 10 shares @ $16 ($160 total), if the strike price of $12.50 executes, you can now have 12.8 shares (let's pretend it was an even 13 shares)?

[_zman]

I understand it nearly completely and may post a question about it later once I dig a bit deeper, but for now my biggest question is as follows:

If it were this simple, why doesn't everyone do it for easy money? Not doubting the method, just genuinely curious.

Because it's not that as easy as people make it seem. It's similar to casino winnings. Everyone tells you about a strategy that worked one day out of the week/month for them, but if it were truly this easy then why not double down and do the exact same thing every day.

If I saw a call/put opportunity, the most I could see myself putting down would be 1-3k, but I can have little to no doubt when I put 10-20k towards an index fund and just be done with it.

[Heaney]

What's the downside of a method like this?

The downside of my method is gains are magnified but so are losses. For example I buy 6000 units, this means every 10c gained or lost is 600 dollars.

[demfeelsbro]

Just wondering what, if any, indicators you guys use.

I've done well with just MACD and SMA.

[TugOfPeace]

Just wondering what, if any, indicators you guys use.

I've done well with just MACD and SMA.

I don't use any indicators but probably should. Don't know how to set up MACD. I'm still not even able to read charts well and haven't been using them, have just been looking at price movements and gauging support/resistance/patterns.

Last Friday I had a pretty bad day. I broke my rules and bag held PLTR, all the way down to a $1350 loss, combined with a $250 loss on TSLA. Pretty much due to Citron dropping a tweet saying PLTR was worth $20, and MMs preventing TSLA from hitting $600. Had that not happened, would've finished positive.

Today, had a much better day. 58 buy orders and 58 sell orders, came out +$1200. Most days have been like this (but less profit).

I'm still not sure if my method is sustainable as it's only been two weeks.. but I've only had two times where I've bag held, both times it was PLTR and both times it was due to my own stupidity. Every single day besides those two (only one of those days finished negative), I've been profitable. Usually hit the bulk of my trades before noon. Fwiw, my career job nets me about $400 pretax.

On slow days I usually hit around $350. Good days are like today. If I double my trade size, makes me wonder if I'd double my profit - just afraid to do so because I'm not used to seeing such volatile numbers in the red, relative to my portfolio size. Think I should wait.

[TugOfPeace]

28 buy orders and 28 sell orders today. $570 gain.

Pretty relaxing day, made most of my money off TSLA. A bit of PLTR and AMZN as well.

Really want to scale up my trades and do options, but I’m pacing myself. Need a lot more gains before I can take bigger risks.

[SniXSniPe]

In Example A (Covered Call):

Since an option is an opportunity to buy or sell a contract, and not an obligation, why would it matter if the stock price fell to $5 for example? You would just lose any profit from the covered call as well as the premium, and you're stuck with your shares at $10 right? That's the worst downside?

In Example B (Cash Covered Put):

I don't understand what the benefit of this is. You have shares in a stock whose share price is $16. Why would you want to put that up as collateral to buy in at $12.50? Are you exchanging the share price essentially, so you're gaining shares by doing this? So if you have 10 shares @ $16 ($160 total), if the strike price of $12.50 executes, you can now have 12.8 shares (let's pretend it was an even 13 shares)?

Sorry, just now seeing this.

Remember: 1 options contract always = 100 shares. Not everyone can afford 100 shares of Amazon, or to purchase 100 shares of Amazon with cash standing around, lol.
-Premium = price of an options contract
-Premium is higher when a contract has longer expiration dates (like it expires 1 week, 1 month, 6 months, etc. from now). Obviously, the 6 months contract = higher premium
-Strike Price also effects premium--> "in the money" vs "out of the money" example: stock price is currently $50.
A call with a strike price of $45 is considered "in the money"
A call with a strike price of $55 is considered "out of the money"
So for a call, clearly a strike price "in the money" would have a higher premium.
-Of course, there are other outside factors, such as IV --> Implied Volatility
-Basically, high IV = bad for people buying options, but good for people who sell options. Google IV crush if you ever plan to buy options and understand. A higher IV implies higher premiums.

Anyways, going back to the examples:

Example A: Covered Call
So with the Covered Call, the only downside is basically if the stock price falls. That's literally it. You cannot sell your 100 shares (or however many contracts you put for collateral) if the stock price keeps falling, so you are literally ****ed if it drops to $5 (maybe have to hold long term, who knows?). But that's usually not a crazy risk for a stock that isn't considered "risky". On the other hand, getting assigned = Strike price hits your call price or above by the expiration date, meaning you have to sell your stock --> stock gains + premium. So not a loss there.

Also, you never lose the premium. The premium is ALWAYS there after you sell the contract.


Example B: Cash Covered Put
Nonono:

-Assume you have no shares for a certain stock
-Assume stock price is at $10
-Assume you have $950
-Assume you buy a Cash covered put $9.5p exp 1 week later
-You collect premium because you use cash as a collateral to purchase 100 shares per contract (remember, a contract = 100 shares)
-If the strike price stays above $9.5, your covered put never gets assigned. You keep your money and the premium. You do not get forced into buying the shares.
-If the strike price hits $7, your covered put gets assigned. You now purchase 100 shares @ $9.5 (you still keep the premium). You get forced into buying the shares.




Remember, when selling a covered call or put:
-You are putting up the collateral (Call-->shares or Put-->cash)
-You will ALWAYS collect premium
-Covered Calls: you do not get assigned if price stays below your strike price
-Covered Puts: you do not get assigned if price stays above your strike price

*Covered Calls can be a great strategy on massive green days (do you think the stock will seriously keep going up?).

*Covered Puts can be a great strategy on massive red days (do you think the stock will seriously keep going down?). Also: even if the stock keeps going down, do you think the stock is undervalued at a lower price and will recover in the long run? Good opportunity if you think a stock will recover and you want to buy the stock even if it hits below your strike price.

-Higher IVs = More premium for you to collect! Means volume is probably through the roof (usually when big news hits the market and makes a stock move around heavily, you'll see IV extremely high). IVs @ 100%+ are pretty high and you should be cautious, but it's not uncommon especially for stock such as Tesla which are heavily traded.

[ontclone]

28 buy orders and 28 sell orders today. $570 gain.

Pretty relaxing day, made most of my money off TSLA. A bit of PLTR and AMZN as well.

Really want to scale up my trades and do options, but I’m pacing myself. Need a lot more gains before I can take bigger risks.

so weird how people put themselves through so much stress having to check stocks 24/7 and not knowing if they will gain or lose money this week.

just buy a couple wonderful businesses at good prices and hold for a couple years... very simple and proven method to make money and dont even look at the market, it is irrelevant

[TugOfPeace]

Snixsnipe; ty for the response. Still digging into it and trying to understand.

Just thought I’d post an update since 12/1:

12/2 - had too much work at my real job, no trading that day
12/3 - again had too much work, but managed to squeeze out +$200 half assing it
12/4 - currently up $340, will probably close at $400 for the day

Edit: closing at $450

Taking it easy today with smaller positions and I’m finding it much more enjoyable to swing trade this way without worrying about losses. Getting consistent profitable trades without having my eyes glued to the screen

[xxDeeJayxx]

I've been posting in the trading threads since early this year and haven't learned much outside the basics. Made plenty of rookie mistakes. However now I've devoted time to learning from some experienced people on the fundamentals. This is just day trading, not investing.

I'm an electrical engineer by trade and started wondering, why don't more people pursue day trading as a way to make serious money?

I'm aware it isn't easy for most people to have discipline and look for patterns and whatnot and really invest their time towards it, but for the ones that do, why is it that even they fail?

If you're trading with above $25k and focus on short term exposure to the markets for high volatility trades and you're familiar with the particular pattern of the trade at the time and you're not trading a stock dominated by HFT algos, why is the failure rate so high?

Say a guy starts off with $25k and shoots for a modest $100 daily gain for starters. That's $2k/month, or $24k/year. Say you have more capital than that and shoot for higher gains.

Why is the failure rate so high?

if your investing with 25k and only getting 100/day your sus... i would expect 100/day with 1k... if your throwing 25k in there you should want at least 1k a day or more.. your most likely a low risk low reward investor then.. most people who throw 25k into a stock market look to get rich off of it within a year

[apo99]

if your investing with 25k and only getting 100/day your sus... i would expect 100/day with 1k... if your throwing 25k in there you should want at least 1k a day or more.. your most likely a low risk low reward investor then.. most people who throw 25k into a stock market look to get rich off of it within a year

if you can make $100 a day with 25k for 2 years i will give you $10m and we split the profits how about that? lol

you have no idea what your talking about

[brbacquiring]

Every beginner thinks they can be a successful day trader......until they realize they can't and they would have made more money by just holding

This. I think everyone has to try it and find out for themselves, though, lose money and possibly their mind, and realise that, no, actually they can't beat half the world's super-computing power.

It's an absolute joke, but is very tempting. "Just" make [arbitrary non-greedy-sounding % or $ amount] per day.

The only place that humans can beat the markets, potentially, is with much longer term bets - normally with some kind of information asymmetry, e.g. finding things before everyone else cottons on and then riding it up.

That's the only way anyone actually made money on dis chit. And, thankfully, it only needs a few minutes of screen time per week. Fuk, do you realise what a nightmarish existence it is to be chart-gazing on small timeframes all day long, you know what that does to your health? No thx, jeff, not for any amount of money in the world (srs).

[headturner1]

if your investing with 25k and only getting 100/day your sus... i would expect 100/day with 1k... if your throwing 25k in there you should want at least 1k a day or more.. your most likely a low risk low reward investor then.. most people who throw 25k into a stock market look to get rich off of it within a year

Just
Fukin
Lol

I like your style bro