How I Collected An Additional $674 In Sep 22

It is the end of the month, and its time to start put on record how much I collected in the month of September 2022.

At the same time, I have been tracking my monthly expenses. I set a goal that the cash flow that I am collecting, should be at least three times my monthly expenses. This way I should be able to leave my job comfortably. This means if my expenses is $2000/month, I should expect to have at least $6,000 in monthly cash flow.

For the month of September, I collected a total of $674. Here's the breakdown of the trades I have done.

In the month of September, I sold a total of 8 options and collected a total of $674. All of them expired, except for the last position which expiry date is 7 Oct 22 (which at the point of writing, has yet to reach the expiry date).

I want you to take notice of the second last trade - Amazon, which expired on 30 Sep 22 and the strike price is at 113.

However, take a look at what was the share price at expiry. It was exactly at 113!

So what actually happens - does it get exercised or expire?

Well - in my experience, it will expire.

But to be honest, if you understand the wheel strategy, you actually want it to be exercised instead. Why?

Because, if it gets exercised - I will get 100 shares of Amazon and I can start to sell weekly call options.

Look at the juicy premiums by selling a call option @ 113 the moment I get the 100 shares.  It will be close to an additional $300.

Furthermore, usually, for the strategy that I used (i.e. selling put options at low stochastics and probability OTM), the stock is usually due for a rebound whenever my sell put options gets exercised.

This is why I really don't mind getting my put options exercised - compared to most others who starts panicking every time their sell put options get exercised.

I will show you how I will execute the wheel strategy if this position gets exercised (hopefully it does - because that's where you will collect even more cash flow).

How To Execute The Wheel Strategy

The details of how to execute the wheel strategy has been covered in another blog post. Basically, this strategy is about cash flow collection rather than stock ownership. Hence, we need to sell call options whenever the stock get exercised.

Here's a brief summary.

Personally, I do use a conservative amount of margin, to sell my put options. Because, by using InteractiveBrokers, the amount of cash flow I collect easier outweigh the amount of margin interest that I need to pay to interactive brokers.

But firstly, before you even explore this strategy - you need to know how to find qualified stocks using the 8-Point Checklist. These has helped me avoided many failing companies.