Options Trading For A Living - A Detailed Guide How I Made $52,138 In 8 Weeks
Seeking Alpha Analyst Since 2011
Over the past 20 years, he traded and invested his way to success in the stock and real estate market, making millions of dollars in the process.
Markus has written three best-selling books about trading and investing that have been translated into multiple languages. His youtube channel with over 4 million views is dedicated to his favorite topic, which is trading stocks and options.
Markus has connected with over 300,000 traders in more than 200 countries across the globe.
He lives in Austin, TX where he enjoys spending time on the lake watching his kids racing their sailboats.
I’m Markus Heitkoetter and I’ve been an active trader for over 20 years.
I often see people who start trading and expect their accounts to explode, based on promises and hype they see in ads and e-mails.
They start trading and realize it doesn’t work this way.
The purpose of these articles is to show you the trading strategies and tools that I personally use to trade my own account so that you can grow your own account systematically. Real money…real trades.
In this article, I’m going to show you how I made $52,138 in 8 weeks by trading options (at the time of writing this article March 12, 2021).
The key question that I’m always asked is, “Is trading for a living possible?” For me, this is a resounding YES!
I’ll break down all the steps from how to trade like a pro, where and how to find great trades, how patience is extremely important when making money, and more.
What Do You Need?
You might be thinking, “How the heck does anyone make that much money doing something so risky?” The answer is simple. You need:
Number One a solid trading strategy, which we will discuss in this article. We will talk about the trading strategy that I personally used to make more than $50,000 in the past two months, and I’ll show you how to do this step by step.
Number Two you need the right tools. You will see why that is so important, and I’ll show you the tools that I’m using.
Number Three you need the right mindset. I know that mindset is probably the most boring thing to talk about it, so I will not spend a lot of time on this, but having the right mindset is important if you want to trade for a living.
Now, there’s one more thing that you need, and this is money. I hate to break the news to you, but if you don’t have any money you can’t put money into your account, and you won’t be able to make money.
And yes, I made more than $52,000.
Before we talk about the trading strategy, let me just add a very, very important disclaimer.
No, these results are not typical. Yes, I am very good at this, and I’ve been doing it for over 20 years. If you start trading this strategy, do not expect the same results. I will talk about this later, but it is super important that you start paper trading on a simulator first.
How Much Money Do You Need To Trade Options?
The key question that you might be wondering is, how much money did I need to put into this trading account to make this much?
For this account, I deposited $250,000 in cash. This is a margin account, so this gives me $500,000 in buying power.
Let’s dive in.
The Wheel Strategy
If you have been following me for a while, you know that I like to trade using The Wheel Options Trading Strategy.
There are three steps to this strategy.
Step Number One, what we are trying to do here is sell puts and collect premium. When selling options, I typically like to go with expiration dates 1 to 2 weeks out.
The idea here is to collect a “weekly paycheck.” I’m putting this in quotation marks because this is where some people say you can collect weekly paychecks with no risk, and that is simply not true. When trading there IS risk.
You want to make sure that you trade only the best stocks. What do I mean by this? Well, currently in my account I have positions with companies like (AAPL), (AMD), (DBX), (DKS), (GDXJ), (HAL), (HAS), (IBM), and (JWN).
These are all super solid stocks. These are not fly-by-night stocks. You will not see any (GME), (AMC), (BB), (BBBY), or any of these meme stocks in my account.
We’re talking about super solid stocks, stocks that you have to be okay with owning if you’re assigned the shares.
So let’s look at DKS, which is Dick’s Sporting Goods. They are a solid retailer. The idea here is that we are selling puts at a strike price that is at support.
Here I looked at short-term support. You want to see at what price level did prices touch several times and then bounce back. As you can see, here it is the 66 level, so I sold a 66 strike.
If DKS closes above then I keep the premium, if it closes below, we would get assigned.
Now, another stock that I am trading right now is (SNAP), Snapchat. Here we are looking at a strike price of 49.
Again, this is where you want to pick super solid companies. I don’t know about you, but do you have kids? My kids live on Snapchat. They’re not on Facebook, Twitter, or Instagram, but they’re on Snapchat.
I believe SNAP it is a super solid company. We see that we had support four, almost five times. So this is where I sold a strike price at 49.
You want to make sure that you’re only trading the best stocks and that you always look for support. The support that I like to see is a support level that held at least over the past 8 weeks.
So, again, step number one is where we’re selling puts and collecting premium. The basic idea here is that we are buying stocks at a discount, or as many people would say right now, “buying the dip.”
This is something that has been working really, really well. It’s a tactic that Warren Buffett has been using for many, many years to scoop up stocks at a discount.
Step Number Two is where you may or may not get assigned. This means that if the price at expiration of the stock is below the strike price that you sold, then you have to buy the stock at the strike price you sold it.
In this case, if this is happening, then you would go to step number three, which I will share with you in just a moment.
Now, if the price is above the strike price at expiration, then you don’t get assigned. You just keep the whole premium and you would go back to step number one.
This is why it’s called “The Wheel,” because we keep doing this, right?
Step Number Three is when we are assigned, we will sell covered calls and collect more premium.
This is the strategy in a nutshell. As you can see, it is not really complicated. The trick is to trade only the best stocks with solid support levels in case you are assigned.
Using The Right Tools
The second thing that you need is powerful tools. Let’s talk about the tools that I personally use.
If you have been following me for a while, you already know that the tool that I use is the PowerX Optimizer.
Now, here are the two things for me personally that are super important when we are picking the right tools.
First of all, I want to have a scanner built-in. A good scanner not only finds the best stocks to trade, but also tells me what strike price to trade, and at what expiration.
When it comes to expiration, I already told you in broad strokes, I’m only trading one to two weeks out. But should I trade this week’s expiration or next week’s expiration? This is super important, and this is where a tool helps me.
The second thing, which for me is super important, is that the tool has a calculator. With this calculator, it tells me exactly how much premium I should get, how much risk is involved in this trade, right?
These are the important things you need to know.
Then, of course, a calculator should tell you how many contracts should I trade based on my account size.
When trading options, you know the important things are, that you know what is the underlying stock, what is the strike price, what expiration, what is the minimum premium you want, and of course you want to know the risk.
So let me show you exactly how I am finding these stocks. So here we see the PowerX Optimizer.
So we are looking at the scanner right here at the bottom, this is where the scanner actually gives us a bunch of symbols that are candidates to consider right now. Now, one of the things that we need to do is we need to make sure that we only pick the strong stocks, and that we only pick those that have a good support level.
So one of the examples of a stock that I’ve traded recently is (NIO). When I click on NIO here, it actually shows me in the data window, right up here, what strike prices I should consider right now. It also shows me what premium I can get, and how much this would be annualized.
What PowerX Optimizer told me is that right now I could sell at a strike price of 36. Let me just mark this here, and this is a strike price of 36, right.
And I would get some decent premium for this. Now, we always want to go back over the past few weeks, and if we look over the past 6 to 8 weeks, we see the support see, it touched the level three times. So there looks like there is strong support at 36.
Now, the next thing is, and this is where PowerX Optimizer helps you, that you see exactly here how much premium you can get, especially if we are looking at it annualized, right?
We’re looking at this column here with NIO, right? For me, the minimum option premium that I should get to get at least 30% annualized. For me, that’s what I want to do. This is how I was able to make more than $50,000 thus far this year, and it is only March 12th, and I started on January 11th.
Now I also want to know how many options should I trade based on my account. How much in premium would I collect, and what is the premium per day that I would make? So how much money per day do I make when trading this?
This is where we go back to why it is so important to have a tool that shows me all this because let me ask you, how else would you find all this out? I mean, if you tried to do this manually, I don’t know, I mean, for me, this is almost impossible to do it. So and believe me, no professional trader does this with only a calculator or a cell phone in his hand.
You must know your numbers. Trading is a numbers game, and if you don’t know your numbers, it will be really, really difficult for you to make money.
Another key question is, if you don’t have a tool, how else would you find these trades? I mean, every single trade that I did in this account here, that you see over the past eight weeks, that have yielded $52,000, has been taken from this scanner.
I mean, if you would force me right now to trade without this tool, I couldn’t do it. This is where I believe that having powerful tools like the PowerX Optimizer is giving you an unfair advantage.
Think about it, when trading you are trading against other traders, but you don’t have to be the best trader in the world, you just have to be better than the other trader. You just need to have an edge, and this is where I must say this tool is actually giving me an edge.
If you want, you can even say that it is not only an edge, you could call this if you want to, an unfair advantage, but when it comes to trading, you need to play every ace. You don’t want to show up with a knife to a gunfight, you’re trading against the smartest traders in the world.
Now, this brings me to the last point here of how to trade for a living, and this is having the right mindset. This is something that many traders underestimate because they think, “Hh, you know what, that’s fine, I just need a strategy and I need a tool and I will just be fine.”
Having the right mindset is important, especially if you want to trade for a living. You must be focused on what I call SRC profits. This stands for systematically, repeatable, and consistent.
So this is what SRC stands for, and this is why this so important. You see, as a trader, for me, at the end of the month, I’m wiring money out of my account, out of my trading account into my personal account.
I mean, it's great when you have windfall profits. If recently you participated in the GME hype, and you double, triple, quadruple many maybe 10x your account, then good for you. Congratulations, and I really mean this.
However, can you do this again this month? What is the next stock that is going crazy like this? Or if you were able to capture the Tesla ride all the way up, good for you, but what happened when Tesla went from 800 to 500? Did you take a hit in your account? See, this where it is super important to have these SRC profits.
When it comes to trading for a living it is also important that you have patience, and here’s what I mean. You’ve got to grow your account systematically. So, and how do you grow your accounts systematically?
If you don’t have a trading strategy, this is why it’s so important to have a trading strategy that produces these SRC profits, the systematically, repeatable, and consistent profits.
So you see how it all comes together. I mean, this is why there’s these three pillars, the trading strategy, the tools that are supporting your trading strategy, and the mindset.
Now, the other thing is that when you are trading, patience means that you can’t panic. You see this is where recently, people started talking about these diamond hands, but I think the way how some people talk about diamond hands is just holding on to a losing trade.
No, this is not the case. It basically means you let the trade play out. How do you let the trade play out? You follow your plan, but to follow your plan, you must have a plan. So this is where it goes back again to having a trading strategy.
To sum things up, first of all, is it, is it possible to trade for a living? The answer for me is yes because that’s what I’m doing. Now, does it mean that you can do it? Again, this is why it’s so important that you practice on a paper trading account first. So you’ve got to have the right trading psychology.
For the trading psychology here is that you are aiming for SRC profits and not the YOLO-windfall every now and then profits.
To start trading for a living, what are the things that you need? You need to have a strategy, you need to have the right tools, you need to have the right mindset.
Now, if you are looking for a strategy, today I presented to you The Wheel Strategy, which I think is a great trading strategy because it’s simple to understand and it gives you an edge, right? You also want to have the right tools, and for the right tools, I might be biased, but I think PowerX Optimizer is the best tool not only for trading this strategy but also for trading the PowerX Strategy here.
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