Transcription
In this video, I'm going to show you exactly how I use the SoFi wheel strategy with options to collect 290K in options premium and how that fits into my bigger retire early journey. I'm going to show you step by step exactly how I analyze companies to meet my real strategy requirements. And then I'm also going to show you how I execute cash secured puts, covered calls, and a special uh strategy at the end of this video. So, let's go ahead and dive into it.
Remember, this is not financial advice. I'm just sharing what I'm personally doing for educational purposes only. Results may vary. Now, let's dive into the portfolio. I do want to show you exactly proof that, you know, this strategy has worked for me personally. Uh, as you can see the portfolio right here. If you do want to follow me along my 8 figureure journey, then make sure to hit the subscribe button down below. And if you get any value out of this video, I would appreciate it if you hit the thumbs up button. Thank you.
So, let's go ahead and dive into it. We're going to go to the realized gain loss. And as you can see, year to date, 291K in options premium collected utilizing the wheel strategy with SoFi being one of the positions in my portfolio. Obviously, results vary yearto-year, but I'm going to show you exactly how I do it. And if you do want my free trade ideas, that will be on my Instagram and my free newsletter, which are both down below in the description. And if you want to work more closely with me one-on-one and join my private options mastermind with 328 clients in there, that'll also be at the top of the description and you could watch this training that I filmed for you as well as some client testimonials that I post on a weekly basis and you could book a call with me and I look forward to seeing you there.
So, let's go ahead and jump into it. The three criteria for the wheel option strategy. So, a lot of people get this part wrong. And it's very crucial that you pick the right stocks for the wheel strategy because if you pick a stock that is consistently going down in price, it's not going to work for you. So, I'm going to show you exactly why SoFi meets that criteria and exactly how I analyze and pick perfect stocks for the wheel option strategy.
So, number one is going to be a great chart. So, if we look at SoFi, okay, we could see that for the past year and a half, I like to go back a year and a half. So, we're going to go to uh 2024. All right, you're going to see that the chart has been upward trending. Okay, so all you have to do is draw a line from that point a year and a half ago up to where the stock is now. And as you can see, uh nice upward trending chart. So, that makes it very easy to trade the wheel options strategy.
Now, if you're wondering what this diagram on the uh right or left of me is, we could kind of cover it, what the wheel strategy is, just a brief overview, and then I'll dive into the nitty-gritty. Now that we know that SoFi has a great chart, we'll get into the other two. But first, what we do is we sell cash secured puts and we're collecting premiums. So, what that is is basically there's someone out there who will buy a put option from me because they don't they want to get out of their 100 shares that they own if the stock goes down to a certain price. Now, why would they want to do that? Well, let's just say they've owned Apple since it was at 20 bucks, right? It's at 100 now. And if it goes down to 80, they just want to get rid of their shares. They want to take their profits and not lose any more of their profits. Okay? Now, I would be forced to buy those shares at a discount, right? Because the stock would go below my put price. So, um, we sell puts, we collect premium. It's basically like, think of it like car insurance. We pay a premium every month for car insurance. But most of the time, we'll never use it. And we probably will pay more premium than what the car is actually worth just in case. Okay? And that's exactly how insurance companies make money. Well, this is how we make money with the wheel strategy. We collect premiums on the puts. Eventually, the stock goes below our put price. We're forced to buy 100 shares, but we got paid uh to basically dollar cost average and get that stock at a discount.
Once we have those shares, we then sell covered calls against our shares, above our cost basis. So, eventually the stock goes above those covered calls by expiration and we'll be forced to sell our 100 shares at a profit. So, we get appreciation plus we get a premium. Okay? And then we do it all over again. So, sell puts, get assigned shares eventually, maybe two or three months down the line. Then, we sell covered calls, then we get the shares called away, and we do it all over again. So, I'm going to show you how that works nitty-gritty later on in the video.
But the second part of this is the stock has to have great valuation. So, ideally, I like stocks that have a PE ratio under 100, especially because I'm trading high growth stocks. So the PE ratios will be higher than the S&P 500 average of 26 but lower than 100. Okay, that means they're earning enough per share to, you know, pay out investors, buy back their stock, uh, invest into the company and make that, you know, stock price go up. So PE ratio has to be under 100. If they don't have a PE ratio under 100, then I look at the cash on hand.
So, we're going to look at SoFi. All right? And I'm just looking at tradingview.com. This is a free website that I like to use. Um, I pay for the subscription, but you don't have to. Um, if I go down here, I could see their PE ratio is 52. Okay, so great. It's under 100. For an online banking stock, this it's definitely a little bit higher than like a traditional bank uh stock, but they're online banking. They're into the AI banking space. They are doing a lot of things that are not, you know, traditional, and that's why they're considered a growth stock. Okay. So 52PE that looks good.
Now what we'll do is I want to dive into you know what the stock how does you know certain economic factors influence the stock very basic ones and how you know how do they generate revenue okay so one thing about banks is they're highly sensitive to interest rates all right we're in a high interest rate environment right now so that's not that good for banks right because not a lot of people can afford to pay high interest on loans so banks benefit benefit when stock interest rates start coming down. Okay, they don't benefit like when interest rates are almost at zero because they can barely collect any interest fees, right? But they benefit from the transition of high interest rate to low interest rates. So, as you can see right here, we're looking at the CME Fed Watch tool. We could see that there's going to be an interest rate cut in September. By the time you're watching this, maybe the interest rate cut already happened. Okay, 2025 September. There's going to be another one most likely in December 2025, then another one in January 2026, right? And multiple on the way in 2026. So, that's going to be good for SoFi because people are able to refinance their homes, refinance their um auto loans, their student loans, and that's everything that SoFi does.
So, if we look at their investor relations booklet, we could see record revenue growth, 44% year-over-year this past quarter, Q2. So, that's great. Double- digit growth in their revenue. All right, double-digit net income margin. Okay, that's good. 11% net income margin. And you could see that they're, you know, executing everything that they sought out to do, right? They launched their home equity loans. They launched their paid soi plus subscription this year, right? And that's how they're collecting fees as well as people are using their app which they pay I believe it's $10 a month and they get access to certain benefits like high yield savings account um, you know, AI investor um advice, right? There's lots of different things that they get benefits from. Okay. Um, so what I see is that home loans are going to be a major profit center for them. um, as well as student loans going into this lowering interest rate environment. Okay. And that brings in a lot of other, you know, customers and once those customers come in, they can offer other services like credit cards, SoFi Invest, right? Uh SoFi Protect, maybe some insurance products, stuff like that. So, that's what I like to see. I like to see that their members are growing every year. Q2 2025, 11 million members. Okay. Um, that's pretty insane. 35 34% growth rate. So still doubled digit growth in their members, right? So this is a company that is growing rapidly right now. So it's in the growth phase. They just went positive on their net income in 2024. Okay? So this is the second year they actually earning a net income after taxes, expenses, depreciation, interest, all of that. Right? So that is what we want to see. All right. So, we're in the early innings of SoFi and they're generating more revenue, more customers, and it looks like they're doing a great job with the company. Okay, so now that we have the valuations underway and I do these valuations for you, so when you watch my channel, you'll see that I talk about a few different stocks that I do the wheel strategy on, so that you know, you don't have to do the research um as indepth. you could kind of look at what I'm giving you and then compare it to, you know, what you find, right? So, that is why I like uh, you know, number two, great valuation.
So, number three is going to be great premium. So, because we're selling puts and selling covered calls, we want to make sure that there's at least a 2% ROI there um for us to collect. Okay, so let's go ahead and jump into it. Uh, one thing I do want to talk about is the VIX levels. So the VIX levels are very important because what this is is basically it's the fear and volatility index. So if we go to the charts, all right, this is the fear and volatility index of the S&P 500. So this shows us, you know, how much cash I should be allocating during times of greed or during times of fear. And with options, because we're selling insurance products, right? We're selling stock insurance. Essentially, options premiums are highest when fear is high, right? Like if there's a car out there that's been in a lot of accidents, the insurance on it is going to be higher than maybe another car that has been in no accidents, right? So, it's the same thing. When the VIX is high, insurance premiums or uh put premiums are way higher, right? And that's an opportune time to allocate, you know, for me 100% of cash. like right here when the VIX spiked up to 60 and QQQ uh had a massive tariff crash. Okay, so that's exactly when the VIX spikes up. Now, right now we're at a very low point. Okay, VIX is under 15. So, if we go back to the levels, we're right here. VIX 12 to 15, which is barely any fear in the market. Little to no fear, in fact. Um, so that tells me I could have 40% cash on the sidelines all the way up to 80%, which I don't do because I'm definitely more aggressive. Right now I have like 15% cash. So I'm not quite following these levels to the tea. But these will keep you safe in the event of a crash or something like that to where, you know, you'll have a, you know, I'll have a little bit of cash on the sidelines for when the stock market does crash to take advantage of those high options premiums. So just something to be aware of. look at the VIX levels. This is something that I do uh probably one of the most important indicators I look at when selling uh put options.
So, let's dive into it. The wheel strategy on SoFi cash secured puts. So, how it works is let's just say SoFi is trading at I think right now it's trading around $25. So, $25 right here. We're going to sell a put option. So, I'm going to sell a put option right here at X at 23 and a half. Okay. So maybe I collect a 100 bucks on that per contract. So if the stock stays above 23 and a half by expiration in 30 days, cool. I collect my 100 bucks and I do it all over again the next month. And let's just say the stock, you know, trades all the way down to 24 in the next 30 days. Well, I collect my 100 bucks again and I do it all over again. Well, let's just say the third month, okay, the stock I sell that 23 and a half put and the stock falls all the way down to 22. Now, I'll be forced to buy 100 shares at 23 and a half. So, that's 2350 bucks for that 100 shares. Okay? But I still get to keep that premium. And then now I have shares and I could sell a covered call.
But let's first kind of go through walk through exactly how I sell cash secured puts. So, I do a 20 to 30 delta, which is a 20% chance of being in the money or the stock falling down to that point or 30% chance of the stock falling down to that point. Now, the higher the chance, the higher the premiums, okay? Because you're I would essentially be taking more risk. So, I like to sell like 30 delta um cash secured puts, especially on SoFi, take a little bit more risk and collect a little bit more premium. Um, I like to go 30 days to expiration for monthly income. So, I don't have to be sitting in front of the computer screen every day watching it. That's not what I like to do. I don't day trade. I just focus on swing trading, monthly options, and I like to enter on red days.
So, let's go ahead and go into the portfolio. Remember, this is not financial advice. I'm just sharing what I'm personally doing for educational purposes only. Results may vary. But if we go into the portfolio, okay, you could see so my SoFi position right here at the bottom, 136K in cash secured puts. So I'm going to click in there. So you could see and we have currently 58 put options at the 23 12 mark. So I did this exact trade that I'm talking about. Okay, sold all of these put options to collect um $4,727. Now, if I go to the options chain, okay, I would do the same thing. I would go to September 26. I would sell the 23 and a half which is a 30 delta and I'd collect about somewhere be around 90 bucks per contract. Okay. Which is a 3.98% ROI. Results vary depending on where the stock is trading. Okay. Um, so that's a pretty good ROI there, right? In 30 days. I like that. So I'm going to sell that put option. Okay. I'm going to by clicking the bid and then that'll pull up sell one September 26 23 and a half put and you know most of the time you'll hit the mid price or the bid price right and then review and send and boom that is exactly how I enter the trade. So that's exactly how I entered these trades and you know very um nice premiums there that I like and it hits my return goals per month of anywhere from you know 3 to 5%. I try to hit those ranges. Okay, obviously results vary monthtomonth. So that is exactly how to do the cash secured put.
Now let's talk about the covered calls. Let's just say I got assigned on those shares at 23 and a half. Okay? Or we'll talk about it maybe 25. But basically, let's just say I got assigned at 23 and 1/2. I'm going to sell like a 25 or 26 covered call. So something far above my cost basis so that I could get some appreciation and then eventually get my shares called away and get some premium as well. Okay. So let's just say this month I sell the 26 strike covered call against my 23 and a half my shares at 23 and a half and the stock finishes at 24. Okay, I get to keep that premium. Maybe it's 100 bucks. Keep that premium do it all over again. Let's just say the second month I sell the 25 covered calls. So to collect a little more premium and be a little bit closer to where my stock is trading, but then the stock goes to 26. Okay, by expiration, I'm going to be forced to sell my shares at 25, even though the stock's at 26. So I get appreciation plus the premium. Okay, so what I like to do is sell 30 delta covered calls. I go anywhere from 15 to 30 days to expiration for monthly income, and I enter on green days so I could get higher up above my shares. Okay. So, and what's cool about the covered calls is, you know, I could just wait until expiration, let the shares get called away or enter a new covered call position. So, I'm going to show you exactly how I do it. Okay, let's just pretend that um we're going to go out like 23 days. Okay, let's just pretend I got to sign today at 25. All right, stocks trading at 25 12. What I'm going to do is I'm going to go to that 30, you know, 30 to 35 delta. I could go all the way up to the 28 strike. Okay. Um, which is pretty decent, right? Because that's going to give me over over a 2% ROI on the covered call. So, I like that 28, right? Uh, and then appreciation wise, it would have to go all the way up past 28. So, that's, you know, at least four or 5% there in appreciation. So, it's double the income, right? It's appreciation maybe four or 5% plus the premium 2%. So overall on that I'm getting like 6 to 8% right if the shares get called away. So again if I want to ensure the shares get called away faster I'll go to a higher delta maybe a 40 delta to collect like 3%. But less appreciation but either way the shares might get called away faster. Has a 40% chance right? So either way, I like to go somewhere between 30, sometimes even 40 delta to be very aggressive as long as I'm above my cost basis of 25. Okay, so that's the covered calls. You do that, you know, I'll do that on a uh every two to three weeks, right? 23 days out. Once that is over, if my shares didn't get called away, I'll do it again, okay? Until my shares get called away. So that's exactly how to do the covered calls and collect premiums there.
Now, there's one last strategy that I do to supercharge the ROIs. Okay? So, what I do is, and this is not part of the wheel strategy, this is just how I modify the wheel strategy to fit my needs, is I buy a leaps call option. So, I don't like buying options because you're paying a premium to own something that decays over time. But if you do it right, if you do it the way I do it, then you at least have enough time to be right and you could kind of lever up the money to, you know, um, superers size the return. So, I'm going to show you exactly how I do it. All right. So, um, buy 70 delta leaps at least one year out. I like to go 400 days plus. Stock has to be below the middle Ballinger band to lower Ballinger band when VIX is above 15. And then I sell the stock once or I sell the option once the stock is above the middle Ballinger band.
So let's go ahead and go to the chart. All right. And we're going to go to SoFi. And right now would be a bad time to buy a leaps call option. This would have been the perfect time because we're below the middle Ballinger band line. And the what these Ballinger bands are is basically these top and bottom lines are two standard deviations away from the average price. Meaning in simple terms, the stock's going to stay in between these two lines 95% of the time. Okay? And when it goes outside of there, it tends to suck back in. Same when it breaches the lower, right? It breached the lower back here during the crash and then sucked back in. Breached the upper, sucked back in as you could see. Okay? So, it's pretty predictable. And this would have been a good area to buy. Now, this is not a good area to buy, but this area would have been great. Okay? I would have bought a leaps option here. And then I would have exited once it passed that mid Ballinger band. So probably somewhere right here. And typically I'll make you know 10 to 20 sometimes 30% on these quick moves. Okay. So obviously results vary but um, you know, it's it's pretty you have to wait for the entry but it's it's very fun to do these uh if you get a good entry.
So what I'll do is I'll go to the options chain. I'll go out, you know, I went out to January 15, 2027, which is 56 days out, and I'll buy the 70 delta or at least as close to 70 delta call option as possible. So, there's no 70 delta, but I like to be above 70 if anything. Um, not I wouldn't go to 67. So, I'd get the 22 strike call option, which would cost me about 900 bucks. Okay. Now, to buy a 100 shares today, that would cost me 2500. So I have a leverage factor there of you know almost 3x. So I like that right because I could buy this and I don't have to buy 100 shares but I get to control 100 shares for 900 bucks. Now mind you there is theta decay. So this is decaying at um about 6 cents per day. So not that much because we're so far out in time but still you have to be aware of that. So I like to buy this and then again once the stock goes above that mid Ballinger band line I will sell this option. um to make a profit. Okay.
Now, if you enjoyed this video, please give it a thumbs up and I'll see you in the next tutorial. I'm going to link right here.