Transcription
Whether you're looking to retire early or you just want some safe, passive, consistent income, in this video, I'm going to teach you how you can retire with $212,000. I'll talk about why that's such a specific number in a very short summary, and I'm going to show you the wheel strategy and how you can do it. Even in this economy, I think that right now you can squeeze out so much money. I'm going to show you how to produce so much cash flow that you can actually retire with $200,000, which is a lot less than what most people are doing. I'll go over several stocks and examples, so let's not waste any time and let's just jump right into it.
Here's the one-minute summary, by the way, because I know a lot of people are busy, and a lot of you guys appreciate me getting to the point. So here's the one-minute summary: You can use SPY to implement the wheel strategy and sell puts and covered calls on SPY on a monthly basis, 30 days to expiration with a 27 Delta, and that will produce about 2% per month in income. Now, if you want a higher income, you're going to use single stocks that have more volatility, to be specific, more implied volatility. Those stocks are going to be ones that I covered on this channel: Nvidia, Palantir, but you can also use other tech stocks. That could be Meta, that could be Netflix, and actually, any stock that has an RSI that's under about 40 is a really good candidate to begin running the wheel strategy, or if the stock is towards the bottom end of the Bollinger Band.
When you're running the wheel strategy, what you want to do is run it on a stock that is fairly cheap. You don't want to run the wheel strategy on a stock that's at a 52-week high, which is kind of difficult in this market. That was my short summary, but if you have time, let me explain to you how to actually implement this.
Now, if you have some time, let me go into the specifics. I want to debunk the myth and completely change the 4% rule. The 4% rule states that you can take out 4% per year in income when you're retired, which is a bunch of BS, to be honest. If you're running the wheel strategy, I can make 4% a month—okay, a month, not a year. So it doesn't make any sense to me. That's why I like options.
With the $200,000 portfolio, $212,000, as I said in the title, I think this is a really good position because 4% is essentially approaching the $9,000 mark, which is going to be six figures per year, and I think that's a really good income source. You can really retire or have a full-time income or a really strong secondary source of income.
Now, I quickly want to say that in my experience, I've been running the wheel strategy since I had $100K. When I had $100K in my portfolio, I just started to really focus on the wheel strategy. I did a little bit earlier, but I left my corporate job when I had $100K, which is maybe a little bit early.
Let me show you on SPY. I'm going to start off with the safest ETF, and I'm going to get riskier and riskier, and then show you how to really capitalize and make 4%, 5%, even more per month. My portfolio is at $4 million; I guess our next target is $5 million. I've been doing very well and am very happy and very blessed.
So, SPY. I do have a position here; I have a pretty sizable position, and I am actually running the wheel strategy, as I mentioned. Let me explain to you what SPY is and why you would want to use it. SPY is going to be on the safer side of things. SPY is safer because it's an ETF that has 500 companies in it. Essentially, when I was getting my degree in finance, everyone talked about beating the S&P 500, and that's because this benchmark is truly difficult to beat. It is truly hard to beat for the average investor, and even many hedge funds do not beat the S&P 500, so it truly is a very interesting metric to look at.
Now, the S&P has all the sectors in it, like technology, consumer cyclicals, consumer services, consumer defensive, utilities, real estate, energy, industrials, healthcare, and financial services. This ETF has the top holding, which is Apple, in which I have a huge position. I always say on this channel that you don't need to have the hottest stocks to make good money with options. You can make a lot of money with Apple, Nvidia, Microsoft, Amazon, Meta—all these stocks are fantastic.
In my video the other day, I mentioned how we are in a very bullish market; there is a lot of money to be made. So, with the wheel strategy and running it on SPY, I said in my little short one-minute summary that you can go 30 days in with a 27 Delta. So let's go sell a put option; I'm going to show you how this works.
So, sell put. Let's go for 30 days, right? So that's going to be basically into January, basically going into the new year. So, SPY January. Okay, let's take a look and see a 27 Delta here—$587. That was really close; I picked $586, $587. Here, it has $400. Now, let me explain; this is going to be in the lower end of returns, and then I'll tell you how to get higher and higher returns with the wheel strategy.
On the lower end of things, if you just want that safe passive income and you're kind of retired and just busy, you won't be able to probably produce, look, $400 on $50K. So, on $200K, you're only going to produce about $1,600 a month. All right, so that's on the low end of things. But I will explain that when you're selling puts, the put selling portion is the lower return portion. On the covered calls, you can make about double.
Let me show you an example of how that looks. So here, you know, in a month, it's $400, but on $200K, it would be $1,600 per month—nothing really that big, right? However, on the covered call side, and before we get into the single stocks, on the covered call side, if I go to sell a call, let's say that you got assigned at $600, right? So you got assigned for $600. If I were to sell like the $602 right here, which is very close to the money, I'll say, "Hey, you will lose the stock or the ETF if it goes into the money," but we don't really care because the whole goal here, right, is that we're just trying to create a lot of income into retirement. That's really it, guys. We're trying to create income into retirement. That's the goal of this video: to show you how you can run the wheel strategy.
You can literally go 100% wheel strategy on SPY or single stocks. To finish up this SPY example, the put side of things would only create about $1,600 of income. Now, the covered call side of things would create a little bit more income. So we made about $400 on covered calls; it's about $700 or so, plus you get $2 of upside. Let's say this, you know, the ETF's at $600; it goes to $602, so you get $2 plus, you know, about $7. So it's $9, right? So we got $400 to sell puts, and now we get $900 on the upside for the covered call side of things, right?
So $900 on the $50K or so, you know, if you multiply that by four, you get $3,600. So you can make between $1,800 on the bottom end to $3,600. Okay, so $1,800 to $3,600 on just SPY. I think that's a pretty good monthly income for having $200K, right? Most people can't figure out how to make income; it's pretty easy on SPY.
Now, if you want to create more income and you actually want to hit that $8,000 mark, $9,000, $10,000 mark, you're going to have to use single stocks. Okay? Because, you know, going 30 days out in 27 Delta on SPY is going to produce 2% per month in income or so—1.5% to 2%. But if you want to get to the 4% to 5% mark, or honestly, these past couple of months, I'm at the 10% mark. It's just ridiculous; I'm making money hand over fist—just hand over fist in all these stocks, guys. You know, bicep over tricep, as I say.
But look, I think that SPY is an okay start if you have a bigger portfolio, but if you're at $200K, you're going to want to use the single stocks that I'm about to cover right now. Before I cover the single stocks, let me just go through my notes real quick. I want you to know that selling monthly options is probably the best, although I have seen a lot of successful people go for two- and three-month options because they're busy professionals. I work with a lot of engineers, doctors, lawyers, nurses, accountants, etc. These folks have jobs; they're busy, and they don't even have a lot of time to go on my live calls. They don't even have a lot of time to really trade. Okay? And that's okay because you can just set these positions and forget about them—two months out, three months out.
So I want to say that you can retire using the wheel strategy. Either you can create weekly income if you have more time and you have more desire, or you can go for that monthly and two months out and three months out expirations. Right? The other thing I wanted to say is this strategy allows for consistent monthly income, and for me, that is probably my favorite. Right? Every single month, I like to get income. I don't like to do weekly; I also don't like to do two to three months either. So I think this is a really reliable way to turn savings into cash flow into retirement.
So, of course, the S&P 500 is high quality, but if you really want to get that bigger income, let's go over some examples in my portfolio. So, my videos are unscripted, so I'm just going to go through a couple of examples here. By the way, let's just go to my total return. I just want to show you guys that I've been doing pretty well; a lot of my positions are going for a good win right now. Let's go into something like Chipotle. Okay? I think that Chipotle is going to be the next level of volatility. It's not high volatility by no means; like if we go look at this option right here, the implied volatility is 29. So, to be honest with you, this is just only a little bit more, I guess, risky than S&P 500. It is a single stock, so it is definitely more risky, but the volatility is not that much higher.
All right, so if I were to go to sell a put—and that's how you get started in the wheel strategy—real quick, I have a whole wheel strategy course here. My free stuff is better than everyone else's paid stuff. My free content here on YouTube is basically everything that you need to really level up your option trading. My free stuff is better than people's Discords; it's better than people's boot camps and better than people's coaching. So I try to give you guys everything as much as possible for free because that's my mission; that's my goal, and I 100% believe in that. I've seen it happen over and over; folks are making full-time income.
Look, sell a put. Well, January 17th will be 50 days out. Let's go for January 3rd, about 30 days out, and if I were to sell, I would go for about a 30 Delta. So let's go here. That's 18 Delta; that's way too low. Huh, that's interesting. Okay, 30 Delta right here. So on this position right here, let's go and let's put $200,000 to work. Let's just say hypothetically that we want to put all $200,000 to work. All right? So if I go for 20 contracts here, let's go for 35 contracts. That's $212,000 roughly. Let's go for 36 contracts—$212,000 here. You're going to make $3,000 a month, right, for selling puts. And then once you get assigned, you can expect about double. All right? Like I just showed you in the SPY example, when you sell a covered call, you typically have a bit of upside.
Okay, and the covered call can be closer to the money. So here, $3,000. Okay, let me just show you if you had already been assigned on Chipotle and it's currently at $62. You can go for something like $63. So this will give you a dollar of upside plus $145. So this right here would be a lot more attractive, obviously, on the covered call side because you have some upside on the stock itself. So this right here would probably be $3,000 to $4,000 a month, thereabouts, right? It depends on volatility, depends on market conditions. So that is the next level.
So you can go from SPY, which is $1,800 to $3,600, to something like Chipotle, which is fairly low risk, and that would be between $3,000 to $4,000. Okay? So that would be a bit higher there. Now let me go to something like Tesla. All right? So now Tesla would get you a lot closer to that really big income. Okay? And by the way, I think you need to have a combination of all these things. You need to have some SPY; you need to have some safer stocks; you need to have some riskier stocks. It's just a combination of things that I think is really important.
So let's go for January 3rd again. Okay? And for Tesla, I'm pretty bullish. So if you are bullish—personally, like I'm bullish on Tesla—you can go for a little bit higher Delta. Remember, the Delta is just a give-and-take relationship. The higher the Delta, the higher the chances are that you will get assigned. Okay? And the lower the Delta is, you know, essentially the lower chance you'll get assigned. However, the higher the Delta, the more you get paid; the lower Delta, the less you get. So it's all about risk and return; it's a clear trade-off.
So $320, if I were to sell a put, I'm going to go a little bit higher on the Delta. All right? The implied volatility here is 50, so 50 is obviously better than the 29 that we just saw for Chipotle. So this position right here is going to be a lot more lucrative; it's going to be a lot more lucrative for selling options and running the wheel strategy. So if I were to do five here, that's $150K. Seven, this would be about $212K. So you can see here how on the sell puts, I would already make almost $10,000.
Okay? On the covered call side of things, you can make, you know, this strategy can produce $10,000 to $15,000 a month. Obviously, it depends on the market, and the wheel strategy is not a perfectly flawless strategy. There is no such thing as a perfectly flawless strategy, but I'll tell you how to manage it all right.
Let me go through my notes here. Basically, the way that you would manage this strategy is, first of all, you have to pick stocks that you like. I always say that in my videos. If you're not trading stocks that you like, if you don't know why you own a stock, I will challenge you that you don't even know how to invest; you don't know what you're doing. A lot of people are into the microstrategy or the SMCI stuff. I believe those YouTubers that are covering these stocks are kind of on the scammy side of things because I don't like the hype. The reason why YouTubers cover hype is for views. I mean, everyone likes views on YouTube, but I'm not going to disregard what I actually believe to be true.
For me, I would always recommend do not go for hype; go for safe, high-quality companies. SPY would be the safest side, and then the middle would be your Kraft Heinz, some American Airlines, your utilities, your financials like your banks, JP Morgan, and Bank of America—stuff like that. And then on the higher side of things, I'll show you one more example on Nvidia. It would be your Tesla, your Nvidia, the Palantir—the higher-risk stuff that I've covered that has absolutely paid off. All right? It's absolutely paid off. We've been making money hand over fist, bicep over tricep, as I like to say. We've been doing fantastic, so I hope that your guys' pockets are full of money and that you're just happy.
So look, with $212,000 or, you know, let's say $250,000, you can make a full-time income selling options and just looking at these positions right here on Tesla. I think that it is an absolute no-brainer to run this on Tesla. Now, you can also run this on a stock like Nvidia. Nvidia is also going to have high volatility, and when you go for a higher volatility stock, that's really good because it makes financial freedom a lot easier. You can make a full-time income with $212,000 or $250,000, basically in the $200,000 to $300,000 range because we're going to disregard, you know, the 4% per year typical standard rule. You can make 4% a month. When you can make 4% a month on $200,000 to $300,000, that's what really brings you to that $10,000 a month mark.
Right? So for my portfolio, I'm okay with even just, you know, a little bit less. I don't even go for—it's kind of hard to say because lately I've been making like 10%. So in the last month, I made like $400,000 or so, and that's what pushed me over the $4 million mark. So, you know, it just varies, but I'll say that as you scale, it just gets easier and easier. But don't be discouraged if you have, you know, $50K, $100K; it just takes time to scale, right? It's a journey.
But I want to say that the typical financial rules out there—you guys got to fire a financial adviser. All right? I mean, you can hire me as a one-on-one coach; I'm going to be much better than a financial adviser that just takes 1% of your money every year. Or, you know, it really is so simple, or just watch my free stuff, right? You can make a lot of money by just running the wheel strategy, and you don't need to have like this million-dollar account to really hit some retirement figures. Right? Money is actually not as hard as most people think; it's not.
Right? So I'll talk about managing and everything like that. I just want to go over Nvidia. I want to show you I have, you know, 500 shares of Nvidia, but let me just show you how I would run the wheel strategy on Nvidia. So you'll go to sell a put, and again, I'm going to go for the same expiration. I'm going to go for about 30 days out or so, and I will go for the $130 strike. That is a 31 Delta. Actually, Nvidia's implied volatility is lower than Tesla's, so Tesla is going to be our highest play, which makes sense. Like, on $200,000, if you can make $10K a month, are you kidding me? $10K a month is like more than most people make per month, and $200,000 I don't think is unreasonable at all to make $10,000 per month.
So Nvidia right now is actually lower implied volatility, and therefore, when I go over this example, when I go over $130, if I do like—it's actually going to be about 17 contracts. Yep, 17 contracts. You're going to make about $4,250 per month. So on the covered call side, let me go through the covered calls. So this is about $4K, and then if you already had Nvidia and you were to do a sell call, let's go for the $139. The 45 Delta is pretty high, but again, we don't care if we lose the stock. This video is just going to assume that you just want high income to retire; you need that income; you're going to be using it for your needs, right? So you don't mind getting that income.
So the $139 strike here has a 45 Delta implied volatility. So here it is going for $5, but you also have some upside. So we're going to go basically $4 up, right? Nvidia's current price is $136, thereabouts. So at $1.39, that's going to be $3 of upside plus $5 of premium. So that's $8. $8, you know, is pretty good. That's $800 on $13,000. So again, if I go for 17 contracts here, all right, 17 contracts, this will be a lot of money. This will be about $8,500 plus some upside. So it's $4,000 to $10,000, right?
Why is it that wide, guys? Well, it's because option trading isn't like—it's not a job. You can't get $7,500 per month 12 months in a row. Some months are going to be $6K; some months are going to be $10K. My month's $400K. As my portfolio grows bigger, I see a lot of people that say, "I can never get there." You can get there; it's just a matter of time. Just I'm farther along in the journey than you are. That's okay; it just takes time. You'll also get there if you stick to this game.
So, I mean, the results are going to vary, but give or take on $200,000, if you make 4%, it's like $8,000. And all you have to do is just sell puts to get in. I would say 30 Delta, and then on the covered call side, you are going to go a little bit higher. So you can go for 35 or 40 Delta. It actually depends on yourself; like it is a case-by-case basis. That is why I do one-on-one coaching; it's because I'm not only doing my live trading and giving trades and covering questions and going over technical analysis and fundamental analysis, I also do one-on-one coaching because it varies on people's situations. Like, if you want to retire, your risk level is going to be different from someone else's risk level; your time horizon is also going to be different.
So that's why I do one-on-one coaching. Obviously, you can check that out if you want, and if you don't want to, that's totally fine. Just wanted to point that out. So look, a couple more tricks I want to go over before I wrap up the video. Adjusting your risk and reward is really easy here, and I just showed you three examples: SPY, Nvidia, and Tesla. Look at the implied volatility; pay attention to it. The higher the implied volatility, the riskier it is, right? However, you also want to pay attention to RSI and the Bollinger Band. If the RSI is under 40, that's a good indicator that the stock is not necessarily oversold, but it's much better than buying at a 52-week high. The lower the RSI, the better.
All right? So you want to jump in by selling puts and beginning the wheel strategy. Now, if a stock is at a 52-week high, I would honestly probably not trade that stock just because, if you think about it, a stock that's already expensive using the wheel strategy, which is a bullish strategy, can be a little bit dangerous. It's not a bulletproof strategy; there is no bulletproof strategy, and that's a lie, right? Every single option has its pros and cons. All right? Being whatever—there's everything has a pro and con in life. There is nothing that is necessarily good, and nothing is necessarily bad; it's just how we think about things, and there's trade-offs in everything, right?
Being rich and famous can have cons; being poor can have pros. Same thing with each strategy. The wheel strategy has cons; the con is when the market goes down, the wheel strategy suffers. However, it doesn't suffer more than a regular stock strategy. So if you're looking to retire, it still makes sense to have a 100% option portfolio. That might sound crazy to you, but it's actually safer than stocks. So it's literally safer.
So having a 100% option portfolio is what I would do, and I would use the wheel strategy to essentially retire, and that's essentially what I've done. I'm just running the wheel strategy with my positions for the most part. I have some other strategies; some are for fun, some are for teaching. But if it was up to me, I could be fine with just 100% wheel. Right? I know it's easier for me to say; I get it. I have a seven-figure portfolio, but if I had $200K, I would still run the majority of the portfolio in just the wheel strategy using a combination of some ETFs.
Actually, XLK and XLY are also good. XLK is the tech spider ETF, and then XLY is the consumer discretionary ETF. You can look into those as well. In this market, I think ETFs are good because they save you a lot of time and they have built-in diversification. Now, I was saying how adjusting your risk and reward is really easy. Well, you can also just lower your Delta, right? It's not just about implied volatility; it's all about Delta.
So if you want to go lower in the Delta when you're selling puts, fantastic; do so. Especially because in my one-on-one coaching, I do teach margin trading, and I do go for lower Deltas in the margin trading because there's a way to collect free income selling puts, but I don't cover that strategy on YouTube. I think it's a little advanced. So, you know, if you want to go higher in the Delta, you will get assigned more often on both selling puts and selling covered calls. So you can go higher in the Delta for selling puts, and that's perfectly okay. You can go higher on the Delta for selling covered calls, and you'll also get assigned more.
Again, that's fine if you're generating the income that you need, and you actually need that income for retirement. I don't think there's anything wrong with that. You will be paying taxes. I'm not a tax advisor, nor am I a financial adviser. I'm just the guy on the internet that has tons of experience—more than most financial advisers. But, you know, it is a taxable event, so running the wheel strategy is high, you know, regular income on the taxes. But, you know, it's also one of the best ways to build your wealth, and it's also one of the best ways for high-income producing activities.
So I would say that pay attention to Delta. In my Discord, I'm always looking at Deltas; I'm always trying to understand what is the best strike to pick—stuff like that—just like little nuances. But you guys get the general picture. Let me wrap up this video with one more thing, which is retirement isn't about how much you save; it's about how effectively you make your money work for you. So think about that, and I'll catch you in the next video.