5 Best Call Options to SELL for 2022 | High Yield Passive Income Options Trading

what's going on option investors my name's henry and if you're new this is the second video in a series on options because that's my area of expertise when i work for goldman sachs and in this video i'm going to explain to you why selling leap options is fantastic absolutely fantastic for high-yield passive income in your portfolio especially if you want to lower your risk while still having very high returns before i jump in and flood your pockets with money make sure to smash the like button for uncle henry and subscribe to the dopest youtube channel out here i'm gonna start off by explaining why this is a proven strategy to work for the wealthiest investors that i learned during my time at goldman sachs the truth is most people associate option trading with a lot of risk but selling call options while owning the shares is the safest strategy that you can use to put your stocks to work without any risk at all except for maybe having to sell your stock that you bought for one hundred dollars for a hundred and thirty dollars in that scenario making a thirty percent return in a short period of time doesn't sound like a problem to me in this video i'm going to give you five different leaps that i'm interested in selling into 2022 that are going to print money up front for us and also give us plenty of upside to make on the back end when the stock rises throughout the rest of the year into january 22 option expiration some stocks like neo are going to be very high growth and a couple others are going to be more high yield dividend payers so make sure to stick around for the entire video because you will learn exactly how to make money in different ways with this important knowledge so generally speaking a leap is a longer dated option it's about a one year or more option until its expiration however since so many option traders are day trading or is it my strategy i teach weekly option trading i consider anything beyond three months kind of approaching that territory of a leap option so january 22 is about six months from today so i will consider it a leap option for the purposes of this video before i give you my top five i briefly want to explain the benefits because there are so many to selling longer dated calls so first of all when you sell a call you should always have the underlying stock so say that you have 100 shares of pounds here and you sell a 30 call option well let's say that palantir is about 24 like it is at the time of me making this video well at worst you sell palantir for 30 per share and you bought it for 24 per share there isn't anything else that can happen if you sell a call option while owning the shares so scenario a palantir is below 30 per share at expiration and you just make whatever the option was worth when you sold it and of course you still collect the money up front when you sold the option now in scenario b pounds here is above 30 per share well what happens is you have to sell pounds here at 30 per share there is no other way to lose money on the option either way because you sell a call option you're selling the rights to own balance here at thirty dollars per share but guess what if you own pounds here at twenty four dollars per share then selling it at thirty is absolutely fantastic because you make a very good profit so that's the first reason selling calls is not only profitable but really fantastic it's also called a covered call and you always make money on the option itself the only risk is if the stock falls however that's going to happen whether you made some money on the call option or if you didn't make any money on the call option that's why i advise my coaching clients to always sell calls on stocks that they love and that they don't mind if they pull back because either way they're gonna end up winning on the option itself so even at the worst if the stock declines you're left better off than just a stock investor because you collect money from the option the second reason selling calls is so good and you will see this once i give you guys some examples of stocks that i'm selling league call options on is that they add immediate income to your portfolio and they also give you a margin of safety warren buffett should give me some clapping right now because he loves margin of safety and so should you so when you sell any option you collect income right away that gives you a margin of safety in a way because you need less money to buy the stock that you like i especially love selling calls on stocks that already pay dividends because selling a call and getting paid plus collecting dividends is double the income it's like creating a second dividend that's why i said that this strategy is great for passive high yield income because if you use this on stocks that pay dividends you're going to be making a lot of money without having to do any work all right now let's jump into my laptop and take a look at five different stocks that i'm going to be selling leap options on all right guys let's take a look at my robin hood and look at the five different stock options that i'm going to be looking at to sell so stick through with this dividend player because i cover neonex because i really do think that procter and gamble is a very smart idea now pg procter gamble the ticker symbol is pg the stock has a 2.56 percent dividend and this company has some of the most iconic brands like pampers tied downey bounty and many more brands i can't even remember all of them they just have so many different brands and they are in baby care fabric care feminine care home care oral skin and many more industries so procter gamble has grown revenue by three percent guys compounded annually from 2.66 in fiscal year 2016 to three dollars and three cents per share in physical 2020. now what i want to do here is i want to go to trade pg options because that's what this video is about we're going to be trading some options guys well actually today is july 5th and the market is currently closed which is perfectly fine because a long dated option is not going to change a whole lot in one day so i want the option not to be moving while i am going to be showing it to you guys so let's go to january 21st alright so here we go the stock is currently 135 and what i would recommend here if you really want the high yield passive income is i would go for an option that is near the money because sure well actually let me click sell it's going to be the same thing it's going to be the same premium here that's not going to change but so let me take a look at the 160 call sure you can sell the 160 call option right guys you can make 81 dollars here however procter and gamble is not likely to move a whole lot because this company is a very non-cyclical company this company has products that people just need they always need those products so the stable revenues that procter gamble has is not going to be very volatile therefore the stock is not very volatile so you don't need to go out so far ahead into the 106 per share range because well quite frankly the option just doesn't have that much money and you're going to be investing a fairly large sum of money if you're going to be holding 100 shares of stock remember guys you need 100 shares of stock if you want to trade any option so here i'm not going to be looking at anything like 160 or even 150 to be honest guys i'm going to be doing something very close to the money because it has the highest amount of premium and because you're buying the stock at 135 dollars you get two things you get capital appreciation if it goes from 135.98 to 140 that's a good thing you're going to be making about four dollars per share which is translating it to 400 and you're also collecting 4.65 cents or in reality 465 dollars for selling the option so from one on the back end you get 400 bucks when the stock appreciates and on the front end you get paid 465 dollars right away so you're going to be making 865 on your investment and you know let me do the math real quick on that so 865 okay divided by 13 500 is going to be the investment you're going to be making six point four percent in terms of passive income now tell me guys what stock pay six point four percent dividend that you trust even if you take a look at one of the best dividend payers which is a t and t they actually recently had to cut through dividend the stock took a hit guys so here in this scenario this is what a lot of wealthy individuals do and i know this might not be the highest return and we're going to be talking about neo and nmdm in a few minutes here because i want to show you guys some more higher growth plays but procter gamble is the first thing that i want to show you guys because i know some of the people that are watching me maybe a little bit older you guys a little bit closer to retirement maybe your portfolios are a little bit larger and you can afford 13 500 of capital being in a safe play because honestly everyone needs some diversification you do need some safety in your portfolio procter and gamble is a fantastic pick now if you don't like six point four percent you're like well that's a little bit low for me henry well what you can do and let me do some math here is you don't have to go with 140 call option you can honestly go with 145 dollar call option however what you have to keep in mind is you're not going to get paid 465 dollars you're going to be getting paid 299 dollars however in this case scenario if procter gamble goes to 145 which it may right i'm not going to be predicting procter and gamble stock in this video because i didn't do a full analysis or a discounted cash flow model or anything like that on proctor and gamble i just know that i like the stock because they're involved in so many industries and they're non-cyclical they have necessary products that people need to do i mean people need to take a toothbrush they need to buy toothbrush and toothpaste that's not going to go anywhere so i'm very confident that procter gamble is going to have a lot of safety so if you don't want to go for 140 which would be about a 6.4 return in six months which is about 12.8 percent in one year which is more than the average stock market return so on average guys you already know this um the stock market returns between like seven to eleven percent it really depends on what time period you pick depends how far back you go but let's just call it ten percent so here with procter and gamble you're gonna pick something with very low volatility and you're gonna be making 12.4 percent again six point four percent in about six months so if you double six point four percent twelve point eight percent all right so let me do some math on the 145 so rather than selling the 140 if you want to sell the 145 here let me get my little calculator out so 145 and 135 that's basically nine nine dollars so that's 900 bucks don't even need the calculator there that's 900 bucks and you're going to be collecting another 300 on the option itself so that's about 1200 bucks and again you are putting in thirteen thousand five hundred so if i do twelve hundred divided by thirteen five hundred this is going to be an eight point eight eight eight eight eight eight eight eight eight eight percent return it's a repeating 8.8 return so rather than 6.4 return in six months you're going to be returning an 8.8 return in six months so that's fantastic guys so that's my first leap option play here um it's gonna be either a 6.4 return or an 8.8 return and again this is one of my safest plays guys so for a safe play you're going to be making a whole lot of money so okay let's go into the second um stock here and i know a lot of you guys love neo i love neo i love tesla's my first number one pick but then a second baby is neo neo's fantastic huge gross story i'm very bullish on it so the only problem with neo guys i'm gonna tell you this right now i coach a lot of people they have a lot of neo stock the only thing is with selling leap options on neo is some of you guys don't want to get rid of the stock so the only risk with selling call options long term is if the stock goes past your strike price you do have to sell it at that strike price and many people do not want to get rid of neo so this may not be the best strategy out there if you just want to hold neo and you want to hold it up until 200 i made a video yesterday on that if you want you can check it out right here in the um little card up there but essentially this is not the best strategy if you want to hold neo long term because you do have to get rid of the stock at a higher price but again as i explained to you guys let's say you have neo at you know even 50 let's say you just bought it at 50 let's go to trade options right here guys let's see how much money we can make i'm gonna go sell call let me go to january 21st all right so even if we go up okay we don't want to sell a near the money option here on neo because what if neo goes to like 75 you're gonna be kind of upset at yourself that you're selling yourself short of 55 dollars per share procter and gamble we don't really care about that because procter gamble is not a high-growth uh stock it's not going to go double on us in a matter of six months but neo there's some potential that william lee might be putting in the moves over there he might be doing some finessing he might be doing some good stuff for our neil holding so we don't want to sell the 55 dollar call we're gonna go for something like i don't know we're actually going to take a look at the delta real quick so delta again guys is the probability the option will expire in the money what that means is i opened up delta right here the chance of neo going to 75 dollars per share is 30 because the delta is 0.30 so that means 30 percent because each option is 100 shares 100 times 30 30. math is really easy isn't it so 30 chance that neil will be 75 and a lot of you guys are going to say well 30 chance is kind of high so we're not gonna pick 75 we're gonna go for something like hey i don't know let's go for like a hundred dollars so neo to double in six months i know you're gonna be happy if neo doubles in six months and that is a 16 chance which is not very high so i like the 100 call option on neo specifically to sell it now the premium is not bad at all because it's a 188 dollars but this time guys if you have 100 shares well hey 100 shares only 5 grand so 188 divided by 5 grand take a look at how much that is and i know that's going to be a decent return and a lot of capital appreciation so 188 dollars it's 3.7 percent guys so 3.7 return is literally a dividend that's literally bigger than procter and gamble's dividend and it's literally bigger than the s p 500 dividend payout so you can basically create yourself a dividend on neo that's better than the s p 500 than the index which a lot of people hold so you can basically outperform the dividend rate by selling leap call options on neo however there's really little risk here because if neo goes to i don't know 75 dollars you're totally fine only when neo goes past 100 do you have to sell neo at 100 but again i really wouldn't worry about that because if neo went from 50 to 100 in six months you're going to be doubling your money and you're going to be getting paid if that doesn't happen if it stays below 100 get paid if it goes above 100 well that's fine you still get paid and you double your money so this in my opinion is a huge win-win scenario your chance of profit right here is 94.1 percent literally 94 chance that you're going to be successful with this trade now six percent of the time what happens is you sell neon 100 and again that's not a problem so 94 chance of success six percent chance that you just make a little bit extra money with the option but you have to sell new 100 not a problem in my eyes not a problem at all especially in six months neo can rise past 100 but in six months guys that is just not very likely so this is a very high probability trade that i recommend for january 22 that's a fantastic one now the next stock i'm going to be talking about is nmdm this is a stock that i covered on the channel a few times i haven't covered it recently because i'm a little bit less bullish on nmdm i'm going to be honest with you guys kathy wood has not had the best performance in 2021 however i am still bullish that kathy wood knows what she's doing i'm still blush on a lot of her plays and honestly i am bullish on nmdm i'm just not as bullish as i was before okay so we're gonna take a look at the three month performance and for the three months the stock is down just a little bit it's down about eight percent if i look at the one year performance however nmdm has done tremendously well it's up uh it is up 259 guys this stock is a fantastic stock i do think it has a long-term growth trajectory i don't know what's going to happen short term not going to make a prediction in the next few months however what i will say is that the premium is very very high and the investment is very very low and i know a lot of you guys want to make as much money as possible with putting in as little money into the investment as possible so nmdm might be your play here so i'm going to go to trade nmdm options and again i'm going to sell call and i'm going to go down into january 21st 2022. wow 2022 i can't even believe it's 2021 time goes so quickly guys especially when you're having fun um that was a little cheesy all right i apologize for the cheesy joke all right so um taking a look at selling call options january 21st okay guys so the stock is currently 7.73 so if you wanted to buy 100 shares it would only be 773 and i know if you guys are looking to invest some money 773 is not a whole lot especially compared to 100 shares of neo which is 5 grand and 100 shares of procter and gamble which is 3 500 this is 773 okay a lot of people can make that happen all right so specifically there is not a whole lot of options with nmdm it's not as big of a stock it doesn't have as much liquidity that's one of the issues with a smaller cap stock it doesn't have as many strikes so it'd be nice to have the eight strike the nine strike and the ten strike but that doesn't exist for an mdm so we're just going to work with the 10 strike here and oh that's really interesting that it says 50 delta here guys that is both a good thing and a bad thing i need to think about this because this is very strange usually an option let me click the 7.5 65 oh that's really interesting here so let me explain this to you guys and i have actually not seen this scenario happen before so this is going to be very interesting for me to explain life so essentially um nmdm has a 50 chance of going to 10 which is really weird because normally a stock let's say is that 10 if you look at the 10 strike it's going to have a 50 delta because it's about evenly likely to go up or down because it's right at the strike price so a stock tends to stay where it's at but for nmdm it's at seven dollars and seventy three cents however the ten dollar strike is a 50 delta so um option investors think that it's very likely for nmdm to hit 10 per share and i've actually never seen this i've never seen an option so far out of the money have such a high delta especially because usually 50 delta means you're at the money but here an out of the money option has a 50 delta so that's really interesting because here the premium is very high i mean actually this premium is insane if i do the math here and i do 155 divided by 773 dollars that's a 20 return right on the dot 20 and like a lot of decimals but hey guys you can earn 20 just off of the option premium and this is actually an insane pick i did my research here but i did not expect this option to be so lucrative so 20 on the option itself holy moly and then also you do have capital appreciation so from about 773 to go to 10 i know it's about 33 return because one third of 75 is about 25 and 25 plus 75 is about 100 bucks so 20 or sorry 33 so one-third of the current price if it were to rise 33 it would be 10 bucks so um on one hand you have 33 return on the back end if the stock just appreciates you just make 33 on the appreciation itself but on the option premium you make another 20 guys that's a 50 return wow on a very little amount of money so i'm actually shocked at how good of a like a trade this is this is probably something that i'm going to post in my option discord my private option discord tomorrow this is a fantastic trade this is absolutely something i'm probably going to actually increase my position on usually when i make a video i open up a few positions but this is actually something i'm probably going to take a little bit more of a massive position in because 50 returning guys warren buffett returns 20 returns so 50 return delicious delicious okay so the fourth stock that i'm gonna be talking about is coca-cola um coca-cola stock okay guys and i'm not in love with coca-cola but what i do like about coca-cola is that they always have an increasing dividend the stock is very stable again i gave you guys a dividend play i gave you guys two growth plays i have another growth play for you guys as a fifth pick but coca-cola right here as a fourth pick is good for a retirement portfolio because specifically let's take a look at the dividend the dividend is three percent so three percent is an above normal dividend and coca-cola for three months went up three percent so coca-cola just has so many good trends going for it because people just love coke they're not gonna go anywhere the coke brand is strong coke is everywhere in the world coke is delicious i don't drink it myself personally but i know the entire world loves coca-cola so three percent dividend in three months it went up three percent let's take a look at how much it went up in one year in one year it's up nearly 20 basically 20 guys so very very strong stock let's take a look at the options um if we sell call option we're gonna go to january by the way this is a exact stock that i talked to some financial advisors about they gave me some tips here this was years ago when i was working at goldman sachs but this is a stock that some of the financial advisors did like at the time so looking at coca-cola again here i would take a similar approach to procter gamble where i would go for a strike that is near the money so for me um 55 dollars per share or a strike price or 57.5 both look fine to me if i open up the delta here it's 32 so 57 and a half looks good to me so if we were to sell this call option to be 122 so that's about two percent i can tell right now because well one percent of 54 dollars is you know 50 cents and percent would be about a dollar so this is about a two percent return so again fantastic because you have two percent on the option uh the upside here you know i'm just gonna do rough math in my head about five percent so five percent on the back end so five percent on back end on capital appreciation um on the stock itself two percent on the option premium so that is uh seven percent right there and then it has an annual dividend of three percent however this option is only six months so you know let's cut the three in half let's do one and a half so essentially five plus two is seven seven plus one and a half eight and a half percent return guys eight and a half percent return in six months on coca-cola coca-cola a very very safe company to be invested in so coke is my fourth play now for my fifth play you guys already know i gotta mention the tesla guys i have so much tesla oh you guys already know i love tesla is where i store a lot of my wealth tesla is a fantastic long-term play and again guys i'm very bullish on electric vehicles in the future so tesla neo i think both of these companies are going to dominate robin hood if you have an ipo i'm not going to invest in you because you're taking some time to load my friend robin hood all right guys and robin hood is not loading because tesla options are just so juicy they're just so juicy robin hood can't even load so i'm just going to exit out of robin hood it's all good we're covering the last stock here so i'm just going to use the apple finance we're going to go to january 21st okay guys and we're going to look at some call options so tesla is currently 678 dollars per share and you don't need to have robinhood you can really use any broker or even yahoo finance to do some of this research so i'm going to go scroll down and i already know that i want to look at the 750 call or maybe the 800 call so 750 call 82 bucks uh premium which is a whole lot of premium that's over 10 on the stock itself so because the stock was at 678 bucks right so 82 is over 10 because 10 of 678 would be 67 so over 10 return we might not necessarily need that because we might want more money on the back end more money on the capital appreciation because i am bullish on tesla so i would look at something like 800 and perfect the 800 strike has a 68 dollar premium so perfect right there you make 10 percent of your money on the option itself and obviously you make between 15 to 20 on capital appreciation because if the stock's about 678 you know 10 67 we'll be in the mid 750s okay so at 800 in terms of strike price you're gonna be making over 15 capital appreciation on tesla and you're going to be making about 10 on the option premium so 15 plus 10 we have a 25 return yes i know fantastic absolutely fantastic so a 25 return in six months guys in one year that's a 50 return similar to nmdm so another fantastic fantastic trade on tesla so that is my fifth play for tesla for a leap option that i'm interested in selling for january 22. all right guys those are my top five plays if you want to learn how to produce weekly income and create cash flow or what i call the money machine consistently and safely without taking a lot of risk or waiting impatiently for stocks to grow then definitely check out the link in the description for some free training on my brand new option income academy i go over my option calls picks and plays in real time breaking down the thought process and where you guys can mimic me you will also get very hands-on access with me as well as my team of six and seven-figure coaches click the application link below to see if you qualify and as always guys be aggressive in learning but be safe investing this pump

Channel: Invest with Henry

Views: 28,224

Rating: 4.9464035 out of 5

Keywords: leaps, options, options trading, calls, call option, call options, leaps 2022, apple options, Tesla options, pltr options, six options, option trading, stock options, invest with henry options, leap options, options to buy, sell leaps, covered calls, puts, invest with henry

Id: G4TV_9autnU

Length: 26min 4sec (1564 seconds)

Published: Tue Jul 06 2021