Week 6: The Products – Selling Puts & Calls

Now you understand the math (Greeks) and the philosophy (Casino). It is time to learn the two specific transactions we use to make money.

1. The Cash Secured Put (Bullish Trade)

This is our primary weapon. You sell this when the market is Bullish (Green Ribbon, Inside Bar Breakout).

• The Setup: You have cash in your account. You want to buy a stock, but only if it’s cheap.
• The Trade: “I promise to buy 100 shares of Apple at $140. Pay me $200 for this promise.”
• Scenario A (Stock goes up): You keep the $200. You never have to buy the stock. (Free Money).
• Scenario B (Stock crashes): You are forced to buy Apple at $140. But since you kept the $200 premium, your actual cost is only $138. You got the stock at a discount!

2. The Covered Call (Bearish/Income Trade)

You sell this when you already own 100 shares of the stock, but the market looks weak or flat.

• The Setup: You own 100 shares of Apple. You want to collect rent on them.
• The Trade: “I promise to sell my 100 shares of Apple if it hits $160. Pay me $150 for this promise.”
• Scenario A (Stock stays flat/drops): You keep your shares. You keep the $150 rent. You repeat this next week.
• Scenario B (Stock moons to $170): You are forced to sell your shares at $160. You keep the $150 premium + the profit from the stock appreciation up to $160. You missed the top, but you still made max profit.

3. The Wheel Strategy

This is the Sniper Ecosystem:

1. Sell Puts to collect income until you are assigned stock.
2. Sell Calls on that stock to collect rent until it gets called away.
3. Repeat.