00:00:00
want to make massive cash flow every
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single month that outperforms real
00:00:03
estate normal stock buying and even
00:00:05
cryptocurrencies just buy my course for
00:00:07
19.99 just kidding stay tuned and watch
00:00:09
this video
00:00:14
what's up fruitful investors hope you're
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having a great day so if you know me and
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you know my story i started off as a
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real estate guy i was all in i was just
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obsessed with real estate i didn't want
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to hear nothing about stocks nothing
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about crypto and for 12 years i put my
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nose to the ground and we made millions
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and millions of dollars i still have a
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fantastic real estate business that's
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just kicking ass in the background but
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i'm also into stocks cause i had a lot
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of friends tell me you got to learn this
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thing stock options matt you got to
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learn it and finally i gave in i learned
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it and thank god i did because it's a
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great skill probably one of the best
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skills i think you could learn to have
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financial knowledge of how the world
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works and how markets work and today i'm
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going to share with you guys
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why my bull put strategy is what i think
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the number one strategy
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and i'm going to brag about it
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throughout this video so first before we
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start what's the put and what's a put
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spread what's the difference so a put is
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let's say
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um we're talking about spy mo because
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that's what i invest in really only so
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the s p 500 the spy etf let's say that's
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at 457 which i think today it's at 457.
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um if i'm gonna buy a put i'm gonna sell
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an option contract let's say at 440. so
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should spy fall down to 430 i'm gonna
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buy whoever shares i did that agreement
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with let's say steve some guy named
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steve who lives in new york city steve
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if spy falls all the way down to 440 and
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something goes crazy in the market i
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will buy a hundred or 200 or more of
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your shares i promise but in exchange
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for that contract we're going to sign
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you're going to pay me a fee so if
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you're if you're lost right now i'm
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going to show you on my phone how this
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works but that's essentially a put
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contract i'm promising someone that i'm
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going to buy their share should the
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market take a i'm gonna buy them at
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that price even if it falls even more
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let's say spy falls down to 420 then the
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410 then the 400 too bad i have to buy
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steve shares at 440. that's what i
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promised him and that's what he paid me
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for
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the put spread uh strategy is a little
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different a little more risky in a sense
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because
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the difference between the putting the
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footprint as a put you want to own the
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shares you actually you actually want to
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own them the put spread you don't want
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to own them you're just playing the cash
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flow game so if the market does fall
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past the price we agreed upon dude i
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lose all my money i don't even get the
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benefit of holding the shares which is
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the benefit of a put strategy because
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even if the market continues to fall and
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fall and fall well at least you own the
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shares you can just wait six months a
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year i'm sure the market will be at a
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new all-time high and you'll be positive
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again with the put spread strategy
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if the market falls below the price we
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agreed on i lose all my money but i can
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make a lot more money as well
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okay so if you're lost right now which
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you probably are if you don't know how
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the pus
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strategy works no problem let's dive
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into my phone and you will see exactly
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how that works all right so now we're
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into the spy etf on my phone here
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currently trading as you can see at 457
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85 83 80 keeps bouncing around that's
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what it does so you see here on the top
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where it says options by the way i'm
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using uh interactive brokers that's
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that's the broker i use for my stocks
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but there's a bunch out there but
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they're all the same this strategy works
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for pretty much all the platforms so you
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can see i clicked into the option side
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let's go back for a second this is where
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you this is where most people play see
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the sell on the bottom left and the buy
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bottom right that's what most people do
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they just buy
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and sell shares that's boring we're
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going to the options
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because i think it's even safer in a way
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better strategy so we can see that we
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can go out to the contract still on the
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top bar here how i'm moving it december
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10th 13th 15th the day of shooting this
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video is
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november or december 6th so i like to go
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uh 30 45 60 days out into the future
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that's what i like because i don't like
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playing or day trading or very short
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contrast because the market can move a
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lot in short periods of time if
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something takes a i have time to
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bounce and get out or do something else
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and fix the trade or end it early i have
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time
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on my side to figure things out that's
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why i like to go pretty far in the
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future a lot of people you'll see do
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option strategies for like two days a
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week at a time i don't like that it's
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too risky and i'm a big baby i like to
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take it slow so we're going to go out to
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january 21st which
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that's about 45 days or so so that's
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kind of the timeline that i play in
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for contracts that far out so you can
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see again on the top left here spy's
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currently at 457. so so let me show you
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a put strategy and how that works so
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spy is currently at 457. let's say i'm
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gonna sell a put which means i'm
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promising to buy it's confusing it makes
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no sense i don't know why they do this
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but selling a put actually means buying
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shares it's confusing but you'll learn
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it eventually so let's say
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i want to sell a put at 420 which means
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let's say steve in new york city right
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i'm here in canada steve if this if spy
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takes a and fall all the way down
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to 420 i will buy your shares but how
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much are you going to pay me let's find
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out so if i click cells i'm selling a
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put see we got puts on the right and
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calls on the left i don't even touch
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calls well that's for more videos in the
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future i really only play with this one
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strategy on the put side again i like
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things boring and easy so i'm selling a
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put so i'm going to click sell bottom
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left here
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okay so let's say i'm going to do six
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option contracts which is actually 600
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for every one option contract it's 100
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shares don't mix that up that could be a
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big mistake so six actually means 600 so
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if the market does fall to 420 i gotta
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put up a lot of money to buy 600 spy etf
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shares this is where people don't
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understand how this works and they
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literally go bankrupt because if the
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market takes a especially if
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they're doing
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more risky stocks tesla whatever it's
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tech stocks really and something really
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happens really quick meme stock
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specifically and you did a hundred of
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these puts oh my god i didn't want to
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think about that situation but a lot of
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people have done some terrible things if
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you read on reddit it's not cool man
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people literally
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i'm not gonna say it but their lives are
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over we'll put it that way okay so
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how much is he gonna pay me so i have to
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put up actually let's do
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five of these because i know i'm trying
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to make a apples and apples scenario
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you'll see in a sec let's say five five
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hundred shares okay
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so that means i gotta put up sixty five
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thousand dollars see here on the bottom
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here i gotta put up sixty five thousand
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dollars
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but he's gonna pay me three thousand
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dollars now
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if spy doesn't fall down to 420
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does steve get his three grand back no
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he doesn't i keep that three grand thank
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you steve if spy falls below and i do
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have to buy his shares i still keep
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steve's 3 000 bucks he's paying me this
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three thousand bucks to cover his ass
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now you're probably thinking why would
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someone pay for these contracts on the
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other end why would they pay me think
00:06:54
about this scenario let's say steve is
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investing his last amount of money his
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last 60 grand or whatever his wife says
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steve you better not lose our goddamn
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money this is our life saving don't lose
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it so what does steve do he does these
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to protect his ass okay martha should
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the market fall to 420 don't worry i
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might lose a little bit of money but
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this other guy in canada he's gonna buy
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all my shares at 420 i'll get out pretty
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much unscathed so that that that's the
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uh
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that's the calmness or whatever i'm
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giving him the peace of mind i'm giving
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him so that's so that's why steve would
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do what he's doing and this is why i'll
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do what i'm doing because i want the
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3000 bucks thank you so don't forget
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that the put strategy 60 i had to put up
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65 grand to make three grand in two
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months let me bust out my calculator
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here and see what that return would be
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three thousand divide sixty five
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thousand bucks
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uh times 100 to make that back into a
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percentage that's four percent cash on
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cash return um
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but that's two months so it's actually
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two percent on monthly cash on cash
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return dude that that's pretty crazy
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that's that's a good return that's
00:07:55
better than real estate in most cases uh
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maybe not quite better than crypto but
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some of them yeah for sure it's a good
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amount of money that's a good return
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let's see what that would be for a year
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that's two percent per year easy math 24
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uh return a year not bad not bad okay
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let's see my strategy and why i like the
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put spreads better so
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to get that 3 000 cash flow i had to put
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up 65 grand and i have to do it at 420.
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but 420 is a little too risky for me
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because spy is at 457. you know let's
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see how far that is out the money 420
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divided by 457 times 100 minus 100.
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okay so that's eight percent
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at the money so the market has eight
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percent to fall before i'm in trouble
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and i gotta buy steve shares that's too
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close eight percent
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drops happen all the time i don't like
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that i'm more of a baby this is why i do
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the put spreads check this out if i go
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down to 390.
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now i'll get my guy to pull up a graph
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here of spy you can see 420 was kind of
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close to the money a little bit but 390
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dude spy has to fall a lot before i even
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get into trouble let's see how far out
00:09:02
the money that is 390 divide the current
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price of 457 times 100 minus 100
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that's 15
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out the money spy has to fall 15 before
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i get in trouble with my strategy how
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many times has that happened in the
00:09:18
whole lifespan of the s p 500 well we
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can look back on the graph here
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about four or five times max where spy
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fell 15 or more in a 60-day period okay
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spy has been around since 93 and this
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has only happened about four or five
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maybe less times this is why i like this
00:09:36
strategy it's like a 99 win rate so
00:09:39
check this out so if i'm at 390 so
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instead of selling a put
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i also have to buy
00:09:46
a put so check this out so i have to
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sell the 390 just like i would sell the
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420 but i don't want to actually own the
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shares i don't want to put up that much
00:09:53
money and if i do have to buy them i got
00:09:55
to put up hundreds of thousands of
00:09:57
dollars to buy these shares so what am i
00:09:58
going to do i'm going to do my own
00:10:00
insurance policy and buy the 3.85 see
00:10:03
that i'm going to buy the 385 so if spy
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falls down to 390
00:10:08
that sucks and it keeps falling to 385
00:10:12
384 380 i'm automatically
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topped out at 385. i i i cut out and i
00:10:18
peace out at 385 this is why you sell
00:10:21
and you buy at the same time it's
00:10:22
protection on my end that if spy
00:10:24
continues to fall
00:10:25
um i'm just i'm going to lose the money
00:10:27
i put up unfortunately but i'm not going
00:10:28
to lose
00:10:30
in this case potentially you're gonna
00:10:31
see millions of dollars and go bankrupt
00:10:33
so this is why i like this so check this
00:10:34
out so i'm gonna go to order
00:10:38
all right and i'm gonna do a hundred
00:10:40
contracts and you'll see why
00:10:42
because instead of doing six because i'm
00:10:45
not buying the shares i'm automatically
00:10:47
buying it which means i only have to put
00:10:48
up the difference of the money so it's a
00:10:50
five dollar spread right i bought the
00:10:52
390 i sold or i sold the 390 bought the
00:10:55
385 that's five dollars wide times 100
00:10:58
that's 500 bucks times 100
00:11:00
you're gonna see so
00:11:02
easy math here i gotta put up 63k see
00:11:05
that right there so almost the same as
00:11:06
the other strategy right i put up 65k in
00:11:09
the other strategy to make 3 000. but i
00:11:11
have to own those shares should hit
00:11:14
the fan i don't want to own them i don't
00:11:16
i own enough of those i don't want to
00:11:17
buy more
00:11:18
so i have to put up 64 000 53 934
00:11:22
and steve's going to pay me 2700 so
00:11:25
almost the same as 3
00:11:27
so it's almost the same return however
00:11:30
the biggest benefit is i'm way farther
00:11:32
out the money and the other strategy is
00:11:33
only eight percent out the money kind of
00:11:36
close this one i'm 15
00:11:38
oh the market has to fall 15
00:11:41
before i get in trouble now let's say
00:11:43
the market does fall
00:11:46
you know seven percent eight percent and
00:11:48
people are getting freaked out you don't
00:11:50
have to stay in that trade i'm not
00:11:51
locked in i can leave that trade at any
00:11:53
time i just have to pay money to get out
00:11:56
of it i have to buy it back that's the
00:11:58
only thing so that's that's the way you
00:12:00
can kind of mitigate things the worst
00:12:01
thing you can do if the market is
00:12:03
falling and you own a bunch of these uh
00:12:06
put credit spreads is stay in the trade
00:12:08
unless you're like really really really
00:12:10
far out and you're like there's no way
00:12:10
it's going down this far
00:12:12
because we have market scares all the
00:12:14
time you're like there's no way it's
00:12:15
going down that far and you're confident
00:12:17
hey man stay but what i do is when the
00:12:20
market starts to get really weird and
00:12:22
there's bad news coming out maybe it's a
00:12:24
new coronavirus or something like that
00:12:26
and the market's freaking out
00:12:28
and the market drops three percent four
00:12:29
percent i'll probably buy my contract
00:12:31
out then yeah i'll pay a thousand bucks
00:12:34
two thousand bucks i'll lose two
00:12:35
thousand bucks maybe but i get all my
00:12:37
money back that's 65 grand i get it back
00:12:39
and then i'll do it again because the
00:12:41
market dropped so i'll do another 15 out
00:12:44
from there now the other that happening
00:12:45
dude it's never gonna happen pretty much
00:12:46
so you can see how this works and you
00:12:48
can protect yourself even with these
00:12:49
risky strategies is don't wait for it to
00:12:52
get close to your price that's stupid
00:12:54
you're going to lose almost all your
00:12:55
money go far out the money when you see
00:12:58
stuff happening in the market that's
00:12:59
really weird get out as soon as you can
00:13:01
if the market drops three four five
00:13:03
percent buy that contract out you'll
00:13:05
lose money but then you do it again so
00:13:07
you get paid again it kind of it's a
00:13:08
wash in a sense maybe you just didn't
00:13:10
make any money that month but at least
00:13:12
you didn't lose money either and you
00:13:13
don't own hundreds and hundreds of
00:13:15
shares so anyway guys
00:13:17
if you have no idea what to put
00:13:19
put credit spread is or puts our you're
00:13:20
probably confused as hell subscribe to
00:13:23
this channel i explain it more and more
00:13:24
and more but if you understand the basic
00:13:26
knowledge of how options works you
00:13:28
probably figured it out and this is why
00:13:30
i like the put credit spread strategy
00:13:32
and why i think it's the number one
00:13:34
strategy for stocks and why i do it so
00:13:37
much if you like this video click that
00:13:39
like button hit that subscribe button so
00:13:41
i'll see you in the next video
00:13:47
[Music]
00:14:01
you