We’re all given 24 hours in a day. It doesn’t matter where you’re from or what obstacles you face—we’re all working on the same clock.  

How we choose to spend it determines our place at the table of success.

And if you want to be at the head of the table then you must LEVERAGE your time. 

The elite know how to stretch time better than anyone. 

For example, when Daymond John’s community asked him to teach them about the stock market, he knew that he didn’t have time to commit. 

He knew that if he could find someone with the track record and experience, then he’d be able to leverage it and deliver it to his family.

After a long and grueling search, he found someone he could confidently team-up. 

Professionals don’t try to DIY. Instead, they focus on their strengths and then delegate responsibilities to others. 

For example, I hire doctors, lawyers, and accountants because they are experts in their field, and they make my life easier. When I’m flying across states I’ll fly private to save me time. 

These are all examples of how to stretch time.

And when it comes to trading options, TIME is an essential component in pricing an options contract. 

Just like in life, in the options world — time is a wasting asset. 

And you know what else?

My Weekly Windfalls strategy takes complete advantage of this law of nature. Before learning this I was a perennial loser when it came to trading options.

 

Time is a wasting asset

 

Time works against you when you buy an options contract. 

Example: You buy a new iPhone from the Apple store and they give you the option to insure it for about $10 month. 

That $10 is your monthly premium, and it will cover certain damages on your phone, as well as, replace it if it ever gets lost or stolen. The plan protects you for up to one year, but after the expiration period, you can not renew it, and the contract expires. 

While some people will use their AppleCare — there will be plenty that won’t. Apple accepts the risk, but in the end, their mathematicians have ensured them a profit. 

Now, when you are buying an insurance product you actually don’t mind if you never use it. 

I have never heard anyone complain because they don’t get a chance to use their car insurance enough. 

Who wants to be involved in a car accident? 

And that’s sort of how the options market started out to be. A way for producers of commodities to be able to hedge their crops and food against adverse weather conditions. 

However, the options market isn’t just for people who want to hedge their assets but entertains a bevy of speculators. 

These speculators don’t own the underlying asset… they are simply buying calls betting that a stock will trade higher… or hammering into puts in anticipation for a stock sell-off. 

And do you know what?

I take the other side of their trade. And let time work in my favor.

 

 

As you can see above, the life of an option is a race against time. 

When you buy an option you must pay a premium — and are of the mercy to the clock. 

For example, take a look at what’s against a call buyer of near-dated Tesla options:

 

 

Take a look above and you’ll see that the stock is trading $2.16 from $330 a share. If you wanted to purchase the $330 calls expiring in four days they’d cost you about $6.50 or $650 a contract. 

Now, if you sold ten contracts and Tesla shares were to 

  • Trade lower
  • Stay range-bound
  • Not move at all

 

Then you could make as much as $6,500 in less than a week.

That’s right…when you sell an out-the-money option there are actually three ways to profit. 

In fact, the following day when Tesla shares sold off, those options lost 70% of their value ( a 70% overnight windfall for the options seller).

 

 

Now, imagine if you did this with a number of symbols, say four to five per week. 

However, as good as this sounds on paper, it’s actually too risky for most people to trade. In the next installment, I’m going to write to you about an adjustment to this strategy that makes it bulletproof.

 

Author: Jason Bond

Jason taught himself to trade while working as a full-time gym teacher; his trading profits grew eventually allowed him to free himself of over $250,000 in student loans!

Now a multimillionaire and a highly skilled trader and trading coach, Over 30,000 people credit Jason with teaching them how to trade and find profitable trades. Jason specializes in both swing trades and in selling options using spread trades, which balance the risk of selling options. Jason is Co-Founder of RagingBull.com and the RagingBull.com Foundation which donates trading profits to charity. So far the foundation donated over $600,000 to charity.

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