For most of us, our 30s are a time of personal growth and financial turmoil. So many things are going on at once that it can be overwhelming.
In our 30s, we are getting married, having kids, building our careers, and buying homes. This season is already stressful enough; the last thing we want to do is add additional pressure on ourselves.
It is no surprise that trading options is a highly emotional affair. One day, you are on top of the world; the next, you’re down in the dumps. Therefore, during our 30s, we want to focus on making some passive income to help with these tough times.
- Dividend Investing in Your 30s
- Bond Investing in Your 30s
- Stock & Bond Investing in Your 30s
- Staying Debt-Free in Your 30s
- Real Estate Investing in Your 30s
- Retirement Planning in Your 30s
It all happened at once. The day I got married was the day my wife got pregnant. I was 25, and she was 22. That day, I was responsible for two additional human beings. We added another son four years later.
High-Yield Savings Account Year in Review 2022
I did not have the wherewithal to stay out of credit card debt, let alone trade options. However, I wish I had learned about becoming a capitalist much sooner.
During my 30s, I needed more income. I needed the ability to spend 30-60 minutes a day producing some safe cash flow. Options trading could have been my best friend at this time.
Options trading versus dividends. In my 30s, I would have loved to have a massive dividend portfolio that paid me $1,000 per month. But that would have required at least $150,000 in an income-investing portfolio.
At the time, I was broke as a joke. We simply had too many things going on, including paying for childcare, home maintenance, and car payments.
Trading options could have allowed me to earn an additional $500-$1,000 on a relatively small amount of capital.
Middle-Class Investing 111
The options wheel method. The key to earning passive income from options trading is aiming small. You want to focus on one to two stocks that fit your trading profile.
The more money you attempt to earn from trading options, the more time you will spend behind a computer screen. When you have a wife and young kids, and an all-encompassing job, the last thing you have is time.
That’s why using the options wheel strategy is best during your 30s. The options wheel strategy consists of rotating between selling cash-secured puts and covered calls.
The result is generating monthly passive income that you can use for expenses, saving, and investing. Let’s take a closer look at the options wheel strategy.
The Great Family Reset
The magic of $10,000. Hopefully, you were able to save a decent amount of money in your 20s. I had $60,000 saved when I was 27, but we used it all to purchase a home (maybe not the best idea).
Let’s say you enter your 30s with $10,000 available in an options trading portfolio. Let’s see what kind of passive income we can generate from selling monthly cash-secured puts and covered calls.
Currently, my two favorite stocks to trade are Palantir (PLTR) and Rivian (RIVN). They both are stable and volatile enough to be profitable.
Volatility is critical to making money in the options market. However, you could be left in bad shape if a stock is too volatile, like Gamestop (GME).
Middle-Class Investing 110
You also want to find affordable stocks for your budget. Remember, to sell one covered call, you must hold 100 shares of the company stock. For one cash-secured put, you must have enough cash to purchase 100 shares of stock at the strike price you set.
The cash-secured put stage. Let’s look at RIVN. Today’s price is $17.41. Let’s start by selling five cash-secured puts at the strike price of $15.
It would cost us $1,500 per put for a total of $7,500. That leaves us some remaining cash in our portfolio, which is always good.
We would collect $55 for each put we sell ($0.55 x 100), for a total of $275. Earning an extra $275 during my 30s would have been magical.
You always want to calculate the annual yield when you trade options. This helps you remain humble and not get greedy. If I earn $275 per month, the annual yield would be 33%. Remember, a high-yield savings account pays 5% right now.
Diversify Your Home Equity
The covered call stage. You would keep selling cash-secured puts until your options are exercised. In this case, you would wake up on Monday with 500 brand-new shares of RIVN in your account.
Now, It’s time to sell covered calls. Let’s say we have 500 shares with a cost basis of $15 per share. THIS IS THE IMPORTANT PART.
Always ensure your strike price is higher than your cost basis. This will prevent you from losing money if someone exercises your calls.
I don’t have the options chain for RIVN at $15. But let’s assume we would receive $0.80 per option share with a $17 strike price. That would give us $80 per options contract, for a total of $400.
Again, let’s calculate our annual yield. The annual yield would be 48%, which is outstanding. When you sell covered calls, you also have the chance to earn some capital gains.
Once someone takes your shares, you will have completed the options wheel strategy. Now you have cash in hand to sell cash-secured puts again.
Pay Your Bills With Dividends
Putting it all together. The goal of using this strategy in your 30s is to generate passive income with the little bit of time you have.
However, things can get crazy in options trading if you want more money. You will lose time if you try to follow 5-10 stocks at once or join a trading club.
You want to keep your strategy as simple as possible. You should check in on your options from your cell phone several times a day.
Strange things happen in the market. Sometimes, it is prudent to “buy” your way out of a position early because you can take profits and reduce risk.
You will get the hang of it. Options are all about time and volatility. You can implement the strategy in about 30-60 minutes a day.
Increase Your Savings Rate
You would spend most of that time checking your stocks, following up on your options, and reading about the stock market in general.
Conclusion. I went through all of my 30s without trading any options. Options trading can be rather safe if you have patience.
Most people don’t have a lot of money in their 30s, and they sure don’t want to lose any. Only place what you are willing to lose into your options portfolio.
As soon as you sell an options contract, your money is in the casino. There are rules in place, and it is actually quite structured.
However, the tides can turn very quickly. Selling one contract at a time is wise until you understand time decay and other principles.
Middle-Class Investing 109
The more you trade, the more confident you become. I always have a cash-secured put or covered call running in the background of my life.
Passive income is the key to earning money while you do something else. Your options contracts will do major work for you, but you must set healthy parameters for them to operate.
The minute you get greedy, you will feel a rush of stress flow through your body. Trust me; I was a mess for my first few trades. Take it slow, keep it steady, and document all your trades.
You can generate passive income and help get through your 30s in style. Don’t depend on your options money; just use it for special events like dinners and gifts. Good Luck!
- PDF of the Month: Don’t Gamble with Retirement 12 (Free 460-Page PDF)
- Free PDF Downloads: Download FREE PDF LIST here
- Financial Mindset: Become CEO of Yourself 2 (Free 196-Page PDF)
- Retirement Planning: Your Retirement Planning Guide 2 (Free 255-Page PDF)
- Investing: How We Plan to Retire on Dividends 4 (Free 139-Page PDF)
- Cryptocurrencies: Counting on Crypto 2 (Free 159-Page PDF)
- Real Estate: Financial Independence through Real Estate 4 (Free 112-Page PDF)
- Business: Retire Rich, Retire Comfortable with a Business 4 (Free 149-Page PDF)
- Latest DGWR: Don’t Gamble with Retirement 11 (Free 410-Page PDF)
- Everything!: The Biggest Book on Passive Income Ever 4! (book)(Web Edition)(Art Edition)
- Writer’s Comparison: M1 Macbook Air vs. GalaxyBook3 Pro 360
- Read My Books for Free: Free Kindle Books Schedule
- Book Design: Design Tips on YouTube
- Kindle Unlimited: Why I Finally Subscribed Kindle Unlimited (learn more)
- Book Reviews: 505 Takeaways from 101 Books (pdf)
- Writing: The Publishing Chronicles (Part 1, Part 2, Part 3, Part 4, Part 5)
- Best REIT- Fundrise: Fundrise vs. US Treasuries (Join Fundrise)
- Follow us: On our Facebook Page and Join our Facebook Group
- Support the Channel on Cash App: $Kingmarine1981
- For more detailed analysis, join my Youtube: MFI YouTube Channel
PDF of the Month: Don’t Gamble with Retirement 12 (Free 460-Page PDF)
Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. All Right Reserved Military Family Investing
Leave a Reply