Joe spent 34 years working in a supermarket to now aiming for $30,000 in monthly options income. In fact, just last month, Joe surpassed this goal and achieved $37,233 in option income.
Recently Joe was kind enough with his time to answer a few questions on how he approaches his option trades.
Joe’s story shows that even the most modest beginnings can lead to remarkable success.
TLDR: If you don’t have time to read the full interview, you can watch this short video instead.
Table of Contents
1. Who are you? Where are you from? How did you first become interested in options trading, and what motivated you to start?
I got my first job bagging groceries at a supermarket when I was 15. After working there through high school, I decided to make it a career. I ended up working there for nearly 34 years before retiring to live off my investments.
I saw an options service advertised by The Motley Fool 10-12 years ago when I was subscribed to one of their services. I printed out all of their tutorials and read as much as I could about it.
2. Can you share your early experiences and any challenges you faced when you were starting out as an options trader?
One of the things I read at the time stated that selling options 2-3 months out was the sweet spot. I soon found out that that wasn’t working so well for the types of companies I was investing in. I was in a lot of high growth stocks and sometimes got left way behind.
Essentially, I was the guy picking up pennies in front of a steamroller.
Two companies I really got clobbered on were Fastly (FSLY) and Livongo (LVGO – later acquired by TDOC).
I’ve since evolved to targeting 2-3 weeks out which seems to be working well.
3. What are your preferred options trading strategies, and why do you find them effective?
Selling Covered Calls and Cash Secured Puts. It’s like selling insurance. If you manage your risk factors, you’ll rarely have to pay out a claim.
Because I trade in an IRA, I am limited in some of the Options I am able to use because margin is not permitted.
Sometimes people may think I am a moron with the way I do some things, but I just shrug it off. It’s surprising how few people understand the differences of trading in a cash account and an IRA.
4. What’s a lesser-known tip or hack in options selling that has made a significant difference?
This isn’t a hack or anything, but stick with what you know. I’m conservative by nature so I do not sell options outside my circle of competence.
As an example, I see traders making a killing selling cash secured puts on crypto related companies, but I remain on the sidelines. Not because I am against crypto, but because I don’t know enough about it to feel comfortable making trades.
5. Do you trade earnings, if so what strategies do you use?
Yes, but only on the companies I track. I typically target a much lower Delta around 10 and sell cash secured puts on it.
I’ve recently branched out to selling them with an expiry a week later. This has allowed me to pick up additional premium and/or lower my risk.
Thus far I’ve always been able to close them early.
6. How do you approach risk management in your options trading? What steps do you take to protect your investments?
When I sell Options for stocks I would like to own, I track the history of trades in a campaign to help manage where my breakeven point is.
As my breakeven gets closer to the current stock price I become more aggressive with my strike price allowing me to accumulate additional premiums.
When I sell cash secured puts for income (I’m going to sound like a broken record here), I focus on the companies I know first and foremost.
As an added measure, I work on the sizing of my trades, keeping them as a small portion of my total portfolio (typically 1%-4% of my total).
7. Are there some companies that you would avoid trading options on completely?
Absolutely. In fact, I only trade options on the 100 companies that I currently track.
Since I’ve gotten more into trading options as income, I have been working on modifying my list, but I do not stray from it.
8. Have you ever had a trade go against you in a big way, did you manage to repair it, what learnings did you take from it?
In my early trading days, big time. I had some covered calls that went bad as the stock price sky rocketed.
Although this didn’t actually make me “lose” any money, it did create quite a bit of Lost Opportunity. I’ve had a few situations this year as well, but to a lesser extent. (There is a post under the “Highlights” tab of my Twitter (X) profile that explains Lost Opportunity in greater detail).
For income plays, saying “in a big way” is a bit subjective, but I will easily say, “no”.
Maybe I’m just lucky, but I have only had two losses this year. One was $AYX where I incurred a loss of $1,531 (3.19%) on $48,000 of invested capital, and my biggest loss on $RNG of $1,814 (3.78%) on, coincidentally, the same $48,000 of invested capital.
Although the dollar amounts may sound punitive, it’s all about scale. A single contract of $RNG was $3,200, so you would lose $121 on my worst trade to date.
9. What kind of returns do you typically aim for with your options trading?
As with most of my strategies, this is always evolving.
I frequently state that I want to make 0.50% to 1.00% per week. In actuality, my goal is to make 30% per year, so I have started looking at my trades in an annualized format.
To be clear, this is with options for income. My other options vary a lot more based on the current situation of each company.
Options Selling Roadmap Course $97
Quick fire Qs
1. How long have you been trading options for? 5 years
2. What is your favourite option selling strategy? Cash-secured puts
3. What is your total account size dedicated for option trading? Approximately $250k for income, but I sell options on my total portfolio as well.
4. What % return do you normally aim for each month? 2.5%
5. How many stocks do you normally trade at any given time? I have 8 that I invest in, in addition to 5 for income.
6. Do you prefer weekly or monthly options? Weekly.
7. What delta range do you normally trade? For income, 10-20. It’s not as important for the rest of my portfolio.
8. What is your favourite online resource or tool for options trading? I am liking OptionsAI.com and barchart.com to help screen my 100 stock watchlist.
9. What options platform do you use for trading? I use E*Trade now. I was having numerous issues with Merrill Edge.
FUNDAMENTAL / TECHNICAL ANALYSIS
10. How important is fundamental and technical analysis in your decision-making process?
I focus on more of a fundamental analysis. Because I track 100 companies on a weekly basis, I have a long history for some of them (close to four years for the ones on the list the longest).
ADVICE FOR BEGINNERS
11. What advice would you give to someone who is just starting out in options trading? Are there any common pitfalls they should avoid?
If you’re just starting out with options, I recommend focusing on only one or two (preferably Covered Calls) different types of trades and keep it simple.
Plenty of people on twitter post a lot of trades with varying complexity, but focus on getting good at what you do before moving on to more complex trades.
Blindly following other people’s trades is one. If they are just posting a Stock Symbol and a strike prices, you may not know what their objective is.
Some may be hoping to get assigned at that price and you could be the proud owner of it as well.
The second pitfall is trying to be too aggressive chasing premium. I always seem to have a lower strike than most people I see, but I make up for it with contract sizing.
Final Note: Are there any other things you would like to add that might help aspiring new options traders?
One of my favorite quotes is “Begin, the rest is easy.”
This applies to anything in life. Say you need to clean out your garage. You look at all that is in front of you and don’t know where to start. Once you make the first move to cleaning it, things snowball and you continue to make progress until you are done.
You might say that it is easy for me to say that since I have been having success for years. I followed the market, and created dummy stock portfolio for nearly 15 years before I finally got the courage to open an account and start making trades. Once I did it, I continued to learn and realized that it was no where near as intimidating as I once thought.
Where can people find you?
I only post on Twitter (X) @JoeYurillo, and recommend checking out the “Highlights” tab on my profile.
Do you have any products or services you would like to include / promote?
I do not. I just do this to help and encourage people to take charge of their future.