← Wealth and Health Podcast
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- [00:01]
Amazon Music Host
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- [00:35]
David Jaffe
My name is David Jaffe. Welcome to the wealth and Health Podcast where you'll learn valuable skills and positive habits that will improve your life. This podcast originally aired as a video on my YouTube channel at YouTube.com Best Stop Strategy the Wealth and Health Podcast is brought to you by beststop strategy.com. Retire from your 9 to 5 early with stock options Steal this strategy by Money Talk with Rashad. Let's check out what Rashad has to say. What's up traders?
- [01:13]
Rashad
Today I'm going to show you an option strategy that I use in order to retire in my 30s.
- [01:17]
David Jaffe
Oh yeah, welcome to the channel.
- [01:18]
Rashad
My name is Rashad. I am a full time options trader and I bring in multiple six figures a year from the stock market and I use the money I make from the stock market in order to pay for my entire lifestyle.
- [01:26]
David Jaffe
I would say the probability of that is pretty close to zero percent in my opinion. I think that the majority of his money comes from his community and maybe he's not a profitable trader, but I could be wrong. That's just my opinion.
- [01:41]
Rashad
I built wealth over time. Now options have been a huge blessing to me throughout the last five years because besides it becoming my full time income, it has allowed me the ability to do what I want, when I want, with who I want, for how long I want. Oh yeah, a complete game changer for me. And you know, up to recently that was my definition of wealth. I thought the ability to do what I want when I went with who I want, for how long I want was my definition of wealth. Until recently the Lord told me no definition of wealth is the ability.
- [02:06]
David Jaffe
You see these people, what they do is they bring in and they invoke God. Or in Felix Prince case, they'll bring in some animals. Now again, I'm not saying that anything that Rashad is saying is untrue because I haven't verified it. But my gut feeling is that he's not a religious person and that he's simply using God as a way of building trust with his audience, similar to how Felix Pran uses animals to manipulate people's perception. Again, I could Be wrong. But that's what a lot of these.
- [02:32]
Rashad
People do, to bless anyone at any time with anything. And because of that word, anything, I would say that I'm not wealthy yet because I have it set in my mind that one day I'll be able to just go out and buy multiple houses and walk out to the street and give the keys to homeless families and walk away and not think twice about it. And so I haven't said that I will do that. And when that happens, that's when I know that I'm wealthy. I. Because I can bless anyone at any time with anything.
- [02:56]
David Jaffe
You see, this is so disingenuous because if his goal is to bless anyone at any time with anything, then what I would like his viewers to do is say, hey, Rashad, I could really, really use, and I would really appreciate you blessing me with free access to your membership and free access to your community. And then see what he responds with. My gut feeling is that he'll reject any, every single person who asks for free access to his community. But he just said that he's not rich because he can't bless anyone at any time with anything. Right. But with something that he can provide for free where the marginal cost is zero. I'm pretty confident that if his viewers emailed him and asked him to bless them with free access to his community, he would not do that. So if you're watching this, please email Rashad and then see what he says. And if he doesn't respond, or if he does respond and if he rejects you or if he responds and he actually accepts you and provides you with free access, then either way, email me back and let me know what he says. Because I want to make a follow up video because in my opinion, Rashad is full of shit.
- [04:05]
Rashad
I want to be like how Oprah did it. You get a car, you get a car, you get a car. No, no, you get a house, you get a house, you get a house. But options are how I'm building my wealth currently. And I believe that options will be how I'm able to, to do what I just described. And you know, options really saved me in a sense. So for anybody who is not familiar with my story, I worked at a job making $10 an hour for several years and I saved up very aggressively. So much so to the point that I was able to open up my first restaurant with the savings.
- [04:29]
David Jaffe
Hey, there's nothing wrong with working hard. Respect. Seriously, people think that it's low class or that it's low status in order to work hard to make a living. No, it's not. Working hard is really important. A lot of people who have never had money think that if they stumble into wealth that they would stop working and that they would just simply go on vacation and party all the time. Yet people who do that, they usually end up losing their sense of purpose and they become depressed. Working keeps you busy, and especially if you enjoy what you do, or at a minimum, if you don't hate it, then it does provide you with a.
- [05:01]
Rashad
Sense of purpose really well for several years. And then we were set to open up our second.
- [05:06]
David Jaffe
All right, I'm going to skip through this because he probably was going to open up a second restaurant. And then something happened with the pandemic.
- [05:13]
Rashad
And so I was in a really difficult position. So I had to figure out a way to make money money. And that is when I stumbled into options trading. I basically got into it out of necessity, but little did I know that it would absolutely change my life. And I am hoping that it does the exact same thing for you. So without further ado, let's go ahead and get into the strategy. First things first, you can be a seller of options or you can be a buyer of options. And because I like to generate consistent and reliable income week in, week out, month in, month out, I like to use option selling strategies. Because if you're going to retire, you need guaranteed payments because you need something that will replace your 9 to 5 income. And with option buying strategies, you have to hope that a stock goes in a specific direction in order to just make money. And if it doesn't do so in a specific amount of time, then it's possible for you to lose all of your money. Now, most people use option buying strategies in the wrong way. That is why you'll see the statistic that 95% of traders do not make money. And that's because most of them don't trade in a way that increases their probability of profit.
- [06:07]
David Jaffe
My opinion on what he just said is that he has a very fundamental understanding of options trading. If you want to be consistently profitable, you have to integrate buying and selling options. It's not just one or the other. You need to use both. Because when you sell options, not only are you going to be taxed at the highest marginal rate on that quote unquote income, but also if you're selling put options during a volatility expansion event, you're probably going to end up blowing up your account if you use margin. And if you're not using margin, then when you sell put options, you're going to be using so much available buying power that during a bull market, you're going to dramatically, dramatically underperform the market. Then, if you're assigned and you run the wheel strategy, you're also going to dramatically underperform the market, because the call options that you sell are going to eliminate your upside potential and leave you with downside risk. Or if you use something like a poor man's covered call, then there's a situation where if the underlying stock goes up too rapidly, then your short deltas will overwhelm your long deltas, and you can actually lose money if the underlying increases in price. So for him to say that he likes selling options, it tells me that he has a very fundamental understanding of options trading. And I believe that if I actually subpoenaed his trading statements, it would show that he underperformed the market or potentially that he was an unprofitable trader.
- [07:29]
Rashad
I like the guaranteed forms of income every week and every month. And option selling strategies will have you looking like these little fellows over here. And option buying strategies may have you looking like this little fella over.
- [07:39]
David Jaffe
Yeah, so basically what he's saying is that option sellers are smart and option buyers are dummies. And in my opinion, that's a very amateur way of looking at things. And I really don't think that this guy is even profitable.
- [07:51]
Rashad
All right, don't be this little fella. But one of the option selling strategies that I like the most is called the short strangle. And the objective of the short strangle is to generate income and profit from the stock price, staying within a specific price range. Now, a short strangle is just a mixture of selling puts and selling calls at the exact same time on the exact same stock for the exact same expiration date. Now, if we break down both sides, we know that selling puts is an agreement to buy shares, typically at a lower.
- [08:17]
David Jaffe
So here he gives an example.
- [08:19]
Rashad
Short strangle. So let's say that Apple stock is currently trading for $175. What we could do is we could sell a put at $165 and then also sell a call at $185. And for this, we'll use an expiration that is about 30 days out, and for doing so, we'll receive.
- [08:37]
David Jaffe
And then what happens when your short call ends up getting challenged? Because in a lot of situations, especially when something's only $10 away and you have 30 days to expiration, your call side is going to end up getting challenged. And he probably Say something like, oh, it's no problem. We would just end up rolling the trade and we can roll up the call strike. But if that call becomes very deep in the money, then there are some times when you can't easily roll that short call up. So basically, you're left with a position that's not really earning you much money and. And the stock is going up and you're stuck in the position while it's using up a lot of buying power. In most situations, especially in a bull market, if your main strategy is only to sell options, you're probably way better off just simply buying and holding the underlying security and doing nothing.
- [09:22]
Rashad
Hundred dollars in pre shares of the stock. And for those individuals, they could use ETFs, such as SPY or QQQ. Now, SPY is essentially a basket of the top 500 largest companies by market cap in the entire United States. States.
- [09:36]
David Jaffe
Okay. Basically, it seems that he's encouraging his audience who have smaller accounts to use leveraged ETFs, which in my opinion is basically gambling. Because those leverage ETFs, they have a lot of drag, they have high fees, and during times like April 2025, they can get crushed. I remember one time, I think it was February 2018, I was flying to Cartagena, Colombia, with my wife, and we had a large volatility expansion event in the afternoon. And I think either UVXY or SVXY basically collapsed. So it was a leveraged etf. And then the whole security collapsed. And then they actually had to change the formula of how the price was calculated. So these leveraged ETFs are very, very risky. You can use a small percentage of your account in them. I would say up to 5%, probably 10%, absolute maximum. But for him to suggest it for smaller accounts, I think is very dangerous and very negligent.
- [10:33]
Rashad
Companies that typically have a huge focus on technology. Now, the reason I use ETFs is for the decreased amount of volatility, but it's not.
- [10:40]
David Jaffe
You're using a leverage ETF on ETFs.
- [10:43]
Rashad
All right? And now the second group will be for people who do not have large accounts or who are fine with buying the shares. And for that group, I use leverage ETFs, UPRO or TQQQ. Now, we can see UPRO follows the S&P 500, and TQQQ follows the NASDAQ 100. Now, these are both 3x leveraged ETFs. And so for TQQQ, if the NASDAQ 100 were to move up 1% for the day.
- [11:06]
David Jaffe
Wow. We'd move up 3%, 3% for the day, right? And then if the S and p falls by 10%, which it usually does about twice a year, then TQQQ would probably drop by not just 30%, but more like 35%, and you'd have to make more than 50% just to get back to break even.
- [11:24]
Rashad
Hydroverted. Move down 1% for the day and TQQQ would look to move down to trade these ETFs because they trade at a fraction of the cost of the sectors that they follow. And just for an example, QQQ is currently trading for around $520 while TQQ is currently trading for about $72. So you need much less buying power to trade TQQQ.
- [11:44]
David Jaffe
The other thing is that sometimes your brokerage is going to have different margin requirements on these leveraged ETFs because of how volatile they are. So for him to say that he uses indices because they. But then for him to suggest using leveraged ETFs, that doesn't make sense. Especially because I've heard that interactive brokers, and I believe I've also heard about Tastytrade increasing their buying power requirements based upon the market environment with for QQQ.
- [12:09]
Rashad
Framework via the Trade to Freedom course. They'll get full access to ask me questions at qq.
- [12:13]
David Jaffe
Yes, but again, email Rashad and ask him to bless you and tell him that you would appreciate it if he could bless you with a free membership to the community because it doesn't cost him anything and you want to help him be wealthy by blessing you because hey, he just said that he wants to feel wealthy and that's his eventual goal. Right? And his definition of wealth is to help people at any time with anything, anywhere, or whatever he said. So email him and ask him to bless you with a membership and then email me and let me know what he says.
- [12:45]
Rashad
And lastly, they'll be within a community of optionschain for qqq. And the first thing we need to do is select our expiration date. And I typically go anywhere up to 45 days out. But let's say for this instance we want to make sure to focus on monthly income. We want to generate that consistent and reliable monthly income since we are either retired or looking to retire off of options. So let's go somewhere around 30 days out. Let's do this date that is 27 days out. So now we've selected our expiration date and the next thing I want to do is look at a few data points now the first thing I want to look at, Delta expected move. Now, the expected move is just the largest move that the option market currently has priced. And so typically I want to select a strike that is somewhere near that low, which is currently at $525, drops down to this strike price, which is, let's see, $507 by this expiration date to buy shares of the stock if it were to drop down to our strike price by the expiration date. And so because of that, that's why I said that people with larger accounts could possibly use this stock because at $500, then per contract we are buying $50,000 worth of shares for QQQ. And if you don't have an account size like that, do not worry. I'm going to show you TQQQ here in just a moment. All right, but now we have our put side set and now we need to come over to the call side and follow the exact same steps. So we'll scroll on down. So again I'm over here. I'm looking for deltas of 0.20 or lower. And if we recall, our expected move was $24. And so the strike of $550 would fit both of those criterias pretty perfectly. So I'll go ahead and select the bid price here and it will add it to my ticket. And so we can see here we are selling a put at $500 and we are selling a call at $550. And for doing so, we are receiving about $548 per contract.
- [14:29]
David Jaffe
So I think QQQ on June 30 was trading at about 551. So the call side was actually in the money. Now, it wasn't tremendously in the money, it was only in the money by about a dollar. But still, you would have been way better off had you simply purchased the shares and held onto it as opposed to selling this strangle, which could potentially get you into trouble and it would actually underperform the market.
- [14:51]
Rashad
We'll just keep it to one contract. But you could. Let's now discuss how we exit the trade. Now, typically it goes in our favor and I'll typically exit either side individually once they reach anywhere between 50 to 80% profit. And that's what happens most of the time. However, what if the trade goes against us? Well, first let's talk about the put side. And so remember, I had this separated into two different categories of people. People who are okay with buying the shares and people who are not. Now, assuming you're okay with buying the shares, then I am absolutely fine if the stock price drops below my put strike, because I am absolutely 100% okay with buying the share.
- [15:24]
David Jaffe
If you're not using a margin account, you're not going to make much money by selling options at all. Because the buying power reduction for selling even one strangle is, is basically going to use up all of your buying power and you're barely going to make any money. You'd be way better off just simply buying and holding the shares. Then if you end up using margin and then the market collapses because the buying power requirements are about two and a half times more when you're assigned shares versus when you're selling options, you can get forced into a margin call. That's why option sellers almost always blow up their accounts during a market pullback. And that's also why, in my opinion, I don't believe that Rashad is a profitable trader. Because for him to suggest that selling options is better than buying options indicates to me that he may not understand the nuances associated with options trading.
- [16:14]
Rashad
And I was threatening your call strike. Well, what I do is if it gets close to my call strike, then I go ahead and buy 100 shares of the stock in order to make that position covered. And from there it essentially becomes something like a covered call.
- [16:26]
David Jaffe
Okay, so that's really foolish. I thought he was going to say something that he would just simply buy back the call for a loss. But for him to say that he would just simply buy 100 shares of the stock so that it's a covered call, that assumes a lot of things. If you're selling a put with a strike of 500 and you're not using margin, that's going to use up $50,000 of buying power. Then just like Rashad says, if you're going to sell a strangle and you have to keep a lot of available buying power just in case your call side gets challenged, then you're basically going to need an account that's over $100,000 in order to what, $500 a month? And if you didn't manage the trade, this call side actually expired in the money. Because on June 30, QQQ was trading at around 551. But let's give him the benefit of the doubt. Let's say that you had an account with a hundred thousand dollars and you were even able to make $500 a month. That is $6,000 a year, that's 6% return. Why aren't you just simply buying an index fund and holding onto it and doing nothing. This strategy dramatically underperforms, and in my opinion, I don't believe Rashad outperforms the basic index.
- [17:35]
Rashad
You're not losing any money. You're just agreeing to sell those shares that you already have at the strike price you select.
- [17:40]
David Jaffe
Right? Okay, so let's say you're short the put of 500, you are short the call of 550, and then let's say you think that the short call is going to get challenged. So you buy shares of stock at a strike price of 540. Then let's say the market collapses. Therefore you're long 100 shares of, let's say in our example, 540, and you're short the put at 500, and let's say QQQ pulls back to $450. Then suddenly you have a major loss on your hand.
- [18:09]
Rashad
Two ways to do this. You could just keep a mental note in your head to buy shares. Let's say if the stock price were to get to like 545, or if you don't want to think about it, you could just place a stop order within your brokerage to go ahead and buy the shares if the stock price were to increase to whatever mark that you set.
- [18:25]
David Jaffe
Yeah, in my opinion, that's a horrible strategy.
- [18:27]
Rashad
However, if you are not okay with buying the shares, then typically I just set a stop loss to 3x the amount of premium received.
- [18:34]
David Jaffe
In my opinion, that's a way better strategy than buying the shares outright. Just simply take the loss.
- [18:39]
Rashad
Since we received $548 for putting on this trade, you would just 3x that amount and put that in as your stop loss. And that way your brokerage will automatically take you out of the trade if the premiums were to get to that level. All right, so that is qqq.
- [18:53]
David Jaffe
How so? Instead of looking at the individual premium received from the put and the call, it seems like he's suggesting using the overall premium that you're receiving around $550 and then using that as your stop loss. All right, that's not what I would do, but it's not the worst advice. And in my opinion, it's way better than buying shares at 545 like he recommended, where your upside potential is going to be further capped by that short call. And essentially you're holding on to downside risk.
- [19:20]
Rashad
However, let's take a look at TQQ, which is much more suitable for people with smaller accounts. Please.
- [19:25]
David Jaffe
We disagree with that.
- [19:26]
Rashad
And now let's go ahead and select our expiration date. Now, while QQQ has expiration dates every single day, TQQQ has expirations every single week. And so we'll select the expiration date that is closest to the one that we just used for QQQ, which is this one that is 30 days out. So we'll go ahead and select it and then we'll go ahead and select our put strike. So we can see that the stock price is currently $72.
- [19:46]
David Jaffe
And the side Notice how he actually doesn't make the trade. He doesn't submit the trade. So he's suggesting it to his audience, but he doesn't actually submit it.
- [19:56]
Rashad
$11 expected move per contract. And we just need for the stock price to stay in between $61 and $85 by expiration date in order to make the money. And if we like this trade, we can go ahead and hit review. But let's go ahead and take a look at the P L chart. I will then turn around and sell covered calls on the stocks that I was forced to purchase. All right. And then on the flip side, if it were to go up within the range we selected, we just keep.
- [20:18]
David Jaffe
So it looks like for making this Trade, you collect $200, which is not really that much money. Again, you'd be better off just simply buying the shares and doing nothing. Because in a bull market, when you sell options, your maximum profit is going to be the premium that you received and you're unable to participate in the.
- [20:37]
Rashad
Directional move has blessed you and that you learned a ton of information.
- [20:40]
David Jaffe
Yeah. So I would definitely recommend that people email Rashad and ask him to bless them with free access to his membership. Because in my opinion, this is not a good strategy. And I don't believe that Rashad outperforms the market. But I could be wrong. Leave a comment below and let me know your thoughts and your opinions. And if you like this video, then watch the video that's popping up on your screen right now because YouTube believes that you would enjoy it the Most. Visit beststock strategy.com and submit your email address to receive invaluable free training. Please give this podcast positive reading and review. If you have any questions, visit beststockstrategy.com and send me a message.
- [21:32]
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