Money making strategy: selling options on stocks

[Bigjon]

I do use this for mostly blue chips.

But I just looked into selling puts on JNUG a 3x leveraged index stock.

Like I could sell 35 day puts with an at the money 13.50 strike for 80 cents. That is like a 5.9 percent yield annualized to 59 percent. If it gets put to me at that price 12.70 I would not mind and if it does not move up I get a good return on my money and if it moves up I get to capture the move by buying it back sooner than 35 days an even higher return on my money. I would set my stop loss at .75 of 12.70 to avoid disaster.

Like why not?
Anyone have any caveats?
Seems to me these leveraged stocks have a higher premium than the blue chips I usually buy. Typical yield for them is in the 20 to 25 percent per year range.

[ziero0]

Like why not?
Anyone have any caveats?
Pay for risk is an insurance industry concept. Insurance is a maritime law concept. Do you have aspirations in becoming an underwriter?

If you do then fine. However realize that higher returns are associated with unreasonable levels of risk while smaller returns result from lower risk.

[Bigjon]

Pay for risk is an insurance industry concept. Insurance is a maritime law concept. Do you have aspirations in becoming an underwriter?

If you do then fine. However realize that higher returns are associated with unreasonable levels of risk while smaller returns result from lower risk.

If you have free cash, you can park it in the bank where you give up title on your money and become a 3rd party creditor.
Or you can put it in gold and silver and worry about someone stealing it.
Or you can put it at risk.
To make money, you have to risk money.

[hoarder]

You can make money playing against the house if you're clever enough and lucky enough. But you're still playing against the house.

[ziero0]

To make money, you have to risk money.

To make money you start by melting brass. You pour it into ingots. You let the ingots cool. You pass the ingots through a furnace and then hot roll it to about 3/8" thick. Next you take a spiral mill and mill off the dross formed in the hot mill. You take the shiny brass and pass it through a tandem rolling mill to size. You pickle the roll. You pass it through a leveler in order to relieve any tension. You might roll it one more time on a precision mill to get to final size. Then you bond nickel to each side of the brass roll and what you have is what money is made from.

See. No risk.

[ziero0]

You can make money playing against the house if you're clever enough and lucky enough. But you're still playing against the house.

There is no difference between an IOU and a FRN. Neither one is capable of effecting a change of ownership. Each is owned by the drafter.

If in doubt on this issue I suggest you approach a new car dealer and, after picking out a model, ask if he will accept your IOU. Yet he will accept a FRN. This is how you determine if the seller is delusional.

[Bigjon]

You can make money playing against the house if you're clever enough and lucky enough. But you're still playing against the house.

I don't quite see that. I think the house is the market makers and they are making money on the spread. They will buy from you and sell to you, but you have to pay them their spread.

[hoarder]

I don't quite see that. I think the house is the market makers and they are making money on the spread. They will buy from you and sell to you, but you have to pay them their spread.It's not a matter of how you buy and sell the house's merchandise, but what you are buying and selling. Options are just leverage. The market makers are in bed with the darkest characters at Wall Street.
Paper assets....it's their game.

[Horn]

If you have free cash, you can park it in the bank where you give up title on your money and become a 3rd party creditor.
Or you can put it in gold and silver and worry about someone stealing it.
Or you can put it at risk.
To make money, you have to risk money.

#2 put it in gold and silver and worry about high risk thieves.

[woodman]

If you have free cash, you can park it in the bank where you give up title on your money and become a 3rd party creditor.
Or you can put it in gold and silver and worry about someone stealing it.
Or you can put it at risk.
To make money, you have to risk money.
Moses invests. Jesus saves. In the end, if you don't spend it, you lose it. Of course you can always leave it to your irresponsible kids. They will spend it for you.

[Bigjon]

Moses invests. Jesus saves. In the end, if you don't spend it, you lose it. Of course you can always leave it to your irresponsible kids. They will spend it for you.

I am that awful kid, my folks worked and scrimped and saved and now I own my half of their farm. My sister sold her half for 5000/acre two years before it was worth 10,000/acre. I want to leave it to my heirs and hope they live large and well.
My Daughter is an MD and book smart and dumb as a rock when it comes to what the real score is. Just one kid, wanted more, but didn't happen. Thats the tale of white folks who start late trying to make a safe secure nest.