Learning to modify your rules based on market conditions is an important skill to learn to be a successful and profitable trader. Almost every strategy works better with certain market conditions and realizing this and making adjustments to your strategy can make you far more profitable. You might be taught a strategy that works extremely well in a bullish market, but doesn’t perform as well if the market is bearish or sideways. This does not automatically mean you shouldn’t use the strategy, you just need to make some adjustments to your trading strategy. This is why you shouldn’t total write off a strategy that has stopped working, sometimes the person teaching doesn’t even realize this, so let’s go through a couple of simple strategies I use all the time to illustrate what I mean and help you think about when and how to modify some of your strategies to help make you a better trader who is more profitable and mechanical! Covered Calls I’ve talked about selling covered calls to reduce cost basis . Check out the article for all my “secrets”. I also frequently sell covered calls on a weekly basis for income generation. You might see someone teaching a strategy of rolling covered calls on a weekly basis for income and they teach you that as soon as your current covered call reaches 90% recapture, close that and sell your next covered call immediately at a 20 or 30 delta. This is an excellent strategy if your covered call is expiring due to theta decay, meaning the stock is still bullish and your call no longer has any time value left. But if your call reaches 90% recapture due to a large decline in the stock price, going out and immediately selling the 20 or 30 delta covered call is not going to be as profitable or advisable as it would if the stock were in an uptrend and your call was near zero DTE. Here are some factors that I consider when selling weekly covered calls: The direction and trend of the stock price. Is it bullish, bearish, or sideways? The volatility of the stock and the option. Is it high, low, or average? Will my shares still be profitable if I get called away, or do I need to sell a call further out of the money. Where are the moving averages compared to the current trading price of the stock? Depending on these factors, I  might modify myr strategy by: Choosing a different strike price or perhaps a different expiration date for the covered call Waiting for a better entry point to sell the covered call Rolling the covered call up or down, or choosing a delta further away from the money. Closing covered call early during bounces in bearish markets. Hedging your covered call with another option or a stop loss on the shares Selling Puts My most favorite strategy is selling puts . Multiple articles here about this. We know that selling puts on down days brings in more premium, but it’s also important to consider the overall market conditions including Vix (which measures volatility) VIX can be used to gauge fear in the market. If you have a general rule to sell puts each time a stock has a pullback of more than 5% and you don’t check if the stock is 5% off of an all time high (ATH )or 5% away from support or resistance, you are actually setting up two very different trades following the same ‘rule’. If you don't pay attention to VIX, selling puts can have more risk at certain times. It doesn't mean your strategy is bad, it just means it's not exactly the same strategy all things considered! Here are some factors that you should consider when selling puts: The direction and trend of the stock price. Is it bullish, bearish, or sideways? The volatility of the stock and the option. Is it high, low, or average? Where is SPY and the relevant indexes for the stock your are selling puts on. Are they at all time highs? Maybe they are making new lows? The delta of the option. Is it in the money, out of the money, or at the money? The support and resistance levels of the stock. Depending on these factors, you might want to modify your strategy by: Choosing to not sell puts at all time highs Waiting for support as a better entry point or resistance as a better exit point for your put Rolling your put up or down, based on the how the stock is trading Closing your put early in bearish markets or looking for a bigger profit target in bullish market. The point of today’s post is to remind you that sure, have a simple set of rules that are easy to execute, but understand why a strategy is working (or not working) right now, and take the overall market conditions, the market cycle and volatility into account when you review your strategies. Nothing works all the time, but you can make small changes to your strategy to make your trades more profitable and get a better success rate. It’s very rare any strategy works exactly the same and has exactly the same rules. I hope you enjoyed this post and learned something new. If you did, please share it with your friends. And if you want to learn more about trading strategies and how to apply them in different market conditions, join our discord! Subscribe for our weekly newsletter. It's all free! Happy Trading Good Kids! Disclaimer: this is NOT financial advice. I’m basically just some dude on the internet who’s been trading a while, and I use the stock market as my primary source of income. None of this is financial advice it’s purely educational!

Delta is a fundamental Greek we focus on at Good Kids Trading (GKT). If you want to make successful options trades understanding delta is crucial! Delta measures how an option price will move in relation to a one-dollar change in the underlying stock price. I like to think of delta in terms of MPH of a car. The higher the delta, the faster the option price moves as the underlying moves. But we use delta for more than just trading individual options, let me explain. Decoding Delta: Essential Insights for Options Traders For calls, the range of delta is from 0 to 1. A delta of 0.60 means that the option price will go up or down by 60 cents for each dollar that the underlying stock moves. On the other hand, for puts, delta ranges from -1 to 0. A delta of -0.532 means that the option price will increase by 53 cents if the underlying stock moves down by one dollar. We can also use delta to indicate the probability of an option being in the money (ITM) at expiration. If we sell a put that has a Delta of 30, it indicates a 30% probability of the option expiring in the money. As premium sellers, we want options to expire out of the money, so a lower Delta corresponds to a higher probability of success! If you're thinking about selling a covered call and want to know the probability of the stock reaching the strike of your covered call you can check the delta of the call option. Let's look at this example: If you wanted to sell a covered call on your Apple shares at 180, you can see the delta is .25. This means there is a 75% chance this call will expire worthless. To be clear, we look at more than just delta when selling calls at GKT, but I want to illustrate how delta works. If you want to read more about covered calls checkout this blog I wrote with all my "secrets" delta is a very important factor I consider as well. By adjusting the expiration date you can see how the probability changes. The call in the example above expires in 45 days. What happens if you choose a closer expiration date? This covered call that expires in 10 days, as you can see the 175 strike is the closest to .25 delta. So the strike moved by $5. The premium collected also changed. Delta of options are impacted by many factors including days to expiration. The more time you have on an option the more time (Theta) and uncertainty (Volatility) is priced into the option. GKT uses delta for our put sales as well! If you're interested in buying the dip on Apple and you want to know the probability of getting shares (based on delta) you can look for a strike in the -20 to -30 delta range. Meaning there is an 80-70% chance this option expires out of the money. You can see that the 160 strike put has an 80% chance of expiring worthless, and the 165 strike put is closer to 70% in terms of expiring worthless. We do not just look at delta when selling puts, but it is part of our consideration! Read more about how I g enerate income using put sales . Understanding Exposure to Market Movements Delta can be used as a share equivalent to measure directional bias or exposure. A position with a Delta of 40 would behave like owning 40 shares of stock, even though the contract is for 100 shares. Keep in mind that shares never expire, and options always do! Conversely, a Delta of 80 would feel more like the full contract size and weight. You can monitor your options delta to understand how your position compares to owning shares of stock. Delta of your Entire Portfolio At the portfolio level, Delta provides a broad market view of directional exposure. For example, if portfolio deltas were 200 and beta weighted to the SPY, it would suggest an equivalent of owning 200 shares of SPY in the overall portfolio. This is a powerful way to determine how much you account will move up or down as SPY moves. We will write an entire article on portfolio hedging. In the mean time you can checkout our discord and you will see why I sometimes setup put spreads to hedge my delta when the market looks like it might pull back! I monitor my total delta's and I add put verticals (which have negative deltas) to help my account from moving as much. I'm looking to neutralize my deltas! Navigating Returns with Delta in Options Trading Delta's relationship with returns is a classic give-and-take dynamic. Selling options with higher Delta values, such as 45 (meaning close to the share price) over a 30 delta option, will generate higher returns. This is because options with higher Deltas have higher premiums. However, this higher return comes at the cost of a lower probability of profit and more risk that your option expires ITM. Deltas represent probabilities, and selling options with higher Deltas means accepting lower probabilities of profit. You know I love to sell strangles, I wrote why I love strangles to reduce my cost basis now that we've discussed delta, you understand that selling a 20 delta covered call and a -20 delta short put has a better chance of expiring worthless, than a 30 delta covered call and a -30 delta short put. Of course selling a 20 delta strangle pays less premium, there is no free lunch in the stock market. Mitigating Risk with Delta Management The stock market is random and unpredictable, and as option traders, we have a number of advantages to mitigate risk. When it comes to Delta, the key to reducing risk is controlling your size. Whether at the individual position level or the overall portfolio level, it is crucial you make sure your Delta is manageable. Understanding our directional exposure is essential in managing risk. It's natural to have a bias and take positions based on hunches, it's important to remember that the market is unpredictable. Staying small and staying informed about Delta can help you control your risk in this uncertain market. Understanding Delta allows us to assess the potential movement of option prices as stock prices change. Delta serves as an approximate probability gauge and a share equivalent to measure directional bias. When it comes to returns, Delta can help us determine the optimal options to sell. And in managing risk, controlling our Delta and understanding our directional exposure is key. By staying small and being equipped with the knowledge of Delta, we can make better decisions in the options market. I hope you enjoyed this post and learned something new. If you did, please share it with your friends. And if you want to learn more and how to apply them in different market conditions, join our discord! Subscribe  for our weekly newsletter. It's all free!   Happy Trading Good Kids! Disclaimer: this is NOT financial advice. I’m basically just some dude on the internet who’s been trading a while, and I use the stock market as my primary source of income. None of this is financial advice it’s purely educational!

Lets discuss an alternative strategy to just buying stock. The wheel strategy is one of my favorite ways to generate income without using as much buying power as just buying 100 shares of a stock. I will compare the wheel strategy to buying stock so you can see if it fits your risk profile, capital requirements, and trading style. We’ve talked about how to pyramid into a position instead of just buying all the shares at once, but I think the wheel strategy is something you should also consider. The wheel strategy enables traders to buy stocks in a more controlled and strategic way. Understanding the Wheel Strategy Instead of immediately buying 100 shares of a stock, the wheel strategy involves selling puts at the delta and expiration of your choice. Dr Eric wrote about put sales last week ! By selling these puts, we collect premium immediately, generate income and potentially reduce our cost basis. Depending on the delta of the put you choose you get a cushion in case the stock goes down. If the put expires out of the money you will keep the premium, if the option goes in the money at expiration the premium reduced your cost basis by the amount of premium received. Comparing the Wheel Strategy to Buying Long Stock Let's compare the two scenarios of buying 100 shares of a stock versus implementing the wheel strategy. For this comparison, I will use the example of the stock SPY, which is close to $500 a share. If we were to buy 100 shares of SPY at $500, the cost would be $50,000. On the other hand, if we were to sell an at-the-money put with a 45-day expiration, the capital requirement would be $10,000. So, the wheel strategy requires significantly less capital compared to buying long stock. Understanding Deltas in the Wheel Strategy Deltas play a key role in the wheel strategy. When buying 100 shares of a stock, each share has a delta of 1.00. This means that for every $1 movement in the stock price, the value of the position changes by $100. On the other hand, when selling an at-the-money put, the delta is around 0.50. This means that for every $1 movement in the stock price, the value of the position changes by $50. Understanding deltas is important for managing directional risk and potential profits in the wheel strategy. If you sell a 0.30 or 0.20 delta put you are decreasing your premium received, but you are also agreeing to buy the underlying at an even lower price. The Importance of Cost Basis Reduction Cost basis reduction is a key concept we discuss at GKT. By consistently selling puts and collecting premium income, traders lower their cost basis over time. Cost basis reduction is similar to buying a house and renting it out. The rental income reduces the overall cost of the house, providing a financial advantage. Similarly, in the wheel strategy, selling puts reduces the cost basis of the stock position. If the stock continues to drop and you are assigned shares of the stock that you were going to buy anyway, you can start selling covered calls against your shares to get called away at a higher price! Of course, this depends on your trading style and assumes you do not mind capping your upside. Selling the call also generates more income, which is one of my primary focuses for my active trading account. The reason it’s referred to as a wheel strategy is you continue to sell calls until you get called away, then you can go back to selling puts again. The cycle continues where you sell puts, until you get shares, then you sell calls until you are called away, then you keep this cycle going over and over. The wheel strategy offers several benefits over buying long stock. 1.     it requires less capital, making it accessible to a wider range of traders. 2.     it provides a cushion in case the stock goes down, potentially reducing losses. 3.     it allows for cost basis reduction, which can lead to increased profitability over time. However, it's important to note that the wheel strategy also has some risks. If you do not own any shares you are missing out on appreciation of owning shares. If the stock price goes up significantly, traders miss out on potential profits. Additionally, if the stock price keeps going down, the wheel strategy requires active management and adjustments to avoid losses, but that is the same as owning shares. Implementing the Wheel Strategy To implement the wheel strategy, traders should follow these steps: Sell a put to collect premium income and reduce the cost basis. If the stock goes down and the put gets assigned, sell a call against the stock position. If the stock goes up and your shares get called away repeat the process by selling another put. Manage the position by rolling the puts and calls as necessary to maintain a profitable and protected position. The wheel strategy offers an alternative approach to buying long stock. By selling at-the-money puts, traders can reduce their cost basis, lower capital requirements, and potentially profit even if the stock price declines. While the wheel strategy requires active management and adjustments, it can be a powerful tool for traders looking to optimize their trading strategies. So, next time you consider buying stock, consider giving the wheel strategy a try! I hope you enjoyed this post and learned something new. If you did, please share it with your friends. And if you want to learn more about trading strategies and how to apply them in different market conditions, join our discord! Subscribe  for our weekly newsletter. It's all free!   Happy Trading Good Kids! Disclaimer: this is NOT financial advice. I’m basically just some dude on the internet who’s been trading a while, and I use the stock market as my primary source of income. None of this is financial advice it’s purely educational!

Today Good Kids Trading (GKT) is identifying 5 common themes that hold you back from being as successful as you want in the stock market. Let's identify and then solve the most common problems so you can make the stock market a bigger source of income and find the time freedom that you so deeply crave! Here's a quick video of today's blog, I've also posted an entire thread in our discord to discuss these obstacles in more depth! 1. Not taking action - The stock market is so confusing to beginners. It can feel overwhelming even if you’ve traded for a while. It's like staring at a mountain of information without a clear path. The complicated terms, options chains that look like a bunch of random numbers, not even sure what a stock really is, or what is the next step. For years I just traded shares of stock because I quite frankly didn’t know the difference between calls and puts. It was confusing you can sell or buy options. The learning curve in the market can feel steep. Too many people let this learning curve keep them from taking the next step. Instead of trying to figure out a complicated strategy, focus on the very next step. If you don’t understand stocks (or options), spend 30 minutes learning a little bit more about the basics. Just keep taking the next step, do not become a victim to analysis paralysis. GKT is a good source of information without the hype. 2. Assuming there is a better way - You can spend a lot of money looking for the easy button , I did it for many years. Trying all of the strategies that promise awesome returns, thinking some other person or group knew secrets I didn’t know. There are millions of people trying to sell you the “best strategy” I have found and I firmly believe the best way is for you to build a strategy and a plan you believe in. If you follow someone else without understanding, you will end up losing money. Trading is mostly managing your emotions more so than managing your trades. You have way fewer emotions when you understand and believe in your plan. Of course, you will have emotions, but it won’t be the same as following a plan you don’t understand or believe in. 3. Thinking someone else knows - Self-doubt, imposter syndrome, or lack of confidence will get in your way if you aren’t careful . Some of my mentors have seemed so confident in their analysis or opinion they shook me out of trades, or I took outsized risks based on their guidance. Realize that no one really knows. This is not as negative as it might sound initially. Yes, people can have informed opinions, but they can and will be wrong. You need to block out the noise and follow your plan UNLESS they have a point of view or concern you did not consider. Just like I mentioned above, it’s easy to believe there’s a better way or someone knows more than you do, but once you realize that no one really knows anything it’s easier for you to just stick to your thesis and trade your plan. 4. Sticking with the same strategy - Let me give you a ‘secret’ (after I just told you there are no secrets) everything works in the market just not all the time. Just because you (or someone else) has a strategy that is making you huge profits right now, it doesn’t mean it will work next week, next month, next year. The market moves in cycles, the market makers and institutions are really smart. It is not a merry-go-round. Do not overleverage or ramp up just because you have a strategy that is working, you want to make note of what is working in which market conditions so you can start building strategies in advance. Keep learning, don’t get caught up in thinking you have found a holy grail because as the market shifts your strategy should also shift. Keep doing what works, but keep notes so you can stay ahead of the market’s cycles. 5. Trying to go too fast - We’ve all heard the fable about the race between a tortoise and a hare, with the tortoise winning by moving slowly and steadily because the hare took a break. I’ve found this to be true in the market. Everyone is a genius in a bull market, you will see people overleverage and make a ton of money, you will see these same people lose big at the first shift in the market and then they disappear because they blow up their account. Don’t be them. You don’t have to learn complex strategies to make money in the market. It’s easier to add complexity than it is to simplify your strategies. The power of compounding over time is powerful, so if you keep hitting base hits you will get a couple home runs and of course you will strike out as well. If you make your trading strategy too complicated and you keep swinging for the fences every time trading will be stressful, your emotions will ruin your success, and you won’t have fun. Every day I get direct messages, text messages, sometimes even phone calls asking for input and help. These are five principles I stress to everyone because I know trading can be simple if you have the right perspective and build enough experience. I think most traders are still struggling with many if not all of these to different degrees, and that’s why I’m here to help you. It’s time we cut through the challenges and remember we are clicking buttons and making (or losing) money, how cool is that? If you need help reach out to me , join our community. I’ll see you here next week, hopefully I’ll catch you in our Discord much sooner than that! Happy Trading Good Kids! Disclaimer: this is NOT financial advice. I’m basically just some dude on the internet who’s been trading a while, and I use the stock market as my primary source of income. None of this is financial advice it’s purely educational!

Let’s dive right in on things.  In this article, I will answer the question, “How much money do I need to start investing?” I remember struggling with this question. In fact, almost every new investor thinks that they don't have enough money to start investing. They often times view their account size as insignificant because it doesn't compare to the wealth of the Elon Musk's and Warren Buffet's of the investing world. I'm here to tell you that comparisons like those aren't fair to you. Whatever amount of money you do have is significant and has the power to change your life.   Before I answer that question in detail let me tell you a story about how I began investing.    How I Started Investing My “career” in the stock market started out as nothing more than a mental break from studying while in medical school. I have “Dr” in front of my name because I ultimately graduated medical school.  I mention this for two reasons: I am not a professional investment advisor.  In fact, I never took any financial courses after high school.  These articles are for entertainment purposes only.  Before you trade real money, make sure you understand what you are doing and are comfortable with the risks involved. All investments carry some degree of risk! I started trading as a side gig and after a learning curve, I can say that I am a consistently profitable options trader and stock investor.  I also currently have a full time W2 job, as a civilian Medical Resident, and continue to trade.  It doesn’t take that much time!   During my study breaks, I found that learning about various investing strategies challenged me in ways medicine didn’t.  I quickly realized that throughout any day the stock market was open, literally trillions of dollars are traded.  After a lot of reading, mostly in 15-20 minute chunks, I saw a path towards collecting my very small portion of that money. I just needed to get into the game. If you have the desire to start “working” for yourself and to take active ownership of your financial future, then you must learn how to invest.  Financial institutions want to make it seem more complicated than it is.  They earn their fee by taking the “burden” of your financial future off your shoulders.  Now that transaction fees are exceedingly low, and often non-existent, managing your money just takes a little thought and a few clicks of a mouse.   One of the big things we aim to provide at GKT is value to you.  Although it took me hours upon hours of reading articles and books, we want to streamline that process for you.  It took me all that time because there are thousands of people out there with their own opinions and methods of the best way to invest and I wanted to read all of it.  Honestly, a lot of it was time wasted. Over time, I learned several simple strategies that lead to consistent profits.  Join our Free Discord and you can see for yourself how we trade.  There’s no more sales pitch.  No credit card required.  It is literally free.   My First Investment in the Stock Market There I was, sitting at a med school library table on August 20, 2013.  In those days it took half a pot of coffee just to get out of bed and the other half to stay awake long enough to memorize whatever I was studying.  No one can study continuously for hours on end day after day.  During my breaks, I read stock articles.    Long story short, I knew I didn’t have time to day trade.  I also mistakenly believed options were “too risky.”  I eventually became interested in dividend growth investing which relied upon the power of compounding.  Once I narrowed my focus to dividend companies, Wisconsin Energy Corporation (WEC) caught my attention.  Stable industry, regular increases in dividend payments, and a long track record of paying them all made this stock interesting to me.    On that life changing day in August, I set up an account with Computershare.com because it only required an initial purchase of $250 and they didn’t charge transaction fees. In 2013, EVERYONE was charging transaction fees of at least $10 to buy and $10 to sell any amount of shares. So finding this free service made things possible. Today, you can do this same thing in any maker broker. I also signed up for $25 monthly recurring investments in WEC.  Though this startup cost was a stretch, I was able to fit it into my budget.  That $250 bought me 5.976072 shares of WEC.  Two months of automatic investments later, I put in a total of $300 and I received my first dividend check for $2.75! If you've ever found money on the ground, you know how I felt in that moment. I was literally over-the-moon kind of happy. This tiny dividend represented my first steps towards financial freedom.  My investment strategy relied upon compounding interest, so I signed up for the automatic dividend reinvestment plan which was also free.  That $2.75 bought me another 0.066209 shares!  I still have my first stock spreadsheets where I kept meticulous records.    Because I was investing regularly, each subsequent dividend check was bigger than the one before it. Keep in mind the time requirement of this strategy. Once I set up my account, I did absolutely nothing and I was making money.   How Much Money do I Need to Start Investing? Start investing with what you can afford.  I started with $250 and that earned me $2.75 after 3 months.  That isn’t a get rich quick type of money and I’m not here to convince you that it is.  What I am trying to convey to you is that no matter how much money you have, start with what you can afford to lose.    Here at GKT we are VERY transparent.  In the name of transparency, let me break it to you now, you will make mistakes in your investing journey.  You will have to learn some lessons the hard way and you will lose money.  I know this because I made MANY mistakes which caused me to lose money.  I survived and so will you.   When you start your investing journey, start so small that if you lost everything you’d still sleep fine at night.  Make your mistakes when your account is easily replenished.  If I lost $250, I may have had to use store brand coffee instead of Folger’s for a while, but I would have made it.   The Outcome of my WEC Investment My first quarterly dividend with WEC was $0.3825/share.  At the time of writing this article, WEC $0.835/share every quarter, or 218% more.   I've also invested more money throughout the years and the dividend checks have grown to a meaningful amount. Don't scoff small beginnings. You Can do This Too I share this story to say that you can absolutely do this too.  Investing in yourself and in your future can change your life.  You must take active ownership of the process.  Start small with money you can afford to lose.  A $2.75 dividend check wasn’t a large amount of money then and it isn’t now.   The incalculable value of that $2.75 came from the knowledge that I too could earn money in the stock market.   You don’t have to do this alone.  Join GKT and start your investing journey today! Disclaimer: this is NOT financial advice. I’m basically just some dude on the internet who’s been trading a while, and I use the stock market to generate income as my side gig. None of this is financial advice it’s purely educational!

You could be missing out on an opportunity to generate consistent 7-10% yields in the stock market. Today I’m discussing Master Limited Partnerships (or MLPs) and 5 important points to consider if MLP’s should be part of your diversified portfolio. I did an extensive webinar on dividend stocks , if you weren't able to attend live you should catch the replay. From how to pick stocks, where to buy and sell them, and how to increase your yields! I also discussed MLPs. Today lets break down Master Limited Partnership's just a little bit more. 1.       What is an MLP, how does it differ from a normal stock?   MLP’s trade under a stock ticker but they are not structured like a typical company on the stock exchange. They often focus on energy infrastructure assets like pipelines oil, gas, coal, timber,  and storage facilities. Their structure leads us into the next consideration, and that is taxes!   2.       Tax Advantaged Investments.   MLP’s are considered a Pass-through entity, much like real estate syndications. There are General Partner’s and Limited Partners. The business is structured so that it is not subject to corporate taxation. However, the distributions to MLP shareholders are generally subject to income taxes . We are the  limited partners. This is why you see L.P. on the charts. As a limited partner be aware of the tax implication for you.   3.       K1-s take a while to arrive.   As a pass through entity, if you decide to trade these you should be aware that you will receive a K1 instead of a 1099-Div for your taxes. You likely will not receive your K1 until early April. I’m not exaggerating when I say I got a K1 on April 5th. I bring this up every time I look at EPD's chart, but I had already filed my taxes when the K1 arrived in the mail.   4.       High yields mean steady income. I have stressed why we should not chase high yielding dividend companies based solely on the dividend, did you watch the webinar ? MLP's pay consistent dividends, and when you combine a buy low, sell high strategy by waiting to buy the shares at support, MLP's help make a diversified portfolio. Everyone’s portfolio should have multiple companies in each category of stock. Adding some EPD to your PG, KO and ABBV seems like a nice combination! These are not specific stock suggestions, they are examples of stocks I happen to own.     5.       Interest Rate Sensitivity. Interest rate / Oil price risks- MLP’s are generally related to oil and gas pipelines. These companies are sensitive to changes in the interest rates, and the supply and demand can be impacted by the price of the underlying commodities. So if interest rates are already high and likely to go down perhaps these are more appealing. In low interest rate environments keep in mind this risk, although MLP's are generally still appealing because of the dividend yield the share price might offset some of your gains.   I think MLP’s have a place in portfolio’s where you are looking for a steady income through dividends, and when need some diversification outside of ‘boring’ dividend stocks.   I ’ll see you next week here at the blog. I'll see you much sooner in our discord  if you want to sign up! Happy Trading Good Kids If you enjoy this, perhaps you'd consider buying me a coffee . If you have feedback please let me know . I'm here for you! None of this is trading advice, it's for your education in hopes you can make money in the market as I have done. I’m basically just some dude on the internet who’s been trading 2 decades, and I use the stock market as my primary source of income. None of this is financial advice it’s purely educational!

We talk a lot about individual stocks in the blog, today I'm sharing 5 'secrets' on how to use sector SPDR Exchange Traded Funds (ETFs) in your portfolio! This information has made me lots of money in the stock market, it's a long post, but I can assure you that I'm giving you information other's charge lots of money to explain and I'm keeping it simple. These 11 ETF’s divide the S&P 500 (SPY) sectors. (Visit the SECTOR SPDR ETFs website for more information! A few of the graphics came from their site as well) There are pros and cons to using sector ETF's so identify you trading strategy and your narrative by asking yourself if you want broad exposure, or do you want a single stock. 1 Cons to consider about sector ETFs These ETF’s will likely not move as quickly as an individual underlying since they contain multiple companies. This isn't always a bad thing, but it can be. Let's look at XLF for a real life example of when I traded a single stock over the index. I posted this all in our discord , but I didn't explain the logic with as much detail as I am today! These are the top holdings for XLF During the "banking crisis" of 2023 I was purchasing JPM over XLF or KRE. I think JPM is best of breed in the banking sector, I didn't want exposure to other banks or financial institutions. Look at the chart below of XLF combined with the orange line which is JPM stock. JPM dipped just as much as XLF but it out performed XLF and as of today it's outperformed by almost 30%! This single decision to buy JPM made me more money than my annual salary working at a corporate job. I wasn't trading questionable banks, I wasn't buying the sector ETF because I knew best of breed outperforms! Remember this, it will happen again, perhaps a different industry, but capitalize on this! 2 Pros of Sector ETFs Here's an example of when I'd rather trade a sector over picking individual stocks! XLY is consumer discretionary stocks, the top holdings are: Consumer discretionary should drop as consumer’s start feeling the effects of rising interest rates, and possible inflation. You know the current environment we are in today! Instead of looking for individual retail, auto, hotels, apparel, etc. I wanted broad exposure to the entire sector. These two shorts in the past 2 weeks paid for a beach vacation, and paid my utility bills for the next two months. I took both of these trades in our discord , do you have a better understanding of why? This blog post explains why and how I use moving averages , so that’s how I “picked” my targets. Do you realize how easy this thesis is to make on your own? People pay thousands of dollars for the information I'm giving you today. I've made $100,000's of thousands of dollars doing what I'm showing you . No it doesn't always work, but you miss 100% of the trades you don't take. 3 Using Sector ETF's to hedge expensive stocks: If you don’t own 100 shares of a META, and earnings are coming up and you want some downside protection, consider a put vertical in XLC. Do you see how XLC’s top holding is META? This is a simple put spread on meta for earnings this week. IT would cost you 255 for a max profit of $245 This is similar protection in XLC that can make you $285. Yes, XLC will not move as much if META has a big decline, but look at your delta in both trades and the cost savings! Do you see how this is good for traders who have less than 100 shares or maybe want to speculate a bit? 4 SPDR ETs Pay Dividends: Did you expect me to write a blog post and not mention dividends? Afterall these are a key part of my trading. I have a complete series on dividend stocks . Sector ETF’s pay dividends! Just be aware there is an expense fee of .1%, but XLRE and XLE both yield over 3%. Here's a chart on XLE Side note: a possible trade idea as I think XLE is about to wave 5 higher! Maybe you could consider setting up a bull call spread! The dividend is quarterly so next dividend isn't until June, at which point you could buy some shares before the ex-div sell a call? Buy Writes are less volatile than a single underlying. That is a plus, just realize the covered calls often doesn't have as much premium as a single underlying. For every positive there is generally a negative in the market. Smart people make the markets! 5 Using SPDR's to speculate on market cycles: I’ve discussed how the market moves in cycles, so as money flows out of one sector, it generally flows into another sector. These individual ETF’s give you broad exposure to a sector, instead of all 500 companies in SPY. There are many different cycles and theories, from seasonality, economic, political, even psychological cycles that you can study. Sector ETF's give you an easy way to make an educated guess and get the exposure you think will make you money. You buy and sell (short) shares in these ETF’s but they have options! All normal strategies we discuss at Goodkidstrading for an underlying apply to the ETF, you can sell puts, trade spreads, the option aren’t always as liquid, but these are a good alternative in some situations. -- If you made it this far BRAVO! There is so much focus on individual underlying's that sometimes traders forget about the more boring ETF’s. I encourage you to build a watchlist of all 11 sector ETF’s, There are other ETF’s that should also go on this watchlist, I will cover that in a future article, so make sure you subscribe I’ll see you next week here at the blog. I'll see you much sooner in our discord if you want to sign up! Happy Trading Good Kids These blogs take hours for me to create, I'm sharing information that has taken me years of experience and expensive coaching. If you enjoy this, perhaps you'd consider buying me a coffee. If you have feedback please let me know . I'm here for you! None of this is trading advice, it's for your education in hopes you can make money in the market as I have done. I’m basically just some dude on the internet who’s been trading 2 decades, and I use the stock market as my primary source of income. None of this is financial advice it’s purely educational!

Trading without a plan can feel scary, sometimes trading with a plan is challenging for newer traders. But when you put math and the charts in your favor, trading with confidence is easier! Tastytrade does a nice job of displaying the probability of profit for options trades. Do you see the two red box below? The POP or (Probability of Profit) is the chance of your trade being profitable at expiration. The P50 is the probability of the trade hitting a 50% of it’s maximum profit before expiration. POP and P50 are calculated using a combination of historical data, mathematical models, and market analysis. I'm not going into that level of detail here, I can't even begin to try if I wanted! Lets look at the risk curve. Tastytrade also does a nice job of showing you where the share price of AMD can close for you to be profitable, and where you start losing money. The green shaded area is profits. So above if AMD closes above 133.62 you make money. Below you lose money on this put sale. If you are a more experienced trader this is all simple, you know all this. For our newer traders it might still be a little fuzzy. That's why you should ask questions in the discord thread for this blog! Not a member of our discord ? You should be! The information above is a great indicator you are making a high probability trade but I don’t stop here. I believe you can add technical analysis (looking at the charts) to add more “probability” or confidence to your trade. Do you see on the daily chart below we have a 200 moving average (the thick red line I highlighted? It's at 139.32. So selling a 135 put makes sense! Also checkout that purple box in the chart above from November to January. We have support and a moving average that should help support AMD if it suddenly drops. It looks like it could drop, the chart is a little heavy looking after all, but it's all above the 135 put we are considering selling. I always think you should zoom out! Let's look at the weekly chart. Do you notice I've highlighted two similar looking features in the chart below? We have a 50 EMA (enhanced moving average) on the weekly that at 141.41 slightly above the 200MA on the daily. This is extra confidence. I see support around 130 on this chart. Don't just look at the chart, think about liquidity and return as well! Consider the premium received the orange boxes above. Ideally I want 1% for every 30 days so the 135 put is paying more than 1.35 The option has plenty of liquidity as shown by the red box. The green box shows the bid ask spread is acceptable. You can sell a put for around 1.37 and you can buy a put for around 1.41. Of course we want the mid price... I’m willing to make accommodations for these factors based on how much I like the stock. This meets the 1%, the option is liquid and it has a nice bid ask spread! Just because this is a high probability trade, I don't want you to be mislead. This trade may not work. Even though we have built up a good thesis to why this is a high probability trade the 10% chance it doesn't hit 50% is real. But if you are selling a put you can let the put expire in the money and take shares of AMD at a discount and a nice level where there is support. You can turn this into a wheel trade . If you can’t afford to take the shares, you would want to close this if it closes below the moving averages. Remember you always need a plan for your trades. What I’ve shown you today is how I build an even higher probability trade that gives me more confidence in taking my trades. This is an example with a short put, but you can do this same thing with defined risk trades as well! Do you want to learn how I underwrite a stock trades similar to how real estate investors underwrite real estate deals. I'm hosting a webinar , Join GKT Newsletter , or if you are really serious I'll see you in discord much sooner. Happy Trading Good Kids! I provide all of this to you for free. If you enjoy this, perhaps you'd consider  buying me a coffee . If you have feedback please let me know . I'm here for you! None of this is trading advice, it's for your education in hopes you can make money in the market as I have done. I’m basically just some dude on the internet who’s been trading 2 decades, and I use the stock market as my primary source of income. None of this is financial advice it’s purely educational!

Hi Good Kids! This week I'm talking about a strategy I use when I want to earn income on my long-term stock positions without the risk of being called away. If you aren't already doing this, you should! Quick disclaimer before we get started, only do this on positions where you have 100 shares. The Challenge If you're like me, you want to hold onto your long-term shares but still generate some extra income. Theta decay is a key component of my income. Selling covered calls at resistance levels is a popular strategy I still use, but it has an obvious downside. If the stock keeps rising, you might end up having to buy back your calls at a higher price, or you have to let your long term shares go. There is nothing wrong with getting called away, but you do need to think about the tax implications and your overall investing timeline and strategy. The Solution: Bear Call Spreads A bear call spread involves selling a call option at a strike price above the current stock price and buying another call option at a higher strike price. You still collect a premium from selling the call option giving you income generation. The long call option you buy limits your risk if the stock price surges you have protection How It Works 1. Sell a Call: Choose a strike price above the current market price where you think the stock might face resistance. 2. Buy a Higher Strike Call: This call option protects you from unlimited losses if the stock price continues to rise. By using a bear call spread, you ensure that your long-term shares aren’t called away, giving you peace of mind. Benefits Reduced Risk: The bought call acts as a safety net, limiting potential losses. Cash Flow: While the premiums from bear call spreads are smaller than those from covered calls, they still provide a steady income stream. Flexibility: If the stock pulls back, you can close the spread early and potentially profit. Cons Reduced Cash flow: The long put is a debit, as mentioned this is a down side over a covered call. Assignment risk: the assignment risk is not totally gone, manage these before theta decay gets to the long call. If your short call is ITM and the long call is not, you can end up losing on this trade or losing your shares. Example Suppose you own lots of shares of Google (I know a guy who does...) GOOGL is currently trading at 175. I could sell a covered call at 185 and collect $126. Let's ignore it's a down day, you all know I don't like to sell calls on down days.. Just go with me here. This is the options chain showing the call we are selling. The 185 call, for 1.26 This is the risk graph. Notice after Google passes 186.22 our upside is capped so the 'max loss' here is infinite? We aren't losing money from our account, we are losing out on the appreciation of the shares because remember we'd be called away at 185 if google closes over 186.26 we don't get any more profits This is what it looks like on the chart Let's look at a bear call spread, this is the options chain. we are buying the 190 for debit and we sold the 185 for a bigger credit. So our total credit is $71 This is the risk curve. Do you notice our max loss went from infinite to $429! Less credit, less risk... We see this all the time. This is what it looks like on the chart. We are obligated to sell our google at 185, but we have the option to buy them back at 190 If google starts moving up to 185 obviously our short call will start losing, but the long call will appreciate in value to offset the loss. If google closes below both of these options we keep the credit we received. I generally manage these by taking them off together. If you are more advanced you can unravel them, but understand the risks if you turn a defined risk trade into an undefined risk trade! By implementing this strategy, you maintain control of your long-term shares and continue to generate income, even in a rising market. Selling bear call spreads is a nice way to keep your shares safe while still earning extra cash. It’s not as lucrative as covered calls, but it’s a smart trade-off for the security and steady income it provides for your longer term holdings Subscribe to the GKT Weekly Newsletter , or if you are really serious I'll see you in discord much sooner! Happy Trading Good Kids! I provide all of this to you for free. If you enjoy this, perhaps you'd consider  buying me a coffee . If you have feedback please let me know . I'm here for you! None of this is trading advice, it's for your education. I'm just some dude on the internet who’s been trading 2 decades, and I use the stock market as my primary source of income. None of this is financial advice. Any trades or decisions you choose to make are at your own risk, this is purely educational!

At Good Kids Trading (GKT), we approach stock trading a bit differently. Many trading groups only chase the high-flying growth stocks. GKT recognizes the often-overlooked power of ‘boring’ dividend stocks. Dividend stocks are categorized as value stocks. Value stocks have traditionally been around for more than 20 years, their growth has slowed down and they need to entice investors/traders with extra income from a dividend. Value stocks are seen as slow-moving compared to growth stocks. However, the Good Kids know that there's a valuable place for both growth and value stocks in a well-diversified portfolio. What if you get consistent guaranteed income using dividend aristocrats—companies with a long history of paying dividends AND you also get the possibility of growth by focusing on dividend stocks that are undervalued or overlooked by the market? That is cash flow and appreciation! Most traders focus only on the dividend yields, and when you look at the numbers they don’t get too impressive until you have a larger account.   Here’s a simple breakdown of a $10,000 portfolio of dividend stocks: A 2% yield provides $200 annually. A 4% yield, provides $400 annually. An 8% yield, provides $800 annually. These numbers aren’t that impressive on the surface. When you have a $100,000 portfolio and you add a zero these numbers are obviously more significant. This is why dividend stocks are more popular among older investors who have larger portfolio's. It doesn't have to be this way! Did you watch my webinar on dividend stocks? You can make money from the information I shared during this hour long video.     The GKT Mindset with Dividend Stocks: Dividends alone might seem like a slow path to wealth when you focus on the yield alone, but what if you can build a portfolio of multiple stocks that have the possibility of appreciating in share price? What does it look like when you have multiple positions that have 100 shares of each underlying and you start selling calls and increasing your yield even more?   I find opportunities by looking for dividend aristocrats that are: 1.       Buying shares when the stock is hitting weekly support 2.       Hitting daily or monthly moving averages. 3.       Selling puts in stocks that have high volatility before the ex dividend date (creating a ‘dividend’ by using the premium collected from the put sale) A wheel strategy. 4.       Looking at sectors that are under performing and buying the best of breed in the sector. 5.       Buying underlying’s in multiple sectors   Take Profits/ Have an exit plan before you enter the trade Lock in your profits using resistance on the weekly chart. If you do not have 100 shares you sell when the stock hits resistance (you can trim instead of selling all the shares). If you have 100 shares you selling covered calls when shares hit resistance.   Have an exit plan if the stock keeps dropping. You won’t always be right, and the stock market can remain irrational longer than you can stay solvent. Have a line in the sand where you cut your loss and find a new position. No one wants to be a bag holder, so don’t let ego win. Have plan for profits and losses!   Dividends are the most passive income stream available. With experience, you can find stocks that offer both dividend yields and growth potential. For those who prefer less hands-on involvement, high-yield dividend ETFs can provide substantial income, especially when dealing with larger accounts. At GKT, we emphasize the importance of a diversified portfolio that includes both growth and dividend stocks. It’s very powerful when you can take a boring dividend stock and find growth and consistent yields at the same time! Remember, trading is as much about managing emotions and expectations as it is about numbers. Make your trading mechanical by following the principles we teach! Happy Trading Good Kids! I provide all of this to you for free. If you enjoy this, perhaps you'd consider  buying me a coffee . If you have feedback please let me know . I'm here for you! None of this is trading advice, it's for your education. I'm just  some dude on the internet who’s been trading 2 decades, and I use the stock market as my primary source of income. None of this is financial advice. Any trades or decisions you choose to make are at your own risk, this is purely educational!

Success in trading is more than just having the right strategies or tools; it comes from maintaining discipline. Jocko Willink said it best: "discipline equals freedom." Though he was talking about physical training, this applies to trading as well. Emotions like fear and greed can tempt us to deviate from our plans, but discipline is important for achieving long-term success and avoiding costly mistakes. I’m sharing seven tips I use to stay disciplined in my trading routine, guiding you towards consistent and profitable trading.   1. Set Clear Goals Why are you trading? Money is not the reason. Trading for money isn't enough. If your goal is just to make more money, fear and greed will dominate your decisions. Define what the money is for—why do you want financial freedom? Your goal should be a powerful enough “why” that you treat trading as a business, executing your plan without letting emotions drive your decisions.   2. Have a Trading Plan Please do not confuse a trading plan with a list of strategies. A trading plan is process based. My plan includes steps like logging trades, writing reasons for each trade, and reading orders out loud before hitting send. My plan discusses keeping trading strategies as simple as possible, risk management, and allocation of assets for each strategy.  A good trading plan supports your goal of being a profitable trader and helps you stick to your why.   3. Keep a Journal Tracking every trade is really important. I know it’s time-consuming, but without it, you can't analyze what works and what doesn't. Use a spreadsheet. I have moved to an automated tool called Wingman Tracker to log my trades. I take a lot of trades each week so the cost makes sense to save me hours. Trade logs help you review your performance and make necessary adjustments. You need a spreadsheet to be successful over the long term.   4. Manage Risk Newer traders are all about the profits, making money clicking buttons is amazing! Focusing solely on profits can lead to disaster. Always have a standard risk amount for every trade. Keeping your risk small relative to your account size is crucial. Prioritize trades with a high probability of profit and remember, preserving your capital is as important as making money.   5. Stay Informed, but Block Out the Noise No one knows anything, it’s crazy to say but it’s true. Even if you know for sure what Jay Powell is going to do, you can’t be 100% certain you know how the market will digest the information. Look at earnings events, a company can report great numbers, but the CEO or CFO can mention something about guidance and the stock might drop 15%. Market opinions are everywhere, but no one knows for sure. Understand market cycles and focus on executing your strategies. Block out the noise and stick to your trading plan.   6. Control Your Emotions Trading is 85% controlling your emotions and 15% strategy. (I made that statistic up, but I believe it’s true) The fear of losing is everyone’s biggest enemy.  Fear and greed lead to poor decisions. Cut losers quickly and avoid holding on, hoping for a rebound. Have a plan for every trade and stick to it, regardless of market conditions. No one has made a dime panicking. Having knowledge and education, a trading plan, having a written sentence why you took a trade, and having an exit plan before entering a trade is how you control your emotions and make money in the market   7. Use Watchlists, Alerts, & GTC Orders You don’t need robots, you don’t need to pay someone $20,000 for coaching to make money in the market.  Use automated tools to make your trading more passive. Create watchlists, set alerts, and use good-till-canceled (GTC) or one-cancels-the-other (OCO) orders. This approach reduces screen time and helps you stay disciplined. Make it where you don’t have to be glued to a screen, let the trades come to you through your alerts, and let the broker take some of the temptation away for your stops and profit targets.   These seven steps will help you maintain discipline in your trading routine. Remember, discipline equals freedom. Successful trading isn’t just about making the right trades; it's about maintaining a disciplined approach. Implement these tips, and you'll be well on your way to becoming a more successful and profitable trader.   Happy Trading, Good Kids!   Justin

Selling puts are so cool, you already know this if you’ve read this blog or watch my trades in discord !  When we sell a put, we collect cash immediately with an obligation to buy a stock at a lower price. It’s a payday where you can be wrong and still make money!   There is one problem with put sales that not too many people think about, and today I want to change this because I want you get cash flow AND appreciation which is every investors dream! Lets quickly review why put sales are cool: Simple Setup and Management:   The trade setup for a put sale takes less than 5 minutes.  By combining math (probability of profit, expected range, standard deviations) with a touch of technical analysis it makes sense why put sales are my most profitable strategy over the last 10 years. Trade management is straightforward because we use a good till cancelled profit target and an alert at your puts strike price and we walk away and don’t even have to look! If the alert triggers, we either roll the put out in time for a credit, many times we can roll to a more favorable strike, or we take shares of the company at a discount. If the stock bounces, we collect 50% of the credit received and look for the next trade.   The downside of selling puts: When a put sale hits the profit target and you buy to close the put, or you let it expire worthless you received the income, but you don’t get any shares of the stock! You got the cash flow, but you have zero assets appreciating. Remember shares of stock are like assets. I talked about this in real estate mindset webinar! My shares of GOOGL, AMZN, COST, MSFT, WMT are assets just like a rental homes. If I only sold puts on these I wouldn’t have any shares today. So while many focus on the obvious risk of selling puts like market risk, capital requirements, and limited profit potential as downside of put sales. I think it’s important you realize that selling premium should only be part of your strategy. Considering using some of the premium you received from the trade to purchase shares after your put sell closes. A solution to the downside: I have a few different strategies for adding shares, but for simplicity and brevity let’s look at one strategy you can consider. Many times I sell puts on the same company over and over again as you've seen in discord . Rinsing and repeating what works! This chart shows my trades in HOOD from the last 6 months: I've sold puts 11 times in Robinhood. This is not a fabricated example, I’ve really done this. If Hood has a down day of more than 3% I consider selling a put. The put closes in a few days and I keep collecting premium. Every time 2 put sales close I buy a share of stock (for each put I sale). Depending on your account size this might be selling 1 put and buying 1 share, (or it could be 5 or 10). As your account grows, you can do a ratio where you keep some of the cashflow from the put and you buy less shares. More specifically if I sell a put for a credit of .20 and I close it at 50% I collected $10 in real dollars. Two successful trades is at least $20 real dollars, many times selling puts on down days gets us even more premium which is enough to buy a share of the stock. Assuming I only sold 1 put and bought 1 share from the 11 trades in the chart above after every two trades I have 5 shares of HOOD at a cost basis of $15.86  The stock is trading at $23.38 as I posted this blog. I’m up $37.60 on these shares, and yes it's going to take a while to get 100 shares, that's why adding capital to your trading account through savings is such a great way to compound your success!   Think about the risk of these shares, since I bought these using profits, what is my actual risk? Of course I don't want to imply you should let these go to zero because we bought them with profits, I want you to think about them a little differently than just the p/l you see in your broker. Every time we sell another put we are obligated to buy 100 shares, but the shares we buy with profits do have a different risk profile in my mind especially if I like the company and don't holding these for a longer timeframe.  Have a plan for selling the shares, but that’s an article for another day!     Summary: Keep in mind that the downside of selling puts in a bullish stock or bullish market is you don’t get the shares if the stock bounces. In real estate terms you got the cash flow, but you have no asset appreciation in terms of share price, unless you build a strategy to pickup some share from your put sale profits.   Happy Trading Good Kids! -Justin I understand the stock market can feel intimidating and complicated, if you want some extra support and guidance, I help people skip levels, schedule a free discovery call with me . Lets talk stocks and see if I can help you! Click on the image below and setup a time that works for you! This is not trading advice, it's for your education. I'm a dude on the internet who’s been trading for 2 decades, and I use the stock market as my primary source of income. None of this is financial advice. Any trades or decisions you choose to make are at your own risk, this is purely educational!