 Welcome back to another video. My name is Johannes Bottle and I'm in love with options trading in this video I will explain three basic options strategies that I use to generate income There's so many different ways of utilizing options, but in this video, I will only cover call options So let's just dive into it. First of all, you can either buy or sell a call option What does that mean? So when you buy a call option as the word implies you have to pay To actually receive the contract. This contract allows you to purchase a specific stock In the future for a specific price You don't have the obligation, but you have the option to do that You'd want to buy a call option if you're very bullish on a stock and you believe that its value will increase in the near future Now that you have obtained this call option, what can you do with it? So you can either sell that contract for a higher price in the future if the stock goes up in value or By expiration date, you can exercise your rate to purchase the underlying stock at the strike price that you determined when you bought the Call option. Here's a fun call option that I purchased last week And I'm saying fun because I usually don't do those short call options But it was AMC and the volatility was so high that I just couldn't resist So as you guys can see here I purchased a call with the strike price of $60 and the expiration date of June 4th Again, this this by the way is very risky, and I don't usually do that, but the volatility just I Couldn't resist so I purchased 14 contracts at $3 and 15 cents, which cost me $4,410 I immediately placed a sell order to sell my 14 contracts at $3 and 60 cents per contract about 90 minutes later My options sold and paid me $5,040 this trade net of me $630. So let's talk about this entire thing. I purchased a call option with the strike price $60 so I was anticipating where I bought this contract with the belief that AMC will increase in value over the next couple hours Let's talk about risks if AMC did the opposite My contracts instead of $3 and 15 cents per contract would have probably been worth $2.80 so that would have lost me 35 cents on each Contract, which is a lot of money. Luckily it went the way I expected it to do and I made money But the risk for this specific trade was that AMC that the opposite, you know Tanks loses value and then my contracts are worth nothing because the expiration date was exactly on that date to sum it up You want to buy a call option if you believe the stock will increase in value now that we know what buying a Call means and what it actually does. Let's see what happens when we sell a call I'm specifically talking about a covered call. I'm going to explain to you how to sell a covered call So if I hold 100 shares of a specific company I can use those hundred shares and sell a covered call Meaning I'm willing to sell my hundred shares that I own in the future for a specific price and for that Commitment I receive a premium a payment up front immediately as soon as I sell that contract That will stay in my bank account no matter what so when I sell my contract I immediately receive my premium that stays in my bank account and now I can invest that or do whatever I can Withdraw it I can do whatever I want with that money My hundred shares are now frozen in that contract and then we have different outcomes on expiration date So number one the stock price is higher than my strike price on expiration date Which means I have to sell my hundred shares at the strike price. So technically I'm missing out on all those gains I still receive I still keep my premium, but I also have to sell my hundred shares Now I have cash in my account and I can start from scratch an outcome number two The stock price ends up below my strike price Which means I don't have to sell any of my shares, but I still keep my premium This is the optimal, you know situation if you just want to sell a covered call for additional income So when do you do that for there are so many different reasons why you would sell a covered call for me personally? I love selling covered calls on growth companies because I invest in growth companies, but they don't pay Dividends and so basically I'm just waiting for that company to increase in value over the next couple years But until then and until I sell I don't see any cash flow So I like to use those companies and sell covered calls on them to just generate more income And basically I can use that money and invest it into this into the same company again Here's a great example. I own three thousand three hundred shares of riot and my average cost basis is $34.80. I truly believe by the end of the year we will see another bullish run from Bitcoin, which will then bring riot back up to like, I don't know maybe 60 70 80 dollars Who knows? But again, this is you know just my guess. I'm very bullish on the stock. I'm very bullish on Bitcoin That's why I don't want to sell any of my of my shares at the moment But like I mentioned, I want to still generate income from those shares from that money That's sitting within the company now So basically I accumulated a lot of shares that I don't want to sell But at the same time I want to make money with them. So here's what I did I sold a call with the strike price of $43 even though the stock price just dropped drastically within two days This contract is way out of the money, which is why I only got paid 22 cents per contract Which is seven hundred and twenty six dollars for about eight days. If I had lowered the strike price I would have increased my premium that I would have received for that contract But at the same time I didn't want to risk anything Maybe you know Elon tweeting something positive about Bitcoin saying Bitcoin to the moon now because he found the solution or whatever And then Bitcoin just having like a mini bull run and then it brings up riot and I have to sell all of my shares Although right now it doesn't look like this is gonna happen anytime soon by just selling covered calls I generate income which I can use for whatever I want and my money's not just sitting in that growth company Waiting for the company to you know increase in value last but not least. I want to talk about leaps leaps stands for long-term equity anticipation securities sounds complicated, but it's Very simple a leap option is basically a call option, but with one characteristic It has to be longer than one year So the duration of that contract has to be longer than one year So it's considered a leap option You can either buy calls or puts but in this video. I will only cover calls So a call leap option. I'm gonna jump in and give you the best example ever This is my worst option that I've ever done in my life. I people say you can't time the market I think I truly time the market Perfectly wrong. I purchased a leap call option on Apple at Apple's pinnacle it was at one hundred and thirty five dollars and I was like, okay within the next year and a half it will go up So right now this is what my call option looks like so with this contract I have the right to purchase 100 shares of Apple at one hundred and thirty five dollars in a year and ten days from now The risk for this option is that I'm 2465 dollars short and if Apple doesn't surpass a hundred fifty nine dollars on expiration day My option will be worth nothing if in case Apple increases in value over the next couple months My option will be worth more so whenever I feel like okay My option is now whatever increased by a thousand dollars and I feel like I want to sell it I can then sell my leap option But I don't think I will I just want to hold on to my leap option until next year because I truly believe that even though Right now we are in a weird Situation with inflation and everything hitting us really hard, but I still don't believe that within the next year will fall into a bear market I'm just very positive on the market still So why would you buy a leap option and not Apple shares if I want to be able to have control over a hundred shares of Apple right now? I need to to spend twelve thousand six hundred dollars on Apple to own a hundred shares If I don't have twelve thousand six hundred dollars to spend on Apple I can just buy a leap option if I believe that Apple is gonna go up in value and just say okay I'm gonna spend two thousand five hundred dollars and have the same thing I still have you know power over a hundred shares because in the future I can either buy a hundred shares at a hundred thirty five dollars or I just sell the contract For a higher price in the future as you guys can see all three strategies I actively use within my portfolio. So it's not something. I just you know Right online. I'm like, yeah, you can't do that. I actually do that Um, I also just wanted to focus on call options If you want to see put options like an entire video on put options Let me know in the comment section below And if you want to join me on patreon to see my financial moves I post there daily and give my thoughts because it's way easier to just like type it in like blog style Then creating an entire video about it So the link is in the description below and also don't forget to grab your free money from the link in the description below Thank you so much for watching. I'll see you next time