Make 50% Return on SOFI Stock (Simple Options Trading How To)
Do you believe in Fintech and have you been following the rapidly growing consumer loans and finance company SOFI?
If you watched the superbowl this year, you must have known The LA Rams won the Superbowl this past year at the $5 Billion Dollar SOFI Stadium!
If you don’t know what SOFI does, in short they’re basically a bank that also offers consumer loans, credit cards, and wealth management.
But what makes it different? SOFI has been called a “bank with a super cool app” or “a bank for millennials”. But the truth is, there are so many different features of SOFI banking that makes it stand apart from a traditional bank.
How to Trade Options on SOFI stock
Want to learn a much safer way to trade this stock with options on SOFI stock that’s not expensive? And put yourself in a win-win scenario in this volatile market?
Do you have around $500 to invest and want to learn trading options with it? With this option strategy, you can earn up to 50% return or $246 per trade on SOFI.
Give me just a few minutes of your time to show you how this option works and exactly how I’m trading options on SOFI stock myself.
Warren Buffett uses this strategy because you win whether the stock goes up or down.
You make money if the stock goes up. And if the stock goes down, you get the stock at a much cheaper price.
Do your own research on what else it has going for them but I am BULLish on this stock!
First, I’m going to go to my brokerage account — Robinhood.
Selling Put Options (Like Selling Insurance)
I’m going to select “Sell Put”. This just means I’m essentially selling insurance so if the stock falls to a certain price (called the Strike price), I would be forced to buy 100 shares per put contract I sell.
For selling that Put Option (or Insurance), I’m going to get paid for it. It’s called the “Premium” I collect. I collect the Premium the moment I sell/open the contract.
Now I’m going to select an expiration date. This just means how long the insurance will last before it expires. If the stock is up by expiration, I keep the entire Premium I collected. If the stock is down, the insurance buyer may or may not exercise his right to sell 100 shares at the set (strike) price.
But regardless of how the stock moves, you still collect the entire Premium if you hold it to expiration.
Closing out Option Before Expiration
You don’t have to hold it to expiration though. If the stock price goes up tomorrow, your contract will increase in value and you can buy it back for cheaper, which nets you a profit. So you can flip your contract out in a day, week, month — or whenever the stock goes up and you want to collect your profit.
If the stock goes down, you can just hold onto your contract and the Premium you already collected.
In the case of SOFI, I’m selling a put option all the way out to January 2023 at a strike price of $7.5 Which means if the stock is below $7.50 anytime between now and the end of the year, I could be forced to buy the 100 shares of SOFI per contract I open.
But for selling that put (or insurance), I collect $246 upfront. So if I have to buy 100 shares of Sofi Stock at $7.5, I would collect $246 on the Premium. So my cost per share if I am forced to buy 100 shares is actually $5.04 per share.
I would be extremely happy owning this stock at $5.04!
Wheel Strategy on SOFI Stock: How it Works
Then I can ride out the 100 shares until SOFI pops up or sell covered calls which basically is the inverse. The covered call is selling a call option out. If the stock goes up, I would be forced to sell the shares AND I get paid a Premium.
That strategy is called the Wheel Strategy.
Recap of How I’m Trading SOFI Stock with Options
So to recap, I’m betting that eventually SOFI stock will go up. If/When It goes up to a point I’m happy with, I’ll buy back the contract for cheaper and collect a profit.
If there are downturns on the stock for some time, I’ll keep holding until I get assigned and get the stock for much cheaper.
That’s basically how selling put options work.
Option sellers never have to predict timing the market like options buyers do. On top of that, they can weather through shaky markets. They just have to find stocks that don’t go down too much before the expiration.
And that’s what makes selling Put options profitable even for the average trader like you and me.
I hope this video was helpful for you. If you like this content, make sure to hit that like button and subscribe for more options ideas just like this.
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