Almost everyone knows you can make money as a stock goes up, a lot of people understand you can make money as a stock goes down, but not as many people realize you can make money as a stock trades sideways in a range. There are several trade strategies that actually pay you as a stock moves sideways. These trades benefit from the passage of time and decreases in Implied Volatility (IV). All of the trades we are discussing today are referred to as directionally neutral. As always we have to consider our risk. There are two types of directionally neutral trades: Defined Risk and Undefined Risk trades. Defined Risk trades have a defined maximum loss. Since the risk is limited your normally also limit or reduce the profit as well. This is not a negative as you can still find trades with a good risk to reward. For beginners with smaller accounts a risk defined trade is a great starting point as defined risk trades use less buying power in addition to having a maximum loss if you are wrong. Undefined risk trades means you can lose an unlimited amount in theory, in reality the worst case is you lose a large amount of money; however, you also have the potential unlimited profits (in theory). More risk often carries the potential for more rewards, but be careful because one bad trade can erase the wins of 100 winning trades. If you are trading undefined risk trades you must have a plan if (when) the trade goes against you. Knowing your plan and exit options before entering the trade enables you to make educated decision that aren't fueled out of fear or emotion. Let's briefly discuss a couple defined and a couple undefined risk trade strategies you can use to make money as a stock trades sideways or within a set range. Reminder of common acronyms: In-The-Money (ITM) At-The-Money (ATM) Out-of- The-Money (OTM), DTE (days to expiration) Defined Risk Iron Condor Butterfly Undefined Risk: Strangle Straddle Risk Defined: An Iron Condor (IC) is setup as a single order in the broker, but composed of 2 vertical spreads (a call and a put spread). IC's are a great way to get exposure to a stock without taking a directional value. A short put spread is bullish, the short call spread is bearish. Both trades offset each other and it's impossible for both side of the spread to lose as the underlying can't trade in two ranges at expiration. A Butterfly is typically created using a ratio of calls or puts where you have a ratio like this: 1 - 2 - 1. The trade is referred to as a butterfly because the ratio looks like wings on the outside with the body having an extra contract. I'll discuss it in terms of calls, but you can also do this with puts, you do not mix calls and puts in this trade. 1 IITM call, 2 ATM calls, and 1 OTM call. Although these trades often have lower probabilities of profit (POP) these trades are great when there is high volatility and you expect the underlying to remain in a tight range. Undefined Risk A strangle is composed of 1 OTM call and 1 OTM put with different strike prices, but the same DTE. Although you can buy or sell strangles, selling strangles is the directionally neutral strategy. When selling a strangle you are selling a call and selling a put. Often you sell the option around the same delta (between 10-30 delta). Strangles are very similar to an Iron Condor, you just don't have the protection of the long call and put. If the stock breaks outside of the range you can incur a large loss. There is a lot of flexibility in managing these trades which is good if you understand, but it's bad if manage at the wrong time or make the wrong adjustment. The best case scenario is the stock stays between both strikes and you collect all the premium you collected. A straddle is composed of 1 ATM call and 1 ATM put so the strike price is the same and the DTE is the same. Straddles will pay more premium than a strangle, but you are also taking far more risk. The increased premium makes for a wider break evens, but short calls are a major risk if the stock has a large move to the upside. If you trade straddles there needs to be very high volatility and you need a high confidence level in your trade with very a defined exit strategy if the trade goes against you. GKT disclaimer: Although this trade is commonly discussed, I do not typically sell straddles as the increased premium is not worth the added risk for me. --- My preferred strategies for directionally neutral trades are Iron Condors and Strangles. Both of these strategies are key components to my success! There are lots fine details to consider and discuss, but today the main purpose is to bring awareness. No matter which strategy you decide to use it's important to recognize that you can make money as stocks trade sideways. There are strategies that work in every market direction. The goal of GKT is to educate and stimulate new thoughts. If you'd like to get more in depth, if you would like to continue this discussion join our discord! Trading in a community of likeminded people is far more fun, educational, and profitable! Join our discord today: www.goodkidstrading.com/join

Memorial Day weekend is coming up, summer is approaching! It's that time of the year where many of us take a well-deserved break to relax, rejuvenate, and re-energize. You might be planning to hit the beach, explore some hiking trails, or maybe it’s a staycation. As a trader you might find yourself worrying about your portfolio while sipping on that Pina Colada or hiking the Appalachian trail. For me trading is my full-time income. The bills don't take a vacation so I wanted to discuss how I manage my trading plans during vacations. This won’t be a surprise to the regular readers as I think every single post I’ve written mentions the Good Kids Trading (GKT) principals of trading small, trading often, and trading mechanically. The reason is this strategy works wonders, especially when you're away from the screen. Here's how I manage my portfolio while I'm out and about enjoying life. First concern for me is all about risk. You know we have defined risk and undefined risk trades. For defined risk trades, I don't set a stop based on my size. Why? I wrote an article on it here .. Defined risk has a max loss, so when I’m not actively monitoring the market it either hits my profit target that is setup GTC, or I will manage it when I return fully understanding trading small I can take a full loss on some defined risk trades. My larger concern is my undefined risk trades. And to be clear I take a lot of undefined risk trades. I used to be afraid to leave these on while I was gone, but I think experience and repetition helps with most of the fear. Here’s what I do if I have undefined risk trades (like strangles) that are fairly profitable - let's say above 30% profit when I'm aiming for 50% - I'd go ahead and take off that trade. This reduces the possibility of a sudden market swing wiping out my profits while I'm away. The only exception for me is if I have a short put that is profitable, but I still wouldn’t mind owning the company at the strike of my put I let theta decay keep working for me. To me that’s the beauty of being an options trader: we can use theta decay to our advantage. Theta decay, for those who aren't familiar, is the rate at which an option's price decreases over time. Even when we're away from our trading desk, we can still set up trades that benefit from this natural phenomenon. That's passive income at its finest… And that’s the advantage options have over day trading (just my opinion). However, I do lighten up on some trades that might require more adjustments throughout the week, like put calendars. Depending on how profitable they are already, I might close these trades before heading off for my break. You have to find a style that works for you, and although none of this is financial advice, I’m just some random guy who trades the market for a living, I encourage you to at least consider leaving some trades on while you are on vacation because the bills don’t stop just because you aren’t trading! You can still have your trades working for you, as long as you have the right risk management strategies in place. BUT at the same time the market will always be there when you get back! It’s those precious moments of relaxation and enjoyment won't. So, go ahead, take that break you've been longing for. Your portfolio will be just fine if you create some simple guidelines that you create and are comfortable following! So pack those bags, hit the road, enjoy your fiends and family, but I think you should keep trading Good Kids! Trading in a community of likeminded people is far more fun, educational, and profitable! Join our discord today: www.goodkidstrading.com/join

When I first heard the term "math-based options trading", I'll admit, I was a little intimidated. Visions of complex equations, dense formulas, and the haunting memory of college calculus classes filled my head. But guess what? I discovered that my fears were unfounded, and yours probably are too. There's a sneaky myth that has been scaring away beginners for years. It's the assumption that to trade options successfully, you must be a math whiz. Today, I'm here to bust that myth wide open and hopefully ease some of the fear that might be holding you back. Here's the awesome truth: with the right broker, you don't have to be a math genius to profit from options. Tastytrade (that is our referral link) has an incredible platforms that does the heavy lifting for you (other brokers might as well, I'm just focusing on Tasty for today). They compute and display key numbers such as Probability of Profit (POP), right there on the option chain page. You don't need a PhD in mathematics, just a plan and a general sense of market direction – up, down, or sideways. And it doesn't stop at POP. The Tasty platform also calculates the delta, theta, the Probability of Touch, Probability of hitting 50%. All this number-crunching, once the domain of supercomputers, is now served to you on a silver platter, simplifying the entire trading process. Sure, as you progress, you might want to dive into the Black-Scholes model, or delve deeper into the greeks of options trading. But for us at GKT, trading is about keeping it small, keeping it consistent, and keeping it mechanical. And you don't need advanced mathematics for that. Aiming for a 50% profit on most trades doesn't require you to perform complex calculations. It's all about following the plan, managing your risk, and sticking to our core pillars. So, if you're someone who always reaches for the calculator for simple arithmetic, don’t sweat it. You’re not alone. In fact, you're in good company – I'm in the same boat and trading is my full-time job! At GKT, we embrace everyone, whether you're a math whiz, a number newbie, or somewhere in between join us on our discord ! Remember, trading isn't about how great you are at math, it's about how disciplined you are with your strategy. So, don’t let the “math” in math-based options trading intimidate you. It’s a lot simpler than you think, and we’re here to guide you through it! Stay smart, stay profitable, GKT fam!

As an experienced trader, I can attest to the fact that participating in mentorships, joining trading communities, and spending time (and money) on education has been essential to my trading success and my overall life. Today I want to discuss what I've learned from mentorships and education, including my search for the 'perfect' strategy and coach. A quick background for those who don't know me: I am a fan of mentorships. You might say I'm a mentor junkie... I love learning and networking. Mentorships, classes, and education have been incredibly valuable to me, but they have also taught me some important, tougher lessons. I am sharing these lessons with you in hopes that you can learn faster and hopefully avoid some of the pain I've experienced. I am writing this article on the day of January options expiration, which is a bittersweet day for me as I have a number of calls that are expiring worthless. I bought these calls over a year ago, at the time they were referred to as LEAPS (which are just calls with a lot of time priced in). I was following advice from a mentor, who told me to buy these calls as a stock pulls back and sell calls against my long calls (known as a "poor man's covered calls"). Not only did I buy calls, but I also pyramided into these calls, essentially doubling and tripling down. This was a strategy that had worked well in the past, and my coach had great success with it. However, if you haven't seen the market's performance in 2022, the market just kept going down. So today, these calls expired worthless. Luckily, I hedged these positions and made some money as the stocks continued to pull back. However, for several months, I've forced myself to stare at these calls as a reminder. These worthless calls and negative P/L were reminders that: Past performance is not indicative of future returns and it doesn't matter how qualified a coach is or how smart they appear, do not put anyone on a pedestal and remember that what works for one person might not work for you. It's important to understand the worst-case scenario and size risk appropriately so you can continue to trade tomorrow. Diversify your strategies as there is no holy grail strategy, nothing works all the time. There are a lot of salesmen out there, so be careful and do your own due diligence. Just because someone is pitching you a strategy, you can still find value. These worthless calls were also positive reminders. I am a better trader, and I've had so many unexpected, awesome experiences from these worthless calls: Every single mentorship I've taken has taught me something unexpected. It's very important to keep an open mind. I've learned life lessons from a stock mentor, I've learned about my life's purpose from a real estate mentor, and I've learned new trading strategies from a small business owner. Mistakes are learning opportunities as long as you use the knowledge. There is a lot to learn from bad strategies. It's even better if you can learn from others' mistakes, but sometimes the best lessons come from experiencing pain. Learning, networking, and helping others opens doors you never thought were possible. As you learn and contribute, you meet new people and find strength in community. This mentorship was the catalyst that formed Good Kids Trading. I was supposed to learn how to make money trading options, yet I ended up making a friend and business partner. Investing in your education is crucial for becoming successful in all aspects of your life. For trading it is important to gain a deeper understanding of the market, learn new skills and strategies, and be part of a community. Continual education is key to staying up-to-date with the latest developments in the market. As previously discussed mentorships normally lead to unexpected benefits. I signed up for that mentorship to improve my knowledge of options trading. I ended up losing money from the strategies taught, yet the mentorship is responsible for starting the path to creating the awesome community we have here at Good Kids Trading. If you want to learn how to trade options responsibility, mechanically, and successfully GKT is a trading community where you can network with other traders and share knowledge, which is a great way to get inspiration and motivation. Investing in yourself and expanding your knowledge on a continual basis is one of the most important things you can do as an options trader, and it can help you achieve your financial goals. Join our discord today: www.goodkidstrading.com/join

Today we're discussing the rationale behind our standard 50% profit target strategy and how it contrasts with other trading styles like day trading and swing trading. This question was brought up last week in our discord and it makes for a great discussion. If you would like to join a friendly group of likeminded traders join our discord it's free! Let's get started! Have you ever wondered why math-based options traders aim to close positions once we hit the 50% profit mark? The logic is pretty simple yet profound. When an options trade reaches 50% of its max profit, the risk/reward dynamic starts to tip, and it's not in our favor. We stand to gain less but still could lose big. This isn't the same as when we are trading shares of an underlying and we continue to to have a large amount of delta with the same risk profile like we do with shares. This risk/reward scenario is where the 50% profit target strategy comes in. When we close the trade we lock in a nice return, we say thanks and we look for another trade because we just freed up capital. This minimizes our risk while maximizing our wins - in essence, we're playing it smart. Day trading and swing trading typically aim for a profit target of at least 1.2 or 2.4 times the risked capital. The reason for this is simple: we are dealing with shares of stock. The game is all about price action and technical analysis. As swing or day traders, we're trying to profit from short-term price movements and are usually less concerned with implied volatility or probabilities. As options traders we're playing a different game. A lot of the time we're not trying to exactly predict short-term price movements - we're guessing on a general direction, but we mainly are playing probabilities and managing risk. We know the market can be unpredictable so we focus on winning the long game by putting statistics and research to our advantage. So why 50%? It reduces risk: When you close your position at 50% profit, you're not just bagging half the potential profit, but you're also dramatically reducing the risk of a future price swing wiping out your gains. This is because the maximum profit that can be made from the trade is now only 50% of the original max profit, but the potential loss could still be significant. It frees up capital: Closing the trade at 50% profit allows you to free up funds that can be put to work in new, fresh trades. It's like a revolving door of opportunity - as one door closes, another opens. T his approach allows us to maintain a higher turnover of trades, which aligns with the mantra of "trade small, trade often". It aligns with our GKT motto: trade small, trade often, trade mechanically. By keeping our trades small and frequent, we can continually reap the benefits of diversification and probability. And by sticking to our mechanical trading plan, we remove the emotional aspects that can often lead to poor decision-making. Setting a 50% profit target is a key part of our options trading strategy at GKT. It's a simple yet powerful technique that allows us to manage risk, free up capital, and stay focused on our long-term trading goals. And while it's different from day trading and swing trading, remember - in the end, diversification is still important, having multiple strategies and different tools in your trading tool box is how we stay profitable! Disclaimer: As with any strategy in trading, this isn't guaranteed to always result in success and should be employed as part of a broader risk management strategy. We all have to continue to learn and adapt our strategies with the market. It's important to understand the market dynamics to optimize your own trading plan. This is our goal at GKT! Keep trading the GKT way, Good Kids and remember, the game of options trading is all about playing smart, not hard: lets keep it simple.

I traded my comfortable surroundings for the wilderness of the Appalachian Trail spending 4 days and 3 nights on the trail, and it struck me how much the trail parallels options trading. But honesty I am ALWAYS thinking about trading! Here's a fun look at some key takeaways from 4 days on the Trail: 1. Embracing the Bear (Market) Ever slept in a tent in a bear sanctuary after 30 years away from camping? Talk about fear! Trading can be a lot like this. There's always the potential for bear markets, fear and panic is how so many coaches and the media makes money,, It seems intimidating, but just like sleeping in that tent with literal signs saying beware of bears, it's all about facing your fears head on, keeping your wits about you, and staying prepared. There are ways to defend your portfolio from bears, you might even be able to make some bear money as your portfolio has a drawdown. If you make a little money going down and your portfolio has some stocks (even if it's your retirement account) you just beat most people in the market! 2. The Power of Consistency The trail taught me that consistently putting one foot in front of the other gets you where you need to be. It’s the same with trading. Consistency in following our trading strategy is so important to success, particularly if you follow the GKT motto of trading small, trading often, and trading mechanically. Don't be afraid to change your strategies according to market cycles, but follow your plan and don't take outsized risks or let fear stop you from executing! 3. Planning Ahead Mapping out the next water sources was vital to ensure I had enough to drink, but not too much weight for the steep climb up Albert Mountain. To be a successful trader, planning and risk management are key. You need to balance potential profit against possible losses we write about risk/reward often in this blog. When you are thirsty on the trail and water is miles away you regret not planning ahead. Don't regret planning ahead for your trades, know all your options no matter what the underlying does. 4. Chirping Experts and Market Noise Birds start chirping every morning before sunrise, rain or shine. It's like market noise, all that chatter and speculation is distracting. You have to tune out the noise and focus on the essential signals. As I mentioned at the start the experts understand everyone is scared, and they actually like to start 'chirping' well before daylight. As the storm rolls in they get louder, they promise you this is going to be the next apocalypse and want you to panic and need their service or product to make it through. If you educate yourself you can stop listening to all the noise and be just fine! 5. Keeping Fear Zipped Away Keeping the tent zipped taught me the importance of keeping unwanted bugs (mainly spiders) out. Same thing with emotions in trading, it's so important to shut out emotions that cloud judgment (fear and greed) and lead to poor trading decisions. Fear and greed have ruined many good traders, don't let these inside your tent, keep them out. 6. Diversification in Nature The array of bugs, trees, and flowers on the trail showed me life's diversity. Similarly, diversification in your trading also helps mitigate risks and keep your investments healthy. 7. Community Matters Hiking with friends beats hiking alone any day. In trading, being part of a community like GKT gives you a network of support, knowledge, and inspiration. Our discord is free, join here 8. Saying Yes to Risk Just saying yes to experiences leads to growth. This applies to trading as well. Embracing the risk that comes with options trading is how we learn, grow, and succeed, just make sure the risk to reward is favorable . 9. Picking Your Path And finally, just because others love hiking the entire 2200 miles of the trail doesn't mean I have to. It's the same with trading. Your trading journey is unique. Just because one strategy works for someone else, doesn't mean it's right for you choose your own path and have your own goals ! And yes it's not a top 10 list because I don't have another thing to add :) The Appalachian Trail taught me a lot about life and trading. Embrace the lessons the trail throws your way, continue to trade small, often and mechanically, and let's enjoy the hike, good kids! As I say at the end of each article Join the Good Kids Trading (GKT) community today, there is no reason to do this hike alone. We're stronger together and it's way more fun!

I'm starting a new series for the blog called Trade Review, if you have a better name for the category let me know! Today I'm talking about a Goldman Sachs buy-write that I converted into a covered strangle. This is a common income generating trade strategy I use. Below I describe the trade as well as my thought process along the way. This is not financial advice, I am not a financial advisor. I'm just some guy on the internet who has been trading the market for over a decade and want to share some of my strategies. They don't always work and I'll share the losers too in this series so you can learn from my positive and negative experiences! The Strategy in Simple Terms A buy-write is when you buy 100 shares of a stock and simultaneously sell a call option (also known as a covered call) . It's a go-to move of mine on stocks I don't mind owning for a little while and it's great in a bullish market, and right now, we're in bull city . I combine buy-writes when a company's about to go ex-dividend (that's the date when you need to own the shares to get the dividend), I use a buy-write to score a kind of 'double dividend.' The trick here is to sell the shares, aka get 'called away', in the same week as I'm not looking to make a lot of money on the shares I just want to pay some bills. It almost feels like stealing a dividend and getting a little extra, but it doesn't always happen the same week. Then there's the covered strangle . It's a buy-write with a twist: you sell a put option too. It's a nice move when you're feeling bullish and don't mind buying more shares if the price drops and the stock has a good down move so premium for the put increases. As you know on ex dividend date the stock is going to drop by the amount of the dividend, it might get bought up or it might sell off even more. If it continues to sell off I use the down move to collect even more premium. Trade Decision Breakdown So why Goldman Sachs and why now? I was bullish on GS (the market overall is bullish), there was a dividend to collect , and I had a hunch that the stock was on the rise . Of course, no one can predict the future, but part of the game is playing your hunches. You don't make any money if you don't make trades. The Trade Journey (this is all posted real time in discord) I bought 100 shares of GS at 330 a share on May 30th and I immediately sold June 2nd 330 call for 2.00 If the stock traded over 330 on Friday I would make $450 in less than a week (the sold call plus the 2.50 dividend. I'm capping my upside and just looking for a quick income trade. On ex dividend day the stock gapped down and it was a bearish day, I was underwater and this trade was losing, but again I don't mind holding Goldman Sachs as long as I need to. This is where it gets fun, I sold a put on the first bearish candle (see image above) this is now a Covered Strangle. Remember put premium is higher on down days. I sold the 320 put for 1.15. So my total premium collected was 2.00+2.50+1.15= $565 in premium for the week. If i was put these shares I would have reduced my cost basis even more, buying more shares $10 lower than the first buy. The next day (June 1st) another LARGE down day (second bearish candle above). I'm losing more than the premium I received if I sold everything right now. This is why you need to follow your plan! I decided to take advantage of 2 down days in a row and I rolled my strangle to the next week (June 9 expiration) for another 2.60 credit exact same strikes. I was looking to get called away at 330 or I'll buy another 100 shares at 320 (reducing my cost basis). This means my total premium is now $825. Luckily GS made a quick recovery and the short put I sold for 4.48 was only worth .30. I closed this on June 6th. If the stock pulled back again I could always sell another put but I cut the tail risk and locked in a little gain. On June 9th I saw the following chart pattern: two hammers compressing right after a nice bullish candle with decent volume. I believe this is why people should learn technical analysis. Compression is a good thing combined with two hammer'ish candles??? Yes please! (Could I have been wrong? Absolutely!) I liked this setup so much that even though I was in Miami on vacation I decided to roll this call for another week as I'm walking along the shore of south beach! This was literally my view as I'm rolling. I got another 2.06 in premium after this roll. I'm now up to $1,031 in premium collected (but most of this was a gain on paper the only real money I had locked in so far was that 2.50 dividend and the premium from the short put i closed). GS continued its bullish move, but it was actually moving to fast for my comfort. It was nearing previous resistance. As someone who has used technical analysis for a while I understood previous resistance would be a target for many traders. I decided to sell my shares at 338.52 and I bought my covered call back for $9.65 before it hit resistance as I believed it could pull back. I might have been wrong, but since I trade full time and need income I wanted to lock in my profits. After it was all said and done I made $871.12 on this trade in less than 2 weeks. As you can see on the chart, GS did pull back, could I have traded this better?? Sure if I knew for sure what the stock was going to do, but that's always the case. You see so many 'professionals' show you these trades after, but at GKT we keep it real and post trades in real time. Wrapping Up This was a quick example into how I use buy-writes and covered strangles to generate income and how I also combine some technical analysis to my options trading. Remember, I'm not looking for perfection, and I definitely don't win them all. The goal is to learn, adapt, and hopefully, keep that income flowing. I'm not looking to double my account with this strategy, I am looking to pay my bills! I have other strategies for growth, we can cover that another week! If you want to get more real-time updates and join the conversation, head on over to our GKT discord! As always, trade responsibly and remember this isn't official financial advice. Happy trading Good Kids!

I have this pact with a trading buddy - we both agreed to steer clear of trading a stock just before earnings. But guess what? Sometimes, the problem of low IVR and tempting volatility leads us to "bend" our rules a bit. Walgreens caught my eye, they reported on a Friday so with 1 DTE (days to expiration) I could sell the 30 put for almost .30 cents (a cool 1% return overnight). As I looked at their past results they had a track record of consistently meeting\beating earnings since 2020. Sure, we know past performance isn't a crystal ball, but it played a part in my decision-making process. I ended up selling some 30 strike puts right before closing on Thursday, securing .29 premium. (My buddy always seems to one-up me on these fills, but that's a tale for another time! I think he got .33 credits) You probably already know where this is going since I'm writing a blog post... Walgreens missed earnings for the first time in years! I woke up to a gap down, with my puts suddenly ITM (in the money). I was losing and losing bad. I think the .30 credit would have taken almost $2 to close (so that means a loss of $170 per put I sold if I closed it that day). I knew before hand that gapping down was POSSIBLE so I didn't sell all the buying power I planned on putting into this stock before the earnings event. I planned to add another equal amount of puts on a gap down. To me this isn't doubling down so much, it's more so only putting on half my risk in the initial trade! Here's what I did (and this is all in our free GKT discord in real time): I stuck to my plan. I sold an equal number of puts at the 27.50 strike for another .30 for July 21 (35 DTE). Here's a picture of the chart, the two red lines show where my puts where. So you can see my 30 puts were underwater and they expired on this day. The 27.50 puts were not super profitable but they were green! This candle is called a DOJI and it means there is indecision! On this day (0 DTE) I rolled my June 30th calls by buying back the puts for 1.89 and sold the Jul 21 30 puts for 1.97, netting a .10 credit. And then, I waited. I just had to trust my plan that Walgreens was not going bankrupt, not going to zero. It is possible they could have, but it's a pretty low probability. As you can see the stock recovered! By July 3rd, my 27.50 puts closed for .15. (so that was $15 per contract). By July 11th, my 30 puts closed for .20 (so that was $20 per contract). In the end, it turned out to be a ok win, considering I was down by over $150 per put at one point. So what are the takeaways here? 1. Past performance doesn't mean anything for future performance. 2. Stick to your trading plan and don't let emotions cloud your judgement. 3. Have a plan no matter what the stock does. Know what you are going to do if it goes up, down or sideways BEFORE you take a trade. 4. Do not let the P/L of an option scare you into closing it at the worst time! 5. Consider lowering your risk before a binary event like earnings. Put on only 1/2 the trade size. Or, Don't take undefined risks before earnings (even if your trading buddy encourages you to!) Even if I'd ended up with Walgreens shares, I knew I could sell premium against the shares. I had a plan. This experience is a classic example of why we make plans and also why we sometimes break them. It demonstrates the value of understanding risk and reward, time horizons, and why taking pre-earnings trades is usually not our thing. But most importantly, it highlights why, at #GoodKidsTrading, we always stress the importance of trading with discipline and focus, regardless of how the market behaves. Want to join us on this journey? Head to goodkidstrading.com and join our free discord. Let's grow together, learning from each win and every misstep. Happy trading, good kids!

I'm starting a series on dividend stocks, they are one of my favorite passive income streams. Today I'll cover high level how I view the stock types, diversification, and taking into account market cycles. There are all factors I consider before I even look at a single stock to add to my portfolio. First, a little background and shameless plug: Did you know the average millionaire has seven streams of income? Dividends stocks helped me leave my corporate job and they still provide a stream of income that funds my current lifestyle. If you want to learn more hop over to playbooktofreedom.com where I uncover my journey and give you my playbook to early retirement. You will find mindset hacks, conceptual approaches I used to find freedom, with practical steps I picked up from years of coaching and self development. OK enough of that, let's get down to business. There's a lot to cover and I want to start really high level because having as much knowledge as possible means you're better equipped to make informed decisions when things don't go as planned (and they won't always go according to your plan). Remember, I'm just a guy who managed to retire early using these strategies. So I'm not a financial advisor, I'm not a trained professional. I do use the stock market as my main source of income and have been doing this for a long time. I believe these tactics can work for you as they did for me, but this article is for educational purposes it is not trading advice. It may make your money or it may not! Just like any strategy you aren’t going to always ‘win’ trading dividend stocks, but since shares never expire you can broaden your time horizon and I want you to realize you can take my system and put your own style on it! ‘Growth’ vs ‘Income’ vs ‘Value’ Stocks Wallstreet and financial advisors are fond of labeling stocks into types. It doesn’t matter if we agree or not, it’s good to understand their labels so we can make an informed decision. Generally they label a stock as a growth or income stock. Some people consider themselves value investors as well. I’ll break it down how I understand it. Income stocks are typically companies that pay out a significant portion of their earnings as dividends to shareholders. These companies are usually the more ‘boring’ stocks in more stable and mature industries. They’ve been around a while, and they don’t normally get too much discussion in trading groups because you likely won’t be doubling your account trading them. The key attraction for investors is the regular income they generate through dividends. Utilities, real estate investment trusts (REITs), and certain consumer goods companies are often seen as income stocks. Growth stocks represent companies that are experiencing higher-than-average growth. Traders/investors buy these stocks with the expectation that they will profit from the capital appreciation of the shares. These companies tend to reinvest all or most of their earnings back into the business to fuel more growth, hence they usually don't pay substantial dividends. Tech and biotech industries have a good number of growth stocks. These are generally newer companies, more inventive trying to do big things, these are the ones you hear about in trading groups who want to sell the dream of becoming a day trader and never ‘working’ again. Value stocks are companies that investors believe are currently undervalued by the market. These stocks have lower price-to-earnings (P/E) ratios than similar companies in their industry and may also pay dividends. The companies may be facing temporary issues or be in an industry that's currently out of favor, but value investors believe in their long-term potential. They invest in these stocks with the expectation that the market will eventually recognize the company's full potential and the stock price will rise. This is a buy low and pray they recover strategy in my mind. Sectors Now that we’ve discussed income vs growth stocks, lets briefly talk about sectors because I believe diversification is super important to everyone’s portfolio. I like to have diversification inside almost all of my individual strategies as well. There are 11 ‘sectors’ in the stock market: Technology Financials Health Care Consumer Discretionary Consumer Staples Communication Services Industrials Materials Real Estate Energy Utilities. I think you can imagine which stocks fall into which sector at GKT we encourage you to consider owning names in different sectors. Diversification is a great risk management tool. I know it seems obvious, but do you know how many traders really only focus on Technology stocks? They are sexy, and when the market booms, you can make great money, but when the market declines as we’ve seen the last year, these traders can take a beating sometimes giving up all their profits (maybe more) because they are only focused on this single sector. To recap, we’ve discussed growth vs income stocks, we’ve talked about multiple sectors, lets talk about market cycles next. I know you are probably thinking I thought this was about dividend stocks… Hang in there this is important. Market Cycles The economy moves in waves, with periods of growth (expansion) and decline (recession). This is normal, its expected, so don’t panic when you hear the talking head try to pump you with fear. This roller coaster ride affects industries in different ways, which influences the performance of different sectors in the stock market. Understanding these stages are normal and what to generally expect can help us optimize our portfolios by leaning into sectors likely to perform well at each stage. But remember, we're not shifting our entire portfolio based on the economic cycle – we are making small modifications to our holdings and looking for opportunities to buy low and sell high! This was a lot to cover today, next time I’m going to jump into Dividend Aristocrats, talk about some of my favorite names, and several specific strategies I use to build my dividend portfolio. No matter you level of expertise I hope this is helpful to you, as I say almost every article I keep it ‘simple’ if you are new to the market you might be thinking this is complex but its not with a little time. You really can make money in the stock market and it doesn't have to be complicated. Until then, keep thinking about growth stocks versus income stocks. Try to understand the economic cycles and how they influence different sectors. How can you build a portfolio of some dividend stocks that will pay you with just a few clicks of some buttons on your screen. A balanced and diversified portfolio is on of the key pillars for The Good Kids! Click here for part two ! As always happy trading Good Kids! I'm not a financial advisor, I'm not a trained professional. This article is for educational purposes, it is not trading advice.

Welcome back to Part Two the GKT dividend series. If you missed part one, click here . Today let’s discuss the GKT process of building a dividend yielding portfolio with Dividend Aristocrats. I’ll share my simple method for selecting stocks for my dividend portfolio. I say it all the time, and I am living proof you don’t have to make the stock market complicated unless you just want to! Let me start off with a friendly reminder, when creating a passive income stream, my focus is on finding the optimal yield, not the highest yield it’s so tempting to just look at stocks that pay 10%, but that’s not the GKT way. Stock Selection: Dividend Aristocrats My dividend portfolio is mainly created from the list of Dividend Aristocrats (the list is free, never pay for it!) I review the list (most of the company I already know, some I need to google) I want to know at the most basic level what does the company do, what sector are they in. This might take time the first time around, but this list doesn’t change all that much. I don't pay that much attention to all the analysis people provide, but it's entertainment at minimum. When I add the stocks I put them under the appropriate sector on my spreadsheet (remember to separate your list by sector!) I am building a little ‘cheat sheet’ that will last for years. So even if the stock is sitting right at resistance today (meaning it’s probably too high to buy now), it still goes on my sheet. It has the following columns: - the stock ticker - price per share - the yearly dividend yield - where the stock stands compared to its all-time high and low (I use my own scale for this 1-10) - An idea if the stock is at support or resistance- I just use S, R, or M (middle) Just make your own system for is this a buy, meh, or sell. Everyone needs to make their own criteria about what stocks they want to own. I like quality companies, companies that I understand what they do, they are boring companies. This is not a get rich quick strategy. This is hey let me start replacing my paycheck at work strategy Once I’ve gone through the whole list I review the spreadsheet to build a diversified portfolio. I’m aiming to select a minimum of 5 stocks I like the most right this minute. This means, - the 5 stocks are in different sectors (it’s ok for 2 to be in the same sector if you feel like there is value), - they are at support levels, or moving sideways, (not at all time highs- unless you have closer to 10 stocks in your portfolio), and they pay a dividend yield I am comfortable with. (this is my strategy, you can make your own! I encourage you to make this your own!) Here's a pro tip: aim for owning 100 shares of each stock. However, don't feel disheartened if you can't just yet. Remember, the journey of a thousand miles begins with a single step. Even if you start with five shares or just on share, you're still starting! You are making money in your sleep even if you just own 1 share. My dividend portfolio occasionally scales up to 15 different stocks, and I'll often add more in a sector I perceive as undervalued or if a particular stock is low and I believe it could rise depending on the market cycle we discussed last week. The key here is diversification. When market rotation happens if one sector gets hit, the money generally flows into another sector. So one stock gets hit, others should hold their ground or even go up. Even in a bear market, when all stocks typically go down, don't panic. Stick with your strategy, keep collecting dividends, and allow the share price to recover in due course. Remember dividend aristocrats have been around for a long time they have seen many bear markets! It's really easy to get caught up too much in dividend yield, I know this portfolio is all about dividend yields, but if you use the strategy the GKT way you are also looking to get share appreciation and once you have 100 shares of each of the 5 stocks, you will start using premium selling (covered calls) to actually bring in more money. You will also be selling some of these stocks for another 10-20% profit. So yeah yields matter, but we’re also using smarter strategies to make even more passive income One word of caution: beware of stocks that offer exceptionally high dividend yields. These are often companies facing issues and use a high yield to entice buyers. It's okay to have a couple of high-yield stocks in your portfolio, but be aware of the risks they could pose. I’ve actually done well investing in a couple extremely high yield stocks, but realize the risk. If I can build a portfolio that can yield around 6-8% in dividends that’s great. So with this strategy, I buy stocks low, hold them, and collect dividends. I make my purchases off support and sell the shares, or I sell covered calls (if I own at least 100 shares) into resistance. It might seem too simple to be true, but believe me, it works. You might be saying to yourself I don’t have time to know when a stock hits these levels, that’s where alerts come in. A crucial aspect of efficient trading is setting up alerts at support and resistance! Doing this is a game-changer that allows you to stay in the loop without needing to monitor stocks daily. You can use your brokerage platform to set alerts for every stock you included in your spreadsheet. I set alerts for when a stock hits support (to potentially buy) or resistance (to consider selling). This approach lets me know precisely when action might be needed, and frees up my time for other activities, or simply exploring new investment avenues. Remember, efficient trading is as much about time management as it is about picking the right stocks. While this strategy is straightforward, I also use some more complex options strategies for dividend stocks which I'll share with you in our next blog! But remember I still keep that relatively simple as well. Stay tuned for the next article and as always happy trading Good Kids! I'm not a financial advisor, I'm not a trained professional. This article is for educational purposes, it is not trading advice.

We’ve covered a lot in our Good Kids Trading (GKT) dividend series. If you missed the first or second articles, I encourage you to check them out! Today I’m covering a little more of the ‘advanced’ strategies. As I mentioned I still keep things pretty simple. This article is aimed at traders with a little larger account size (you really need to be able to trade 100 shares of the stock because we're trying to collect the dividend, and you need to understand options at the most basic levels. Don’t let this scare you, it’s really not that hard and we all started with small accounts. I know this is obvious, but with options we are controlling 100 shares of the underlying and in these strategies below we are wanting to take ownership of the 100 shares to collect the dividend. I don’t always take the shares, or get put the shares, but I’m WILLING to own 100 shares and my account can support this without over leveraging myself. Risk management is key at GKT! My goal with these strategies is to not only collect the dividend by owning the shares, but essentially double or even triple the dividend by collecting the premium of the options as well as the dividend from owning the shares. I start using the same information and strategies we covered in part 1 and part 2 of this series. I have my list of ‘favorites’ and I have support and resistance drawn out on the charts. Here’s where things get a little different, I don’t mind ‘trading’ some dividend names for some quick income instead of holding them in my long term account. I do both, I have longer term holds normally in my IRA's and I also like quicker trades where I’m not looking for huge wins, just get in and out and pay some bills. Everyone is different, you need to make your own plan, use some of the ideas here, and realize this doesn’t always work, in fact NOTHING ALWAYS works. Some trades will lose, its normal and you shouldn’t be afraid of losing just have a plan. If you haven't checked out the 10 things I wished I knew before I started options trading you should! There is no holy grail strategy. I keep an eye on the upcoming dividends (this is referred to as the ex dividend date) I use my watchlist to scan through upcoming dividends. I sometimes use my broker to find non- dividend aristocrat names for a trade. If you want to know more you can ask me by joining our free discord , I’m looking for the same things we talked about in the second article of this series. Is the stock at a good support level? Does it have a good premium? What is the risk/reward? Are there any technical patterns like double bottoms, hammers, or moving averages to hold the stock up? What does the options chain look like? As math based traders we generally want HIGHLY liquid options. We write about this all the time at GKT, I will tell you right now, more than likely the dividend stocks aren’t going to be as liquid as we like for math based trades. I lower my expectations on liquidity here a little bit. Do NOT make trades if there is zero open interest, and don’t chase pennies and get steam rolled. You still want the options to be liquid, you just likely will not see exactly what we like with higher IVR/growth stocks. The volatility will likely lower, the premium might not be as good on the options. If you see high premium there is likely a reason, so I’m not saying don’t take the trades, just be aware that if you see way more premium than you expect there is a reason so try to figure that out before you get fancy. After I find some stocks with upcoming ex-dividend dates I create a plan. I normally look the first of the month and make a game plan for the month. Meaning I create a little watch list of stocks that I like and that pay a decent dividend. You should do the same! Lets jump into several of the trade strategies: Selling Puts So lets jump into a ‘longer range’ to ex-dividend first. I’m going to use examples because I think that helps illustrate the point better. Take a look at stock ALB it doesn’t have a huge dividend, but it’s a good example in terms of a longer DTE until the Ex Dividend date. This is the daily chart, the purple lines I added a while ago showing previous weekly support and resistance. As you see there is support at $172, and the stock is currently trading at $202. That is roughly a 15% drop (the ex dividend date is the blue circle). This stock has weekly options as shown in the options chain below, you also see it has earnings this week so the premium is higher than ‘normal’, it’s up to you if you would take a trade like this over earnings (I don't normally do trades over earnings unless I don’t mind holding it a long time, and I understand it might be underwater a while. If I were put shares of this stock it would be at a 15% discount, so I don’t mind entering this trade as I know I could sell calls against any shares I was put. Do not get caught up in the P/L of the put using this strategy, on paper your put can show a loss of 200% even more, focus on the outome. I wrote about this: F ocus on the Outcome not the P/L As you see below it pays a dividend after the Sept 8th expiration. Tasty Trade does a good job of showing this on the options chain: As you remember we saw support around 172 and there is good premium in both the 175/170 stock (a lot of this premium is due to earnings, so it would normally be less in a dividend stock), the markets are wide, the open interest isn’t great at 170, so If I sold the 175 put. That would get me 2.35 in premium (picture below). The Dividend is .40 so this put would be 6 times what the dividend pays. The P50 (probability of this hitting 50% profit) is 95%. Worst case I’m saying I will own shares of ALB at around 172 a share. That price is right at support and in time to get the dividend. If the stock closes above, the put closes and I collected a 'dividend' type of income without holding the shares at all. You can set the GTC of the puts for 50% or even 75% if you really like the company and don't mind owning the shares. This is just a simple strategy of selling puts in the expiration before the dividend in a company I don’t mind owning and letting probabilities work in my favor (does it always work, no, that 5% on the other 95% means there is a chance this trade doesn’t ‘work’. If I were assigned these shares, I could sell a covered call on the friday I was getting put the shares Meaning if my put expired ITM and I was getting put shares I would go ahead and sell a covered call against my shares to collect extra premium. Buy Writes Buy writes are something we often do in GKT’s discord. This is where you buy 100 shares of the stock before the dividend and you sell a covered call (generally in the same week). Lets use stock VLO as an example. I could buy 100 shares of VLO for 126 a share, and then sell this weeks 127 for 1.02. The dividend is also 102 so this would essentially be like doubling my dividend. In this trade however I have no downside protection. So you need to have a line in the sand on where you take a loss or buy a put for protection. Or you agree to hold on for a longer time realizing you will be underwater. Buy writes can be a quick win, it’s not a lot of money but it is an income strategy that GKT often uses for stocks we don’t mind owning. If you have increased IVR (volititly) in the underlying before the exdividend date you can setup a covered strangle where you are selling both the call and a put. If you don’t mind owning more of the stock if it pulls back this is a great way to increase your income. You don’t necessarily have to sell the put in the same expiration, you could sell the call in the weekly and the put in the monthly (the theta decay will be slower in the further expiration but you can sell further away from the money and collect more premium if you are willing to wait longer, but this is just another options you can consider. You can use the normal math based strategy of closing the strangle at 50% or you can let it go further. Make the plan your own. Collar When I hold a dividend aristocrat for a longer time period and I bought it off support I often times setup a collar or even a super collar. Below an example on KO. This is a collar before earnings: (there is also 100 shares for each collar you sell) So what I did here was I locked in my gains on KO no matter what. I capped my upside but I also prevented any losses. How you manage this depends on you. I often times will close the CC if it hits 50% of the premium I paid. And I will actually sell to close (STC) that long put for a win if KO pulls back. I consider that a way of ‘cash flowing’ the put so I’m making money on the put as my shares lose value, but I don’t mind holding KO for a longer period of time. If I get called away that’s ok as well, it’s a ‘risk’ I’m willing to take in most market conditions. 'Super' Collar You can also setup a super collar for a bigger credit. This is just a put vertical with a covered call. This is what that trade would look like for KO. Below is what a super looks like in the broker (there would be 100 shares for each collar you sell). So if KO went down to 55 over earnings, in this case I would sell my shares at 62.50 (with the long put), then I would rebuy the shares at 60 (the short put). I would keep the credit (again this only happens if KO is at this price when these puts expire. I’m again capping the upside, but to me these types of trades are meant to be quicker timeframes. I’m just looking to pay some bills. There are many different ways to trade around dividend stocks, I’m just covering the most basic strategies. We have plenty more ideas and strategies in our discord. I hope you enjoyed this series on dividend stocks, I make a consistent stream of passive income using dividend stocks. Some of these strategies in this article might seem confusing if you are new to trading, but I assure you that if I can do this you can too. Trading and discussing trades with fellow traders is way more fun and supportive, you should join our free discord. Happy trading Good Kids! I'm not a financial advisor, I'm not a trained or certified professional. This article is for educational purposes, it is not trading advice.

This week as SPX has pulled back about 5%, I've talked with several traders who are bordering on frantic following an impressive bull run this year. As we often emphasize at Good Kids Trading (GKT), allowing fear and emotions to drive your trading decisions can set you up for losses. "Should I just sell everything?" or "I heard people saying we have a huge crash coming." These are real questions I've been asked. No one really knows what's going to happen, but I do know trading with fear and emotions is not the way to handle pullbacks like we're seeing this week. So lets talk through the GKT way of trading what the market gives us. Stocks don't go straight up. When they soar unchecked, its a signal to consider selling. GKT frequently advocates for a contrarian viewpoint. W hen most are selling out of fear, we see this as a buying opportunity, expecting the market to rebound. When everyone is overly optimistic we consider selling or even shorting stocks. This approach, when combined with our strategy of trading small, often, and mechanically, significantly reduces the influence of emotions and fear on your decisions. While most people love a discount while shopping at a store, they don't share the same enthusiasm when the stock market offers a "sale" during pullbacks. If you change this mindset from fear to appreciation it makes a difference. Trading out of fear or panic usually leads to bad results. Over the years, I've made significant amounts of money by purchasing when the general sentiment was fear-driven, and many are selling everything to remain in cash. Do I always pinpoint the perfect moment to jump in? Absolutely not – and to be frank only a few people are lucky enough to buy the exact bottom or sell the exact top. It's essential to recognize that market dips can go deeper than we expect. That's why we all need robust trading plan in place, complete with exit strategies such as stop losses, or an intention to hold quality stocks for extended periods and just sell premium like covered calls or strangles to reduce the cost basis of your shares. It's important to have good risk mitigation, don't oversize your positions. If you are making trades that are too big this is why you feel so much pressure. At GKT we add bullish trades and we add bearish trades! You do not have to catch every single market move, but don't let fear paralyze you. Monitor your account's delta, make sure your account matches your sentiment. Please realize that if you wait for "the bottom" to buy you will only realize the bottom happened after its too late. So many traders try to time things perfectly and end up selling at the bottom and buying at the top! Pullbacks shouldn't induce fear; instead, they should spark excitement. Embracing this attitude is the essence of the GKT trading philosophy. Trading, at its core, is as much a psychological as it is strategic. That's why crafting a diversified trading plan and adhering to it is crucial. Being part of a trading community offers support during tumultuous times. If you haven't already, consider j oining our Discord and connect with a community of traders who trade everyday. Here's to making informed choices and flourishing in the market. Happy trading, good kids!