Elon Musk, co-founder of SpaceX and Tesla Motors, is a towering figure in more ways than one.
This article delves into his physical stature, specifically his height and weight, and explores the intriguing connection between height and success.
How Tall is Elon Musk in Feet (FT)?
At 6 feet 1.5 inches, or roughly 1.87 meters, Musk stands taller than the average American male and many of his billionaire peers.
His height is often remarked upon by those who meet him in person, with many noting his unexpectedly imposing presence.
How Tall is Elon Musk in Inches (IN)?
Elon Musk is 73.5 inches tall.
How Tall is Elon Musk in Centimeters (CM)?
Elon Musk is 186.69 CM.
How Tall is Elon Musk in Meters (M)?
Elon Musk stands at 1.8669 meters.
What is Elon Musk’s Weight?
Elon Musk’s weight is another aspect that sparks interest among his followers. He has candidly shared his struggle with weight fluctuations.
He often oscillates between being “too thin” and “slightly fat,” weighing in at approximately 180.7 lbs (about 82 kg).
His weight has been a topic of discussion recently, as some have observed that he appears to be getting slimmer.
Elon Musk
The Impact of Height on Success
It’s interesting to note the potential influence of Musk’s height on his success. A study published in the journal Nature found a correlation between height and the likelihood of becoming a CEO. The chance of attaining this top role increased by 0.6% for each additional inch of height.
Could Musk’s height of 6 feet 1.5 inches have played a part in his meteoric rise to the top? While it’s impossible to say for certain, it’s an interesting theory to ponder.
Musk’s achievements extend far beyond his physical height. He is among the world’s wealthiest individuals, with a net worth estimated at $160 billion US dollars.
His lifestyle reflects his success. He boasts an impressive car collection that includes several modern and exotic vehicles from renowned manufacturers. He also owns personal aircraft, adding a literal sense of height to his stature.
Musk’s real estate portfolio is equally impressive. He owns multiple penthouses in the exclusive Bel-Air neighborhood of Los Angeles, indicating a taste for luxury and height in his choice of residences as well.
Elon Musk Height and Weight | Bottom Line
In conclusion, Elon Musk’s height of 6 feet 1.5 inches (around 1.87 meters) and weight of 180.7 pounds (82 kg) forms part of his larger-than-life persona.
It’s an interesting facet of his identity and potentially a contributing factor to his success. While we can’t definitively say that height equals success, in Musk’s case, it certainly hasn’t hurt.
Before you go
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If you want to become an options trader, you must understand call options!
What is a call?
Call options give the buyer the right to purchase 100 shares of stock at a specific price. The price that is agreed upon is known as the strike price. As an options trader, you can use calls to leverage your portfolio.
Unlike shares of stock, options contracts eventually expire on their expiration date. If the strike price of your call is below the price of the stock at expiration, the option will expire worthless. However, it is cheaper to purchase a call option than 100 shares of stock.
* Call options for dummies: example trade
Let’s say stock XYZ is trading at $100 per share, and you expect it to rise to $120 per share in the next month.
You can either buy 100 shares of stock at $100 per share or a $100 strike call option. 100 shares of stock would cost you $10,000 (100*100). A $100 strike call option will cost you about $500 with an expiration date of 3 months.
The price to purchase a call option is much cheaper than the price to purchase 100 shares of stock. In addition, it’s cheaper to buy the call because it has an expiration date and allows you to use leverage.
Scenario 1: The stock rises to $120 in one month
If you are right and the stock price increases to $120 in a month, you will be making good money. Let’s compare how the shares did when compared to the call option.
If the strike price of your call is $100, and the stock is currently trading at $120, the option has $20 of intrinsic value (120–100). Since options have a multiplier of 100, the value of the contract would be at least $2,000 (100*20).
The call option you purchased for $500 increased to a minimum of $2,000, providing a return of $1,500 or 300% [(2,000–500)/500=3].
If you purchased 100 shares for $10,000, you would be able to sell them for $12,000, providing you with a return of $2,000 or 20%.
Scenario 2: The stock falls to $80 in one month
If you are wrong, you will lose money on both the call option and the shares. The main difference is that you can continue holding the shares forever while the call option can expire worthless.
The $100 strike call you bought will lose much of its value since the stock moved from $100 to $80 per share. Determining option pricing is complex, but the call likely lost over 50% of its value and is trading around $1-$2 ($100-$200). In this case, you will probably lose about -$300 to -$400 or over 50% of your investment.
The shares you purchased for $10,000 are now worth $8,000, resulting in a loss of -$2,000 or -20%. Luckily, the shares do not expire, so you can hold them until they recover. However, the stock does not have to recover and can even go to $0.
Options trading for dummies
Options trading for dummies is possible as various strategies are easy to implement. If you sell options in a stock portfolio, you rarely have to check on them or manage the position.
Discover the difference between buying and selling call options below and why selling options for dummies is easily attainable. Buying options contracts can work, but it is riskier than an option selling strategy.
Buying calls vs. selling calls
Buying calls is a speculative strategy that is riskier than investing in stocks. As a call buyer, you are taking on more risk by using leverage to make a higher return. As the seller of the call, you are betting that the stock will move down or stay flat.
Covered calls for dummies
A covered call is when you own 100 shares of stock and sell a call against them. When you sell a call, you promise to sell your shares at the strike price in exchange for a cash premium.
Additionally, for accepting the obligation to sell your shares, you get paid the contract’s premium from the call buyer. You are betting that the call option you sold will go to $0 and expire worthless.
Covered call risk diagram on $SPY
Selling covered calls is a great way to hedge your portfolio and earn some income for holding your shares. The downside to selling calls is that you will be forced to sell your shares if the stock moves up quickly.
The key is to pick a strike price at which you are okay with selling your shares. If you choose a strike price that is too low, you can miss out on the gains from the stock increasing in price. As an options trader, you must determine if a stock will move up, down, or sideways.
Buying LEAPs
If you are bullish on a stock, you can purchase call options that expire in one year or longer. These options are known as LEAPs (long-term anticipation securities). The benefit of buying LEAPs over equity is they are cheaper and allow you to use leverage.
Buying a call option before a stock goes higher is one of the best ways to make a great return in a short period. However, buying call options is risky, and you can lose your entire investment if your investment thesis is wrong.
Options trading for dummies: bottom line
When you are trading call options, you must understand the risks involved. For example, when you buy a call option, you can lose your entire investment if the stock expires below your strike price. Therefore, you must be willing to lose all of your investment when purchasing speculative financial instruments like call options.
As the seller of call options, you can use the covered call strategy to generate income for a stock portfolio. Selling covered calls are much less risky than buying call options, but the risk potential is lower. Additionally, you must understand how implied volatility affects options pricing.
Regardless of how you trade call options, you must understand the risks involved and be ready to manage them. Options are much more complex than trading shares of a company, which means you must be careful and avoid them if you aren’t fully aware of all the potential outcomes.
A Glimpse into Renner’s Early Life and Ethnic Background
Jeremy Renner, a talented actor, musician, and songwriter, has become a household name, amassing a net worth of $80 million as of 2023. Jeremy’s early life was filled with passion and determination as he navigated the ups and downs of the entertainment industry. Of mixed ethnicity, Renner’s diverse background contributed to his versatility as an actor.
Acclaimed Roles and Career Milestones
Renner’s career breakthrough came with his role in “The Hurt Locker,” which earned him an Academy Award nomination for Best Actor. His performance in “The Town” further cemented his status, garnering a nomination for Best Supporting Actor. Renner continued to captivate audiences in films such as “The Bourne Legacy,” “Wind River,” and “Arrival.”
The Marvel Cinematic Universe: Becoming Hawkeye
Renner’s iconic portrayal of Hawkeye in Marvel’s “The Avengers” series brought him worldwide recognition. The character’s sharp wit and impressive archery skills resonated with fans, and Renner’s portrayal earned him critical acclaim. As Hawkeye, Renner became an integral part of the Marvel Cinematic Universe, receiving substantial earnings for his performances.
Real Estate Ventures: More than Just an Actor
In addition to his acting career, Renner ventured into real estate and house flipping, showcasing his entrepreneurial spirit. His keen eye for profitable investments and meticulous renovations brought him financial success, making him a savvy investor in the Los Angeles real estate market.
Personal Life: Relationships, Family, and Rumors
Renner’s personal life has been the subject of media attention, including his marriage and divorce from Canadian model Sonni Pacheco. The couple shares a daughter, Ava Berlin Renner, and their custody dispute has made headlines. Renner’s rumored relation to fellow actor Jennifer Lawrence has also sparked curiosity, although it is a common misconception that they are related.
Amid his successful career, Renner has faced personal challenges, including hearing impairment. Despite popular belief, Renner is not deaf in real life, but he has been open about experiencing hearing loss in one ear due to a childhood accident.
Overcoming Challenges: Recent Events and Resilience
Renner’s journey has not been without obstacles. He experienced an accident in early 2023 that required hospitalization, but his resilience and dedication to his craft have propelled him forward. Today, Jeremy Renner continues to captivate audiences with his talent, and his legacy in the entertainment industry is undisputed.
A Legacy of Talent and Versatility
In conclusion, Jeremy Renner’s remarkable success can be attributed to his diverse talents, versatility, and passion for the arts. From his acclaimed film roles to his ventures in real estate, Renner has built a legacy that goes beyond the screen. His authenticity, dedication, and ability to connect with audiences have solidified his place as a beloved figure in Hollywood and beyond.
Jeremy Renner’s Accident in 2023
The year 2023 brought a harrowing experience for Jeremy Renner when a heavy snow plow ran over him on January 1st. The actor, known for his iconic roles and a career spanning decades, faced an ordeal that tested both his physical and emotional strength.
Renner recalled the incident in a TV interview, sharing how he had been trying to save his nephew when the truck hit him. The impact resulted in more than 30 broken bones, leaving him severely injured. As Renner lay in the hospital, he grappled with uncertainty and fear, wondering about the extent of his injuries and the future that lay ahead.
The road to recovery was long and challenging, but Renner’s resilience and determination saw him through. Despite the pain and trauma, the actor expressed gratitude for the love and support he received during his recovery.
Reflecting on the experience, Renner stated, “I see a lucky man.” His outlook, marked by positivity and gratitude, is a testament to his unwavering spirit.
In the face of adversity, Jeremy Renner’s journey serves as an inspiration to many, reminding us of the strength of the human spirit and the power of resilience.
I replicate a long SPY portfolio by selling put options on either /MES, SPY, or SPX. Depending on the week, I use a SPY puts strategy and will generally sell to open about 1–2 contracts which are dependent on my account size and risk tolerance at the time.
The idea is that I am trying to generate a higher sharpe ratio than the market utilizing an SPX trading strategy instead of just owning shares of an S&P 500 fund.
I do this by shorting puts and controlling my delta exposure by rolling the contracts when I feel it is a good time. Additionally, you can use the S&P 500 futures options to sell puts instead of SPX.
Additionally, I spend some of my premium from selling puts to purchasing long puts to hedge.
Image from thinkorswim
What do financial advisors recommend?
Many people will go to a financial advisor to manage their money because they do not want to deal with the stock market. Most advisors will put you in an index fund that will perform similar to the S&P 500. Depending on your age, they may also put some of your money in the bond market.
Many famous investors, such as Warren Buffet, also recommend that most people simply invest in the indexes and hold them long-term. If American companies continue to do well, this index has proven it will go up over time. However, deciding to trade stocks vs options is a decision depending on each person’s situation.
As you can see in the TradingView chart above, the market has had rough times but always recovers. The same thing cannot be said about all stocks, though. A great example is the company General Electric (GE), as you can see in the chart below. This company used to be one of the top S&P 500 companies, but now it has fallen and never recovered to its previous highs.
The point here is that those safe companies can quickly turn into losers depending on when you buy them. If you stick to trading the indexes like the S&P 500, all bad companies are automatically removed, so you don’t have to worry about stock picking.
There have been many backtests done on SPX trading strategies, but I believe the best resources have been provided by David Sun. You can view his website here, and I will link this 90 DTE SPX trading strategy backtest here.
This backtest sells 15 delta puts closest to 90 dte. The management uses a 60% take profit level and a -200% stop loss. I won’t go into all of the details, but it is clear that selling puts on the index can beat buy and hold.
Volatility risk premium (VRP)
The volatility risk premium is the idea that implied volatility tends to be higher than actual volatility. In layman’s terms, people generally overestimate how much the stock market will move in the short term. When this happens, put options become overpriced since people speculate that the market will fall harder than expected.
Implied volatility — the price of options.
Actual volatility — how much the market actually moves.
When implied volatility ends up being higher than how much the market moves, the option sellers win. Most of the time, this will be the case, but you must manage your risk when the market draws down more than expected.
My SPX trading strategy combines proven ways of making money
So far, we have learned that the safest ways to make money in the stock market are to buy and hold an index or sell option premium. You can sell options on single stocks, but this requires constant speculation, and you could be wrong.
A superior stock market strategy is formed by combining holding an index and selling options. Many traders attempt to beat the S&P 500 index using single stocks, but you can easily trade an options strategy on the index itself in an attempt to beat it.
Trading the indexes will also provide the most conviction. There is a much greater chance that an index will provide steady returns than any single company. You will never have to worry about bad news reports or industry analysis since the index will pick all the stocks for you. The indexes have always recovered previously, and if you are looking for consistency, an index will be the best option to trade.
Buy and hold wasn’t good enough for me
I wanted to find an excellent way to beat buy and hold while having more control of my portfolio. I developed a strategy with positive expectancy that is also correlated to a buy-and-hold approach.
Bottom line
Historically, the surest way to make money on the stock market is to buy and hold the S&P 500 and sell option premium. I combine these approaches by simulating a long S&P 500 stock portfolio by selling put options with an SPX trading strategy.
Selling premium has been backtested by many people, and due to the volatility risk premium, it has positive expectancy over time. Anybody can learn about options trading, especially with a guide like this post called puts and calls for dummies.
As of 2024, John Schneider’s net worth is estimated to be $200,000. While this might not seem like a staggering figure for a celebrity, Schneider’s financial journey has been filled with ups and downs, which has impacted his overall net worth.
Nevertheless, his dedication to the arts and continuous contributions to the entertainment world have earned him immense respect and admiration from his fans.
Where does Schneider live today?
John Schneider currently resides in Holden, Louisiana, where he owns and operates John Schneider Studios. The property serves as both his home and a creative hub, boasting a fully equipped film studio, a recording studio, and beautiful outdoor settings.
Schneider’s love for the Southern lifestyle is evident in the way he has embraced and nurtured this unique space, making it a go-to spot for artistic collaborations and creative endeavors.
Who made the most money on Dukes of Hazzard?
“The Dukes of Hazzard” was a massive hit during its run from 1979 to 1985, and its popularity brought financial success to the cast members. However, information regarding the exact earnings of each cast member, including John Schneider, is not publicly available. It’s known that Schneider, along with his co-star Tom Wopat (who played Luke Duke), became the faces of the series and were among the show’s highest-paid actors.
At the time, merchandising also played a significant role in the earnings associated with the show. The series spawned a plethora of merchandise, including toys, lunchboxes, and clothing. It is unclear how much of the revenue from merchandise sales went to the actors, but it’s safe to say that “The Dukes of Hazzard” had a considerable financial impact for those involved.
Does John Schneider get royalties from the Dukes of Hazzard?
While specific information on royalties and residual income from “The Dukes of Hazzard” is not publicly available, it’s not uncommon for actors in successful television shows to receive residual payments for reruns, syndication, and distribution.
As the show continues to be a beloved classic with a dedicated fan base, it’s possible that John Schneider and other cast members may receive royalties from the continued airing and distribution of “The Dukes of Hazzard.”
John Schneider’s wife
John Schneider was married to Alicia Allain, a talented filmmaker and music producer. The couple had a strong bond and worked together on multiple projects. Tragically, Alicia Allain passed away in 2023 after a battle with breast cancer. John paid tribute to his late wife and expressed his deep love and admiration for her.
She was remembered as a loving and supportive partner and a creative and passionate individual.
Who is John Schneider married to now?
As of 2024, John Schneider is widowed, having lost his beloved wife, Alicia Allain. He has not remarried since her passing, and he continues to honor her memory through his work and dedication to their shared passions.
How many kids does John Schneider have?
John Schneider is a proud father of four children. He has one biological daughter, Karis Schneider, whom he shares with his ex-wife, Elly Castle.
In addition to Karis, he became a father to Elly’s three children from her previous relationship—Mandy, Leah, and Chasen. John considers all four children as his own and has embraced the joys and challenges of fatherhood.
Born on April 8, 1960, in Mount Kisco, New York, John Richard Schneider developed an early interest in the arts. His passion for performing and storytelling paved the way for a dynamic career in the entertainment industry.
Acting Career
John Schneider’s career took off in 1979 when he landed the iconic role of Bo Duke in “The Dukes of Hazzard,” which brought him widespread recognition. Over the years, he has appeared in various films and TV shows, including “Smallville” and “The Haves and the Have Nots.”
Schneider is not only a skilled actor but also a successful country music singer, screenwriter, film producer, and director. He has actively pursued a career in music, releasing several albums and singles.
Personal Life
John Schneider’s love for country music extends beyond his professional career, as he enjoys performing and writing songs. Additionally, he is a passionate filmmaker and producer, and he operates John Schneider Studios in Louisiana, a hub for independent filmmakers and creatives.
Divorce and Financial Problems
John Schneider has experienced both personal and financial challenges. He went through a public divorce from his ex-wife, Elly Castle, which was accompanied by legal and financial struggles. Schneider’s openness about these challenges has resonated with fans and allowed him to connect with others who have faced similar hardships.
Before you go
If you want to keep educating yourself about personal finance, you must check out these posts as well:
tastylive is excellent for beginners to learn, but their strategies may not always be great in practice.
tastytrade review
tastylive produces a lot of content, and their general recommendations about trading options are relatively straightforward. The best thing about tastylive is that their data is based on backtests and qualitative data. Additionally, the tastytrade platform is amazing for beginners.
Tom Sosnoff, the founder and CEO of tastylive, sold the Thinkorswim platform to TD Ameritrade before creating tastyworks (formerly tastytrade).
Roll forward and don’t change the strike price at 21 DTE to reduce gamma risk.
Trade small and often.
You can learn from the most experienced derivative traders by reading these books. If you trade options, you are doing yourself a disservice for not reading them.
However, we must discover if tastylive is legit, so let’s review their trading mechanics.
The problem with these mechanics
Sell options when IV is high:
Generally, selling options when implied volatility is high is a good idea. Options are more expensive, and you can get paid more premium. However, blindly trading options on stocks just because of their high IV is not a good way to select stocks to trade.
Let’s take the Russian ETF RSX, for example. When the Russia and Ukraine war started, the IV of RSX skyrocketed. Tom Sosnoff of tastylive sold put options on RSX and got obliterated.
High IV can continue higher! Eventually, it will likely contract, but this doesn’t mean your strike price will go back OTM. If you sold a put that went far ITM, you could be rolling this option out for years, collecting minimal premium.
If you were also selling calls, your risk would be mitigated a tiny bit, but not nearly enough to make you profitable on the trade overall. Additionally, if you keep taking profit and rolling your call down, you can easily get whipsawed and lose to the upside.
Use the expiration closest to 45 DTE:
There is nothing inherently wrong with selling options that expire in 45 days. However, if tastylive is so concerned about gamma risk, trading 60+ DTE options would be better.
Gamma risk, in basic terms, is the risk that your option will rapidly move ITM. Gamma risk is higher with shorter expirations because your strike price is closer to the spot price when using the same delta.
For example, the 45 DTE 30 delta put option right now on SPY is the 360 strike price.
The 90 DTE 30 delta put option on SPY is the 355 strike.
Therefore, your strike price is naturally lower with further dated expirations, giving you a larger buffer. A common rebuttal is that selling further dated options comes with a greater vega (volatility) risk.
However, looking into the concept of weighted vega proves this is false. You can learn more about weighted vega with this video.
There are advantages and disadvantages to trading 45 DTE options and 60–90 DTE options. You can take profit or loss sooner with 45 DTE, but you have a higher gamma risk.
Sell options with a 30 delta:
Selling 30 delta options is honestly a great delta to use. You collect a good premium and still have a theoretical 70% chance of your option expiring worthless at expiration.
Your risk is higher than if you were selling 15 delta, but you can also make more. Delta selection entirely depends on your risk tolerance and trading goals.
The main risk for option sellers is overnight gaps and significant quick moves in the stocks you are trading. The best way to reduce getting obliterated with an overnight gap is to sell lower strike prices to negate the gamma risk.
The weighted vega video compares the P/L of an iron condor with expirations of 30 and 161 DTE and short strikes at a 10 delta. The day after the trade is placed, the underlying drops sharply, and IV increases.
According to the picture below, the 161 DTE iron condor performed much better. This is because the 161 DTE strikes were much further from the underlying spot price. The stock price does not affect the longer-dated 10 delta options as much since they are so far OTM.
The 30 DTE iron condor lost $2,135, while the 161 DTE iron condor only lost $210. The 30 DTE 10 delta strikes were probably getting tested, while the 161 DTE 10 delta strikes stayed further OTM.
Take profit when you collect 50% of the premium:
Taking profit at 50% is a great idea. There is not much benefit to holding monthly options until expiration.
Roll forward and don’t change the strike price at 21 DTE to reduce gamma risk:
This tastylive mechanic is almost perfect. When one of your positions gets tested, there is no promise that your option will go back OTM if you keep rolling it.
This is not a terrible way to manage your trades, but remember that you may be rolling positions for years for little to no premium. I think it is much better to use a stop loss and enter a new 15–30 delta position rather than rolling an ITM option for years. This way, you keep your option OTM and your delta exposure under control.
Trade small and trade often:
This is excellent advice. Make sure you aren’t collecting pennies for the contracts you are selling to make the risk to reward worth it. However, keeping your trade size small is essential as an options trader.
tastylive Criticism: Is tastylive Legit?
While tastylive gets a lot of criticism, I would argue that tastylive is legit since they provide tons of free research and data for retail traders. Their strategies may not be the best to trade, but they are a great resource to learn from.
Disclosure: This article contains my tastytrade referral link. If you sign up for a tastytrade account with it and fund it I may be compensated at no extra cost to you.
You can learn from the greatest investors by reading these excellent stock trading psychology books.
Why You Should Read Stock Trading Psychology Books
Studying the greatest of all time is the best way to learn about trading the stock market. The well-known stock market wizards like Mark Minervini, Philip Fisher, and Jesse Livermore have written the best stock trading books about their experiences.
Experienced investors with high-performing track records have traded through various market conditions and are filled with knowledge.
However, knowledge alone does not make you a good investor in the financial markets. You must combine knowledge, trading psychology, and risk management to become successful.
The following list includes trading psychology books, books on swing trading, and even day trading books.
Regardless of your trading style, you can learn something from others’ perspectives on the stock market.
This book highlights the life of an American stock trader named Jesse Livermore. Livermore was born in 1877 and began his career trading by posting stock quotes as a board boy at a stock brokerage. After spending hours updating stock prices, he started to notice patterns and the ability to use technical analysis.
Livermore would trade in bucket shops that took leveraged positions on stocks but didn’t own any. He won so much that he was banned from entering all the bucket shops in Boston. Livermore has made and lost millions of dollars over his lifetime, and the stories about him are helpful for any aspiring stock trader to hear.
Livermore is one of the first day traders, making his book one of the best day trading books to read. The book is beneficial for all types of traders, but it is unique since he is one of the first people to ever day trade stocks.
Mark Minervini is considered one of the most legit stock traders because of his record-breaking performance in multiple U.S. Investing Championships. In 1997, Minervini placed 1st with an audited 155% annual return. He also won the U.S. Investing Championship in 2021 with an insane 334.8% return.
Minervini’s key to success is a combination of technical analysis and fundamental analysis. He recommends that investors only buy stocks in an uptrend with strong earnings and a positive catalyst.
This is one of the best books on swing trading because Mark Minervini’s trading strategy involves holding winners and cutting losers quickly.
Philip Fisher is known as one of the greatest investors of all time. This book was initially published in 1958, and the investment philosophies of Fisher remain relevant in today’s markets. Many investors consider this book a bible of investing, so it is a must-read for all stock investors.
While the philosophies in this book are still relevant today, some of the information is a bit dated. However, this doesn’t mean there isn’t much value you can get out of this book.
Peter Lynch is one of the most successful investors of all time and was the former Fidelity Magellan Fund manager from 1977 to 1990. Lynch averaged a 29.2% return making the Magellan Fund the best-performing mutual fund of all time.
In this book, Lynch preaches that the key to investing is to keep it simple. He explains how anybody can outperform “smart money” simply by using common sense. The lessons learned from this book will surely improve your investing skills and mindset.
This book is a compilation of interviews with the best investors of all time. Jack Schwager conducted these interviews, and his goal was to figure out what separates the greatest investors of all time from everybody else.
The most common traits found in these fantastic investors were risk control, patience, commitment, and discipline. Most of the traders in this book used trend-following strategies to ride uptrends. Capital preservation is another critical metric that allowed them to rack up great returns in the stock market.
The Best Trading Psychology Books | Bottom Line
The best books to learn stock trading are written by successful investors. The information in these books is priceless since you can get inside the mind of the most successful stock traders.
Whether you want to day trade or invest in stocks long-term, it never hurts to gain insight from those who are successful in the stock market. I would consider all these fantastic trading psychology books because psychology is a massive part of trading.
Disclosure: This post contains affiliate links from Amazon and TradingView. As an Amazon Associate, I earn from qualifying purchases. This means that if you click on these links and make a purchase, I will receive a small commission at no extra cost to you.
The expected value of your trade plan is how much you will profit or lose based on statistics. The expected value is calculated by multiplying the probability of being right times the reward and subtracting this from the probability of being wrong times the loss.
Expected value = Probability (right) * Reward (right)-Probability (wrong) * Loss (wrong)
Create a High Expectancy Trading System
To create a high expectancy trading system, you need to know the probability of profit and the expected reward potential. In addition, you must know the probability of losing and the loss potential.
Let’s say you will limit the loss size to $200, and the win size will be $60. The breakeven win rate of a strategy with this risk-reward is 76.7%, which means you must win more than 76.7% of your trades to make money.
Now you have to backtest a trading system that wins more than 76.7% of the time. Strategies like this are best used with options since probabilities of profit are given upon trade entry. If you sell puts on a stock index with a .15 delta, you should win about 85% of your trades over time.
However, the option delta is the percentage chance an option will be ITM at expiration.
If you take profit and manage it before expiration, this number will have less meaning. You must backtest and find out how often you will take profit versus hitting a stop loss. If you are making a profit on at least 77% of your trades, you will at least break even in this example.
Your PnL is Just Statistics
The amount of money you make or lose on the stock market is simple statistics. You must create a positive expectancy system based on win rate and risk-reward. Your long term trading profits highly depend on statistics.
If you skew the statistics in your favor, you are bound to make a profit over many trade occurrences. Options are beneficial to statistical traders since probabilities of profit are generated by the Black-Scholes model.
Cash-secured puts are one of the best ways to learn about options trading.
What is a Cash-Secured Put?
A cash-secured put involves selling a put option and holding cash equivalent to the option’s strike price. If the stock’s price falls below the strike price, the investor is obligated to buy the stock, hence the need for reserved cash.
The cash-secured put (CSP) strategy is simple to understand because you are just promising to buy shares of stock at a specific price. If you know how to buy 100 shares of stock, you essentially understand how a cash-secured put works.
The only difference is that when you sell a put, you collect a cash premium in exchange for your promise to buy 100 shares.
The put side of an options chain.
Using the above options chain on SPY as an example, if you promise to buy SPY shares at 350/share by selling a cash-secured put, you will also be paid a 4.45 per share premium, or $445.
Potential Outcomes With Cash-Secured Puts
Stock Price Stays Above Strike Price: If the stock price remains above the strike price until the expiration of the option, the put option will expire worthless. The seller keeps the $445 premium received for selling the put as profit.
Stock Price Falls Below Strike Price: If the SPY falls below the 350 strike price, the seller might be obligated to buy the stock at the strike price, which is higher than the current market price. However, since the put was cash-secured, the seller already has the funds set aside for this purchase.
Upon assignment, you will see 100 shares of SPY and a cash balance of $445, not including commissions, in your account. This sounds great now, but if SPY is trading at 300 when this happens, you will be down $5,000 on the shares.
Why the cash-secured put strategy is excellent for beginners
While options trading may seem daunting to new investors, cash-secured puts are a great way to start learning.
The worst-case scenario with a cash-secured put is the ownership of the stock. You can hold a stock forever, and there is a good chance it won’t go to 0. Selling cash-secured puts on ETFs like $SPY is especially safe because you are investing in a basket of stocks.
If you get assigned shares of a stock you sell a put on, you can even sell covered calls against the 100 shares. The process of being assigned on a cash-secured put and then selling covered calls is called the wheel strategy.
If you are buying options, you should know that they will lose value each day due to the nearing of the expiration date. The time decay effect is called theta.
If you own an options contract and take it to expiration, there is a chance you will lose all of your money. If the option is out of the money (OTM) at expiration, it will expire worthless at 0. This is why it can be dangerous for beginners to buy options for swing trading.
Example of a Cash-Secured Put
The cash-secured put strategy is easy to understand if we examine an example. Let’s say the stock $MSFT is trading at $200 per share. You can promise to buy 100 shares of it at $180 per share and collect a premium by selling a cash-secured put with a strike price of $180.
If $MSFT stays above your strike price of $180 at expiration, you will keep the premium and not have to buy the shares. However, if $MSFT falls below your strike price of $180, you may have to purchase 100 shares of $MSFT at $180 per share and still keep the premium.
Benefits of Using Cash Secured Puts
– Lower Risk Compared to Other Options Strategies
One of the main advantages is the reduced risk, especially when compared to buying naked call options. The risk is lower because you receive shares in the worst case, whereas calls can go to 0.
– Income Generation Potential
Selling put options generates immediate income in the form of premiums, making this an attractive strategy for income-focused investors.
Cash-Secured Put Strategy vs. Buying a Call
Buying a call option and selling a cash-secured put are similar trades, but they have critical differences. Buying a call option is a speculative bet that a stock will increase in price before the expiration date.
On the other hand, a cash-secured put is a promise to buy shares of stock. The critical difference is that shares of stock do not expire, while the call option does. Therefore, if the stock does not rise before the expiration you pick, you can lose all of your money as the buyer of a call option.
The cash-secured put strategy is not any riskier than purchasing 100 shares of stock. Selling puts is only risky if you use margin and sell more puts than you can afford. If you are using margin and the stock market crashes, you may be forced to close your options at a loss and won’t have enough capital to accept assignment.
Cash-secured puts are the first step to the options wheel strategy. Once you are assigned 100 shares from a cash-secured put, you will sell a covered call to complete the wheel strategy.
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