The real money in options isn’t in chasing premium — it’s in the underlying stock price movement toward and through the chosen strike price. Smart traders focus on out-of-the-money (OTM) or near-the-money (NTM) options that become profitable when price action does its job.
Successful swing trades are those where price meets the strike. Fundamentals, trend, momentum, overbought/oversold indicators, and volume clues help filter stocks with consistently strong setups.
Why this works:
For option sellers, expiration becomes a weapon. Getting exercised is not a loss — it’s often the intended outcome. Example: I sold an XOM $107 put for $0.85. Assignment gave me stock at $106.15. I then sold an $108 covered call for $1.45 expiring the week of 22-Aug-2025. That lowered my cost basis to $104.70. If XOM closes above $108, the shares are called away and I net $3.30 profit per share. Simply buying the call would have produced much less.
The takeaway:
The edge isn’t just in collecting premium. It’s in capturing the stock move with options that migrate ITM, converting into positions that align with this groups' directional thesis. Scanners and indicators should therefore focus on stocks with:
Using this method/strategy generates the names that consistently generate outsized option returns.
Thoughts. (I have been focused investing with options since 1984, in the market with stocks since 1977)
Successful swing trades are those where price meets the strike. Fundamentals, trend, momentum, overbought/oversold indicators, and volume clues help filter stocks with consistently strong setups.
Why this works:
- When price drives an option in-the-money (ITM), delta increases and the option starts behaving like the stock itself.
- Extrinsic premium decays, but that is more than offset by gains in intrinsic value.
- Well-timed OTM/NTM positions give cheaper entry, yet still capture the bigger move if the stock follows through.
For option sellers, expiration becomes a weapon. Getting exercised is not a loss — it’s often the intended outcome. Example: I sold an XOM $107 put for $0.85. Assignment gave me stock at $106.15. I then sold an $108 covered call for $1.45 expiring the week of 22-Aug-2025. That lowered my cost basis to $104.70. If XOM closes above $108, the shares are called away and I net $3.30 profit per share. Simply buying the call would have produced much less.
The takeaway:
The edge isn’t just in collecting premium. It’s in capturing the stock move with options that migrate ITM, converting into positions that align with this groups' directional thesis. Scanners and indicators should therefore focus on stocks with:
- Proven catalysts (e.g., earnings beats, order flow signals)
- Strong trend and momentum
- Volume confirmation during moves
- Rebound setups near key strike zones
Using this method/strategy generates the names that consistently generate outsized option returns.
Thoughts. (I have been focused investing with options since 1984, in the market with stocks since 1977)
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