Episode summary
Can You Really Earn 68% per Year Selling Puts? How Option Income Strategies Work
Money For The Rest Of Us
· · 29 min
Summary
The episode argues that option-income products can have positive expected returns, but the income they distribute is not the same as total return. The host uses a “low stress trading” sales page as the cautionary example, saying the 68% annualized claim comes from compounding a 1% weekly premium target while ignoring losses, trading costs, and the underlying stock’s volatility.
He compares that pitch with historical results from option strategies such as covered calls and put writing, including ETFs and mutual funds. Across examples, the pattern is the same: premium income can look very large on paper, but realized returns have tended to land closer to 5% to 8% annualized once losses are included. The host says that is still investing, not gambling, because option sellers are being paid for taking on insurance-like risk.
He extends the same lesson to sports betting and even Uber driving: frequent small cash flows can hide large offsetting costs or losses. The core warning is to measure the whole return, not just the income stream, and to be skeptical of sales pages that promise easy compounding without a transparent track record.
Key takeaways
- The host says selling puts and covered calls can have a positive expected return, but not the 68% annualized rate promoted by the sales page.
- Historical option-income results cited in the episode cluster around 5% to 8% annualized after losses, not around the stated premium yield.
- The host says the main drivers of option-income returns are cash yield, volatility premium, the underlying asset’s movement, and trading costs.
- The Goldman Sachs paper cited by the host found about 7.1% annualized for a put-writing strategy from 2003 to 2013, despite much higher premium income.
- The host contrasts investing with sports betting, saying gambling has a negative expected return because the house edge overwhelms the win rate.
Notable quotes
“We cannot forget that that income is not the return”
“The more words, the more text, the more wary we should be”
“They say they make 1% a week and compounded that equates to 68% return”
“It has a positive expected return. It is investing, but it's not 68% return”
“You will incur losses with the putr writing strategy. You will and that's why the return is 6 to 8% annual”
How the episode opens
I recently had dinner with a friend and he mentioned that he had gotten involved in options trading and he was really excited about it. It was an outfit called low stress trading and and the reality is whenever I hear the word low stress as it relates to any type of investing or betting uh red flags go up. and I was particularly concerned regarding this particular strategy after I spent time on their page.
Now, I've invested in options for decades. So, options themselves are not bad. They can be used to protect against losses.
They can be used for speculation. But what we don't want to do is confuse this the income the high levels of income we can get from selling protection selling puts or selling calls as part of a covered call strategy. We cannot forget that that income is not the return.
This is insurance and low stress trading emphasizes this is an insurance type strategy but they ignore the potential for losses. So, we want to take a look at sort of these option income strategies, understand what the the returns are, what's a reasonable rate of return, how they work, and we're going to broaden it out to other examples where we we collect income, but oftentimes we forget the fact that there are are potential losses or expenses that offset that income. and we just don't want to be sort of taken in by the the promises of high income.
And that's what low stress trading is doing. They're promising very high income. Here's a rule of thumb for any type of sales page or landing page.
The more words, the more text, the more wary we should be. And in this case, Lowe's stress trading 15,300 words on their sales page.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- option income strategies
- put selling
- covered call etfs
- expected value gambling
- options delta and put-call parity
Watch the episode
Watch “Can You Really Earn 68% per Year Selling Puts? How Option Income Strategies Work” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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Money For The Rest Of Us, this episode and its artwork belong to J. David Stein. Octagon is not affiliated with the show; this page is an independent summary.
