ACHIEVING >75% WIN RATE &

CONSISTENT CASH FLOW

USING OPTIONS
(Watch Training Video here)

Gin Lim
 2

SELLING OPTIONS
You may or may not know this…

When the stock market are highly volatile, selling options is

one of the best way to create the cash flow you need to take
advantage of the market downturns.
 THE FOUR CORE
OPTIONS STRATEGIES
To Generate Income
 CREATING CASH FLOW
Sell Call Sell Bear Call Spread
- Sell at 40 to 60 days till expiration - Sell at 40 to 60 days till expiration
BEARISH

- Close @ 50% premium collection - Close @ 50% premium collection

Useful if you have little capital due to

Require higher buying power lesser option buying power

Sell Put Sell Bull Put Spread

- Sell at 40 to 60 days till expiration - Sell at 40 to 60 days till expiration
- Close @ 50% premium collection - Close @ 50% premium collection
BULLISH

Require higher buying power Useful if you have little capital due to
lesser option buying power

UNDEFINED RISK DEFINED RISK

 TRADE SMALL,
TRADE OFTEN
The key to building up your trading portfolio
 THE CONCEPT
• The advantage of selling options is that you
have a high probability of profit.

• This means it gives you the confidence to

continually trading and scale big as your
portfolio gets larger.

• Eventually, this creates a compounding

effect.
 EXAMPLE OF HIGH PROBABILITY

1 Delta 0.19

2 Delta 0.22

1. This is a LLY Bear Call Spread.

a. Collected $107.50
b. Delta 0.19 (Probability of Profit 81%)
c. Requires only $500 to start the trade

1. This is a NEE Bear Call Spread

b. Collected $40.00
c. Delta 0.22 (Probability of Profit 78%)
d. Requires only $250 to start the trade

Brokerage will calculates the Delta (i.e. probably of profit) of each individual trade.
I typically aim for probability of profits of more than 75%.
I will share more on how you can increase your win rate even further - with strict entry rules.
 THE HOLY GRAIL
• Most people sell options simply based on Delta (i.e.
used as a gauge for probability of profit) - also
known as Statistical Win Rate - where we aim for a
Delta < 0.25 (Spread) and <0.20 (Single).

• However, if you want to make extraordinary profits -

then you have to do things differently.

• I call this the “Mechanical Win Rate”

High Win Rate = Stat. Win Rate + Mech. Win Rate

This is what set successful option sellers apart
Mechanical Rules 1&2 (Trend with Stochastics)
• This is one of the easiest way to boost
your win rate - using trend with
Stochastics.

• The trend is your friend - only take a

bullish position when it is on an
uptrend.
○ This means that the 50MA is
above the 150MA

• Next, only enter your position when

the Stochastics is low (i.e. <20)
○ Notice how the stock tends to
bounce back up? <see red circles>

This is one of the most powerful ways, that

I use to dramatically increase my win rate.
Mechanical Rules 3 (Protect Your Strike)
• Remember that the key
to selling options is
simply to ensure that
your “sell strike” is
protected by a
support/resistance.
Resistance @ 170 (This will prevent it
from being exercised)

• For example, if TXN

has a resistance level at
170… then you should
aim to sell call at 170
or more.

• Because if the
resistance level will
protect the sell strike
(see next slide)
Mechanical Rules 3 (Protect Your Strike)

• You can see that the

price touched 170 and
retraced back.
Resistance @ 170
• The resistance level
successfully protected
your sell strike.
 PROJECTED RETURNS

- Probability of Profit: 85%

- Starting Capital: $30,000
- Risk: 4% per trade
- Risk Reward: 0.25

Simulated 100 Trades

Starting Capital - $30,000
Ending Capital - $46,420
ROI: 54.73%

With a high win rate - the game becomes simple. The key idea is to trade more with a positive expectancy.
The odds will work in your favour in the long run.
THANK YOU
Gin Lim
ginlim@passiveseeds.com