[00:02] use most often with financial options. Of course, I'll explain what this neutral strategy is, all the possible scenarios, and which stocks or market moments are best used with it.  What are
[00:16] neutral strategies?  The neutral strategy I'm going to explain is based on the cover, but we're also going to add a layer of difficulty by adding a put sale.
[00:29] There are many types of neutral strategies, but in this video I'm going to show you the one I use, which is called short strangle, since the rest of the ones you just saw, like Iron Butterfly or Iron Condor, are
[00:43] basically the same, but with added layers of difficulty.  And in this free course, for now, I'm teaching you the basics, although also very profitable ones.  You know that if you want to become an expert, you can take
[00:58] a look at the advanced course.  As I mentioned, I'm going to base it on a cover mentioned, I'm going to base it on a cover call, that is, selling calls already having 100 shares of the company and at the same time adding some put sales.
[01:13] So if you haven't seen both videos I just showed you, you should, although you can stay here and revisit them later.   That said , there are several ways to start, and as always I'm going to use the example
[01:29] of Fords, which starts with a price of 10.59, so to start this strategy and do it safely, we'll need about $2,100. The first way to start, and the one I
[01:42] The first way to start, and the one I personally do, is by selling two put contracts.  If the price is at 10.59, 10.59, I will sell one put at 1050 and another at 10 for
[01:54] a week from now, so we will receive a total premium of $2. we will receive a total premium of $2. $9 for the first put sale at 1050 and for the second put sale at 10, since it is further from the current price.  And to make
[02:10] the example perfect and get to what interests us, let's say that after a week the price closes at 1030. In this way, we will be assigned the 10 shares of the put option that was at 1050, since the price has
[02:27] finished below 1050, for which the broker will take $1.05 from what we already had.  But of course we do n't have to buy the put option with a strike price of 10
[02:40] because the price ended at 1030, so the price didn't fall below that price and we won't buy those 100 shares. Therefore, we now have 1000 shares that we bought for the first put option at 10.06.
[02:57] Now the next step and what is considered a short strangle. is considered a short strangle. We have 100 shares and we sell a col We have 100 shares and we sell a col strike price of 1050. For this we receive a
[03:10] premium of $10 and in turn what we are going to do is sell a put at a strike price of $10 so we will also receive a premium of $21.  And in this case, the price
[03:22] will end the week the same as it started at 1030, which is perfect for us.  Let's say that's the ideal case and what we're looking for.  In a neutral strategy, what we want is for the price to be
[03:37] neutral.  I still have my 100 shares to sell calls and I also still have my money to be able to sell puts, but apart from that I have received a very nice $1.  And what would the next step be ?  Well, obviously, repeat
[03:54] exactly the same thing for the following week.  We'll use the same strikes again and assume that the premiums are more or less the same.  It doesn't have to be that way, but just to simplify things.  If the
[04:08] price remains the same, we will repeat the same process.  But if the price falls to 9.8, then what will happen is that we will be allocated 100 shares for the
[04:21] put option we sold that had a strike price of 10. In this case, we will now have 200 shares, and thanks to the premiums and having bought them cheaper, we will have 124 in cash.  Keep in mind that if we had bought these
[04:37] had bought these 200 shares directly from the start, yes, we would now have 200 shares but 0 liquidity.  In this case, thanks to the premiums we have collected over 3 weeks, we have 200 shares, but
[04:52] also $1 in cash.  And in this case, since we now have 200 shares because they have been allocated to us, what we would have to do for the following week is sell two call contracts.  The first
[05:08] call contract would be made with a strike price of 10, which is the price at which we bought the second call put with a strike price of 1050, which is the price at which we bought the first [cough] put.  And from there
[05:22] continue with the same procedure.  If I have 100 shares and liquidity, what I will do is sell a call and sell a put.  If I have 200 shares, what I will do is put.  If I have 200 shares, what I will do is sell two calls.  And if I have all the
[05:37] cash I need, what I'll do is sell two puts.  If the opposite occurs and the price rises to 10.6, then we will be allocated the 100 shares for the sale of Col, since it has risen above the strike price of 1050. In this case, we will have
[05:54] zero shares, but thanks to the premiums of 2174 in CAS.  We are in the same situation as 3 weeks ago, but now with an extra $74
[06:07] .  And from here, it would simply be repeating from step one.  A lot of money and a lot of graphics, but I think it's pretty clear.  My approach,
[06:19] and what I personally do, is to buy shares of the same company with which I am using this strategy as I receive the premiums.  For example, if I received $12 in the first week, that will be enough to buy one
[06:34] share of Ford.  In the second week I received $31, therefore, I will be able to buy approximately three shares of Ford.  And so on.  Every time I receive bonuses, I buy shares.  If everything goes reasonably well using this
[06:50] strategy of selling calls and selling puts, after a year we should have been able to buy about 100 shares of Ford with the premiums, which sounds pretty
[07:02] good, since that money comes solely and exclusively from the premiums we are receiving, which you wouldn't receive if you had just bought and waited.  And in turn, what I do by repurchasing shares with the premiums I
[07:18] receive also helps us to mitigate one of the problems that the cover can have .  Remember that if the price suddenly rose significantly, we would not the price suddenly rose significantly, we would not benefit from that abrupt increase
[07:32] because we had already committed to selling them at a certain price.  Well, if what we're doing is buying shares with our bonuses, when this abrupt rise occurs, we won't benefit from this rise
[07:48] with the 100 shares I'm using to sell Col, but we will benefit with using to sell Col, but we will benefit with the 10, 30, 50, 70 shares I've been buying with the bonuses, since those don't involve any Col sales.  Although, as I
[08:02] personally do. Perhaps you want to use Perhaps you want to use these premiums to buy gold or shares of another company, which is obviously also fine, but I
[08:15] like to buy from the same company, so as I just said, if there is a sudden rise, I will benefit, not with 100% of my shares, but with those I have bought thanks to the premiums.  And what I don't recommend, at least
[08:29] at the beginning, is withdrawing all these bonuses to use them for living expenses.  As I bonuses to use them for living expenses.  As I said, at least not at the beginning, since all these premiums and purchases of new shares will help us to
[08:43] compound interest and be earning much more in a few years.  Each year we will have more actions.  By having more shares, we will earn more premiums each year and therefore earn more money each year.
[08:57] Compound interest.  And in this way, in a few years we will be able to withdraw a receiving and it will be enough to live on, but only a portion and not by withdrawing
[09:10] 100%.  Let's see what type of companies or market moments are of interest to us when implementing this strategy.  You already know that you can watch a completely free course on YouTube , but if you like it and want to learn much more,
[09:24] becoming an expert in financial options, I recommend you check out the advanced course where you will learn much more and join the community of smart investors.  And basically it's with the
[09:37] companies that I already mentioned in the video about the wheel strategy or the cover strategy.  This strategy will be especially interesting with companies that have a fairly stable average price and simply go up and
[09:53] fairly stable average price and simply go up and down relative to that average price. This strategy will be especially interesting with companies or market moments that have a stable price, but at the same time are gradually and
[10:07] smoothly rising.  This significantly reduces the risk of allocation or of having our shares sold, and at the same time we will benefit not only
[10:19] from the premiums, but also from the price increase in the market.  If advanced course, you can click here.  If you want to see the free course, you can click here.