Options Strategy: Long-Duration

[00:00] So it took me over 10 years to realize that short duration option contracts like dailies, weeklies, monthlies, even going like three months out, they are hands down the biggest trap in the entire stock option world. And when I fixed this problem, I scaled my account to

[00:15] seven figures. So this video is going to be the collection of 10 years of me doing basically every single option strategy out there and explaining why longer duration contracts are not only easier, they're safer, they're more reproducible, but you're of course going to

[00:29] make more money with them at the end of the day. I'm going to compare side by side exactly what happens if you do short duration option contracts and compare that to how much money you could make if you do longer duration option contracts. And I think at the end of this video, you're going to be

[00:42] like, oh my God, why have I been doing all these short duration contracts? I've been screwing this up so bad. Okay, let's dive in. All right, let's go to example number one. And honestly, this example is literally going to blow your mind. I'm not even kidding you. If you don't get your mind blown,

[00:58] unsubscribe from the channel right now because it's going to blow your mind. Just watch this. We're going to go into selling put options first. We're going to buy and call options after that, but let's talk about selling put options first and why longer duration wins.

[01:10] Ready for it? This is in video stock, by the way. This horizontal line right here corresponds to the strike price that we're going to pick for a one-month put versus a one-year put, both at $180 strike. If you sell a one-month put, you are going to collect $385 in cash flow with a one-month put.

[01:28] If you do a one-year put, you are going to collect $2,540 in cash flow. And let me just show you over on Charles Schwab if that's actually what it is. So if we sell a one-year put, 12-18 to 20-26, 180 strike, sell to open NVIDIA put, you'll

[01:42] collect $2,500 in cash flow. But if we flip that to a one-month put, guess what the premium's going to be? Roughly $360 just like I have over here. Okay, actually a little bit less than what it is right now.

[01:54] The market's open right now, so things are bouncing around a little bit. Now, just looking at this, you're like, okay, if I do a one-year sold put, I'm going to collect roughly seven times the premium. You're like, well, hey, I'll just do 12 trades in a row, and I'm going to end up with more money.

[02:08] Number one, you're probably not going to win 12 trades in a row, and there's a few other things we're going to talk about with this, but here's the main thing. I already did the math on the background, but this is the earnings per share growth line of NVIDIA in the last couple years,

[02:21] and this is where I'm estimating it to be based on where Jensen guided for Q, you know, 2026 earnings and stuff like that, 2027 earnings going ahead. This is where we expect the growth rate of the earnings per share for NVIDIA to be. Earnings per share, as you know, is the number one thing that

[02:36] moves the price of the stock in the long term. So this is where it's going to click and this is where you're kind of going to be like, oh my god, I can't believe I never realized this. So if we do a one month option and we go right here, you can see that the distance between where the earnings

[02:49] for share growth line is at, and the actual strike price is roughly 7%. So you're basically building a 7% margin of safety into the trade if you do it like this. But if you do it my way,

[03:01] and we go one year out, we're going to go all the way out to roughly, we'll go to December 16th, it's very close, December 23rd, whatever, of 2026. Look at the margin of safety that you build in that trade, roughly 34%. So when you understand that earnings for share is going up and to the

[03:17] right, but the strike price is staying the same. Longer duration option contracts when you sell put options. It's not only safer, it is not only more reproducible, but you have a huge margin of safety right here. And on top of that, like what are put options actually making you do when you

[03:33] sell them? You are forced to buy shares at a certain price and a certain time frame. But if the profits are likely to be all the way up here, and your strike price is all the way down here, who wouldn't want to buy Nvidia shares for 180 bucks per share? On top of that, like if I flip

[03:47] back to the longer duration contract, we'll go to 12-18 of 2026 right here, you see that I'm collecting $25 per sharing premium right here if we go, I mean it's on the mid, the bid-ask rate is

[03:59] pretty tight. So I'm going to collect $25 per share of premium. So when you subtract $25 per share of premium from a $180 strike price, my break-even is essentially $155 on that play rate there.

[04:13] So again, my break even is 155 right here. Your break even is technically below 180 so it like you know 176 somewhere in that range So not only is my break even lower but again more time to grow earnings per share more time for volatility to work itself out And on top of that I only going to sell this put if I feel like Nvidia is cheap to

[04:33] start. You can see it's pretty close to the earnings per share growth line. That means I feel like Nvidia stock is relatively cheap. So with that being said, again, I'm happy to buy it right now. I'll definitely be happy to buy it a year from now for 180 bucks per share and keep

[04:48] the premium. You keep the premium no matter what. But on top of that, let's say that you think NVIDIA is cheap. You're selling the product. We do think it's cheap. You're going to collect $365 in your account right now.

[05:00] You're going to generate $365 in cash flow. But what I'm going to generate is $2,540 right now when the market is cheap, right now when NVIDIA is cheap. The benefit of that is I can go deploy that capital whenever I want.

[05:14] I could go buy shares of NVIDIA right now. I could go buy call options on NVIDIA right now. I could go withdraw the money from my brokerage account and go buy a car or whatever I want to do. I mean, you can't buy a car for $2,500, but you get my point.

[05:26] I could go buy something if I want to. So that's the benefit of doing longer duration option contracts when you're selling the put option. It's much safer. It's much easier. And honestly, to be straight up with you, I'm not even going to pick a 180 strike price if I go a year out.

[05:40] I'm going to go even lower on the strike price because I want to build an even bigger margin of safety into this trade. But you can't really go too low on the strike price rate here for like a one-month contract because there's going to be no premium that you're going to generate when you do that.

[05:54] Nobody wants to buy a $100 strike price put on NVIDIA for a month out. All right, so before we dive into call options, I want to cover one last thing on full puts and why long-adoration contracts are better.

[06:06] We talked about earlier how if you would do a one-month contract, you would get roughly $365. But if you do a one-year contract, you would get roughly $2,500 in cash flow. We get that. It's roughly a 7x difference.

[06:18] And the thing that most people are going to say is that, hey, I'm just going to go do 12 trades in a row and collect, call it $365 month after month after month, and I'm going to generate more money than Brandon. I'm going to make more money doing shorter duration contracts because there's this thing called theta,

[06:34] where theta is going to make my contracts go down in value faster, which is what you want with a full put. You want to sell it for a lot. You want to buy it back for essentially nothing or let it expire worthless. We get that. But there is a major, major problem with that.

[06:46] Let's go back to the chart. So here's what's going to happen. Let's just kind of, don't really worry about what's going on over here. Worry about what happened in this chart right here. We could clearly see NVIDIA's earnings per shares going up and to the right.

[06:58] But look at all the volatility in the market right here. So if we just do this on a one-year period, let me draw a line that's vertical just to show you the start of 2024. I know this chart might look a little bit confusing, but this is just a marker to show you where 2024 is to keep it simple.

[07:11] So you would have been selling your monthly puts through this time period right here. And it would have been going just fine. The market's going up, NVIDIA's rebounding back to the earnings per share growth line, and you would have just simply collected that cash flow month after month. But what happened right here?

[07:23] The market went down a little bit. You probably would have went in the money on your monthly sold put, you would have had a roll down and out, or just take the loss on the trade, and then you would start over. So then the market rebounds a little bit more. Market goes up, it's above the earnings per share growth line, so it does indicate that

[07:37] NVIDIA is a little bit expensive right here, but you are still selling put options up here when it is less compelling than down here. Guess what happens? The stock reverts back down to the earnings for sure growth line and you lose money on those full puts again. Then it goes up, down,

[07:51] up, down, you get it. A lot of volatility through this period right here. But the thing that you have to understand is that like, dude, you're not going to hit 12 trades in a row. And on top of that, if we just really think this through, how much did NVIDIA stock actually go up in this time

[08:04] period right here for this entire year. We'll go from January to roughly January, so we'll just call it somewhere around right there. The stock went up roughly 175%. But think about that. When you sold these puts down here, yes, it made sense to do it, but you only did a one-month sold put,

[08:20] and you only generated $365 in cash flow. So yes, that initial $365, you did make a 175% ROI. But as the share price is going up, and as the share price is less compelling up here,

[08:32] You are technically reinvesting your shares, I guess, if you want to, but you're reinvesting them at a less compelling price. The share price up here was $137 if you look on the right. Down here, the share price was $53. So yes, the share price went up a lot, and it went up a lot

[08:46] more than what the actual earnings share growth line was doing right here The share price went up way more So versus me though I did a one put and I generated down here and I simply sat and I was patient So I made a 175% ROI on $2,500.

[09:01] Meanwhile, you made a 175% ROI on $365. So again, this builds into the thesis of why a longer-duration contract is not only better, but it's safer, it's more consistent, it's easier to make more money at the end of the day.

[09:14] and so many people miss the boat on this because they're just like oh man i need to generate monthly cash flow no matter what i need to pay my bills with this exact amount of cash flow that i have to generate dude the thing about that is as we just looked on the chart the opportunities

[09:27] aren't always there like if you say you only want to do this on nvidia or something like that dude don't sell puts one in videos right here sell puts one in videos right here sell puts one in videos right here don't sell them up here maybe start selling some down here where the market's at

[09:39] right now. But like, you've got to be very careful with this stuff doing monthly options. And if you feel like you need money to live on, dude, just sell some shares in your base portfolio. Do not sell puts just to sell puts because you have to get this cash flow. You're not going to do good

[09:54] with that in the long term. Okay, so what we need to do next, we got to dive into calls and how I do calls, how I don't do them. I started out making a lot of mistakes with calls and I'm going to be completely honest with you. Buying call options is much, much harder than selling put options

[10:09] because when you sell a put, the share price can go up, it could stay flat, and it could even go down to the strike price minus the premium per share that you receive, and you still break even on this whole put. So this whole put is just easier to make money on.

[10:21] But with the call option, you need the share price to go up, and you need it to go up very fast because, of course, it's being called theta. If the share price doesn't move in a direction that you need it to move in a quick way, theta is going to eat away at your contract,

[10:34] and it's going to be worth less and less and less every single day that goes by. All right, let's dive into that. Okay, so I changed a few things around on the chart, but honestly, like, I'm even more excited to talk about calls right now because I think this is literally going to blow your freaking mind.

[10:47] Okay, so this line right here, it's still the earnings for share growth line. This line right here corresponds to the 180 strike price. We get all that. So in this example, we're going to say we're going to buy a one-month call option at a 180 strike, or we're going to buy a one-year call option at a 180 strike again.

[11:02] So these are the premiums that you're going to pay. If you do a one-month option, you're going to pay $1,300. hundred bucks if you do a one-year option you're going to pay roughly four thousand bucks and you can see right here if i go to the 130 of 2026 contract you're going to pay 1300 bucks if i go

[11:16] out to one year we go to the 1218 contract you're going to pay roughly four thousand dollars and people are just real quick you're going to be like oh brandon you only have 25 you can't buy any of this no i have a lot of buying power if i want to do it but i always keep my money invested in market

[11:29] i never want to have cash in this account of course level three options is what you want to do if you want to sell portfolio security puts and stuff like that but that's for another video Actually, the video right before this one, I covered that, but I want to stay on topic right here.

[11:41] So here's what we got. If you do a one-month contract, you buy a one-month call at a 180 strike price, you have a $193 breakeven. That's what BE stands for, breakeven. So what that means is that you need NVIDIA stock to go up by roughly 7% in one month just to breakeven.

[11:59] But looking left on the chart, it's like, dude, do you see all this volatility that happened through here? Are you good enough to know that you're going to pick the one-month period where it's going to go up and not down? Possible, but you have a lot of gambling and you need a lot of luck on your side for the stock to do what you want it to do in a one-month period.

[12:16] And another thing before we go into the one-year contract, you have to understand this about the one-month contract. You need the share price to go up and you need it to go up very, very fast because the time factor of the contract, the theta, is going to crush you.

[12:28] That's why buying options is way harder than selling puts, for example. But in theory, if you do a 30-day contract, if you take that option contract and you just divide it by 100%, basically what that means is your contract is going to go down in value

[12:43] by 3.3% every single day if the share price does not go up. If the share price just goes sideways, that contract in theory in 10 days, for example, in 10 days, the share price does nothing. You're going to be down roughly 33% because there's just less time left in that contract.

[12:59] So you really have to understand that and it just makes it harder for short duration contracts. But look at this right here. If we do a one year contract, your break even is going to be roughly $220. So in one year you need an 18 ROI in order to break even One month you need a 7 ROI So one month you need 7 But in one year you don need 12 times 7 to get the true break even on your contract It

[13:23] doesn't work like that. You need one year for the share price to go up 18%. When we're showing right here that 34% is roughly what we expect the earnings per share to go up in one year, which honestly I expected to go up a lot more than that for a video. We're being a little bit conservative

[13:38] right here because honestly this earnings per share growth is going to accelerate up a little bit but I'm drawing it straight just to be a little bit more conservative with you right here. So a one-year contract we need less to happen we have more time for that thing to happen meaning

[13:52] earnings per share to go up into the right with time you know the longer you go there's going to be a lot of volatility along the way but what if the share price like follow my cursor what if it goes down and then like this and then it goes up like the one-year contract is still going to be

[14:04] fine. But the one month contract, you're just hoping it goes up and to the right in that one month period. So I have more time, less theta per day, my contract is going to go down way less per day, yours is going to go down like 3% a day, mine's going to go down, you know, less than 1%

[14:18] per day in theory. And I only need an 18% move an entire year just to break even on this contract while earnings for sure again is going up by 34%. So that is why buying short duration option

[14:32] contracts, buying call option short duration is so, so hard to do. I know a lot of people post all their wins online and they're saying, oh yeah, I made this much money. I bought this contract before this company reported earnings. Like, I'm happy that you made money doing that,

[14:45] but just understand that you are gambling and it's unlikely you're going to be able to reproduce that year after year after year. So very high level of the strategy and system that I do and how I bring this all together. We'll go back to the chart. It'll be easier to explain it. Let's just take

[14:58] this different here on NVIDIA. I buy shares on NVIDIA. I use that as my base portfolio. I have TripleQ, the S&P 500. I have a bunch of things in my base portfolio in my main Charles Schwab account. I use that as a collateral to sell put options when it makes sense. I sell longer duration put

[15:13] options, one year puts. So I generate big cash flow when the market is cheap. When I generate that cash flow, I turn around and I buy longer duration call contracts worth of cash flow and I also buy more shares because longer duration contracts are easier to make money. I'm waiting

[15:29] for the company to rebound back to the true valuation level it should be at with the earnings per share growth line. And on top of that, the earnings per share growth line is also going up and to the right. So when you have that double bullish catalyst behind you, and when you have

[15:42] no cash sitting on the sidelines doing nothing, you will likely outperform the market in the long term. And just to prove to you that I do actually outperform the market, I'm going to show you inside this Charles Schwab account. I'm not going to show you my two-year return because that's what

[15:55] everybody shows right now. I'm going to show you my five-year return. This is five years. We went through a bull market right now. We went through the bear market of 2022 where the market went down roughly 35%. I'm going to show you my total compound annual growth rate in that five-year

[16:10] period. Okay, so right now it's currently 12-23 of 2025. So we're going to do a five-year ROI. How did I do in five years through a bull market and a bear market? We're going to go from December 23rd of 2020, and then we're going to go to current. Today's current day is 12-23-2035.

[16:28] You get that. We scroll down a little bit. Your account had an annualized ROI of 25%. That is 25% per year. Now, if we scroll down a little bit, look at what my main brokerage account did.

[16:41] I did 25%. The S&P did 15%. The NASDAQ did 13%. So not only did I beat the NASDAQ, Not only did I beat the S&P, but I beat both of those by roughly 10% per year.

[16:53] 10% per year. The bear market right here, I was pretty similar to what the actual market did. But coming out of the bear market, I capitalized very, very heavy. I bought good companies at good prices, and I simply did options when it made sense.

[17:05] My compound annual growth rate, 25.34% in a five-year period. If I do this, like, what most people do is they just show you their ROI starting right here on this dip, and then they go to current. you have to understand that most people online they're showing their roi's only going from the

[17:21] bottom of the market and on top of that most people don't even have a five-year roi because they haven't even been able to survive in the market for five years okay so i hope you got value from this video right here if you want to watch a very very good video where i talk about

[17:34] exactly how i do stock options my entire strategy step by step watch this video right here it's going to help you out a lot and i'll see you guys there