SOFI trades below $16 after falling 14% in a month and ranges between about $15 and $20, making it his favorite stock for selling cash-secured puts and the wheel strategy; he is comfortable selling near-the-money puts, even a slightly in-the-money $16 strike, because he would like to own it.

Let's choose a cheaper stock. I am going for SoFi now, because I think SoFi is currently one of the perfect stocks to sell put options on. And actually, as we progress in this course and I show you the wheel strategy , I think SoFi is without a doubt my favorite candidate for the wheel strategy.

So, take a look at this . This is SoFi, and currently SoFi is trading below $16 per share. It has fallen by 14% over the past month . It offers a very strong opportunity for an investor to sell a put option .

It has fallen by 14% over the past month. It offers a very strong opportunity for an investor to sell a put option.

So, SoFi, because it trades within a range of between $15 per share at the absolute bottom to about $20 per share. Because it trades within a range, I feel very comfortable selling options that are close to the current stock price.

This would therefore entail selling options with a higher delta. So, if I look at this 15-put option here, the delta is 0.35. So, delta is your chance of being assigned.

Delta is also the extent to which the option moves or behaves in relation to the stock.

So, if the stock drops by a dollar and the delta is 0.35, then the option moves by 0.35 dollars, which is 35 cents per dollar, okay?

This is how you should think about delta. Delta is extremely important, and at an advanced level I manage my portfolio with delta and a few other Greeks that we might cover later in examples, but in essence, delta is the most important.

It is the most important Greek you need to understand. The delta here is 0.35, and I am actually willing to go for a higher delta.

The interesting thing is that I can't even choose a higher delta, because if I went higher, I would be 'in the money', right? Because this 16 put option here is currently trading above the price of SoFi.

So if I click on this option, I see a delta of 0.48. Okay, the delta is a lot higher, but he is already 'in the money'. To be honest and clear with you: I think 'in the money' options are fine, because if you look at the strike price minus the premium, only your average cost basis matters.

So if you sell put options, a cash-secured put is actually a limit order that you pay to wait. You don't have to go below the current share price, because if you choose 16 and factor in the premium, you actually end up at about 14.75 dollars.

So in fact, your average cost base is far below the current value of SoFi. So if I sell a $16 put option that is somewhat 'in the money' and just above the current value of SoFi, that is fine.

I feel very comfortable with this, because I would like to own the stock.

Maybe it is SoFi. SoFi is currently under 30 dollars per share.

I mentioned SoFi. I've been in SoFi since it was a company of about 9 dollars. I said it would cross 30 billion when it was at nine, and it did. So everyone who was in my community really made tons of money .

They made huge profits . They really made a ridiculous amount of money. I'm proud. I'm happy for them.