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"Volatility is Vitality" – Michael Saylor
OPG is nearly two years old, and we've successfully implemented our strategy for hundreds of users. I've seen people generate 100%+ returns since they started. Others have generated six figures in option premiums. My ultimate point is simple: we've found a strategy that, when executed correctly, can produce market-beating returns.
The beauty of options selling lies in its ability to consistently generate these returns by stacking statistically advantageous weekly option contracts. Week after week, we make a half percent here, 1.2% there, and it compounds over time.
I titled this post "Volatility is Vitality" for a reason.
Certain opportunities arise only a few times in a lifetime, and if we're lucky, we witness their emergence. Digital assets like Bitcoin are a prime example. We're watching the legitimization of this industry unfold before our eyes—ETFs exist, governments are buying, and corporations are using it as an inflation hedge.
As an avid believer in Bitcoin, I foresee its value increasing significantly over time. If you don’t share this belief, then the strategy I’m about to discuss may not resonate with you. However, for those who see Bitcoin’s long-term potential, the volatility surrounding Bitcoin-related stocks is a gift.
Let's take MARA, a Bitcoin mining company, as a case study. MARA mines around 900 Bitcoin per month profitably and also taps into the bond market to acquire more Bitcoin, enhancing its stack. Currently, they hold 34,959 Bitcoin. They benefit enormously from the appreciation of Bitcoin’s value, which is why this stock excites me.
For some on Wall Street, this approach may seem risky. However, I see it as an opportunity to capitalize on something I believe in. This belief has driven a significant increase in the implied volatility of MARA’s options contracts.
As I write this on Sunday evening, you can generate a 5.1% return by selling an out-of-the-money put (with a $132 payout at $26 per share). Normally, I target around 1% returns on premium paid out weekly. But due to the volatility of MARA and my long-term thesis on Bitcoin, I feel comfortable selling these slightly out-of-the-money puts.
Volatility can work for us in many ways—if we understand how to harness it.
The key to success in these trades is understanding how implied volatility creates attractive premium payouts. The more volatile the stock, the better the premiums, which gives us more contracts to choose from. We can be aggressive or take a more cautious approach by moving further down the options chain, still generating solid returns while protecting our capital.
You won't see this kind of opportunity in stable stocks like Clorox. Healthy volatility is essential, and it's what makes stocks like MARA viable for this strategy.
After carefully considering this strategy, I decided to test it out with a separate account, distinct from my main account where I stick to our tried-and-true method. I invested $8,000 and generated $566.84 in premiums in just one week—a 7.1% return. I mixed contracts with expiration dates of December 6th and December 13th.
By December 6th, all contracts expired harmlessly, returning my capital. The December 13th contracts are still out-of-the-money, and I’m looking forward to redeploying the freed-up capital into more MARA contracts on Monday morning.
I’m willing to take assignment on these volatile stocks, even if they experience short-term declines, because I believe in their long-term potential. I can continue generating premium by selling puts aggressively, without being assigned often, thanks to the unpredictability of the market.
In fact, I plan to add another $8,000 to this account to double the number of contracts I can handle. This "trade" won’t last forever, though. The opportunity will eventually close, and I’ll have to assess if MARA still holds the same appeal at a higher share price (e.g., $100 per share).
I’ll keep tracking these trades here and share my progress with you. My goal is to leverage the volatility of a stock I believe in to push the boundaries of my options selling strategy.
It’s important to note that this is a risky strategy. It’s experimental, and I would only recommend it if you’re comfortable with the risks involved. This approach is a departure from the conservative principles I’ve advocated in OPG over the years. While I still believe in those principles, I’m now exploring this aggressive strategy due to the unique market conditions.
This may feel foreign to some of you, especially hearing me advocate for more aggressive contracts. I’m not suggesting you adopt this strategy. Rather, I’m opening the conversation about this specific opportunity, as it aligns with my outlook on the market and Bitcoin.
I believe that the best investors are those who can spot opportunities and act on them, even when they go against conventional thinking. That’s the mindset I’m embracing with my MARA experiment.
