Kevin McElroy
The Stupid Man’s Guide to Earning Beer Money at Home


A stupid man, wearing a turtle’s neck sweater

“Why trust a stupid man with anything,” you might ask, stupidly.

Allow me to explain: a stupid person isn’t someone with low intelligence, although I find it helps.

A stupid person is just someone who repeats bad decisions. If you think drinking beer regularly isn’t stupid behavior, I urge you to reconsider, though you probably will not (see the definition of stupid.)

I write to you then, not as a superior, but as a peer. A beer peer.

You see, I too drink beer, stupid.

In fact, living in Vermont (as I do) it would be a sin not to drink beer. We have really good beer here.

And good beer is expensive, though increasingly ubiquitous. Perhaps a non-stupid man would notice that the more beer there is, the pricier it gets and the more I want to buy, and point out that beer is in a Giffen-good cycle. I am not that man and you are on your own when it comes to non-stupid insights.

I am the man, however to show you precisely how to earn some beer money, from home in literal minutes every month, so that you’re not stupidly drawing down your 401(k) to pay your rent because you spent all of your money on beer.

How? I’m not talking about some home-biz. I’m not talking about fiverr or freelance anything. I’m not talking about filling out surveys or any of that crackerjack nickel and dime mumbo-jumbery. That stuff is stupid. It’s way too much work and you might as well get another job. Then you wouldn’t have time to drink. And that would be really really un-smart, if your goal is to drink. If your goal is to save money in order to live a long and prosperous life, then sure yeah go ahead work more jobs. Fine.

No. I’m talking about a way to earn hundreds of dollars a month in just a few minutes. And no again, you can’t “work” more minutes and earn thousands. It’s not that kind of work. It’s not work at all, really.

But before I get you all in a gross lather about how much beer you’ll be able to drink, there are some requirements you need to meet.

  1. You need an internet connection. Hey, that might be a stupid thing to write given that you are ostensibly reading this on the internet, but shut up.
  2. You need about $5,000. Oh you think you’ve found the catch here, huh? No. As you’ll see, this $5,000 will remain firmly in your clutches. I don’t want your stupid $5,000.
  3. You need to be able to follow simple (though somewhat specialized) instructions.

Good? Ok, I’m not going to lead you on forever. Here are the details.

HOW DOES IT WORK JUST TELL ME! I’M SOBER AND POOR

I’m talking about a form of options — that is, stock derivatives available through any major discount broker. I use TD Ameritrade, but all brokerages are basically commission-free now and they all will allow you to trade the type of options I’m talking about. Schwab. E-trade. Robinhood (lol). Any of them work fine. Whatever you got.

The key point here is that less than a year ago, all of these brokers would charge you $7-$10 per trade. For those of you who aren’t arithmaticians, that means every transaction would cost you at least $14 round-trip to get in and out. That’s like a Vegas ATM surcharge, without the enjoyment of “gaming.” No more! Now you get to keep those dollars and put them towards more beer.

Never traded options? Even better. If you’ve traded options before I guarantee you that you’ve done so incorrectly. You lost money didn’t you? If you did, then you did it wrong! Right? Yes. Just blindly nod along with me.

If that sounds scary to you, then I guess go back to painting Warhammer figures for $10 a pop on fivrerrr, or selling plasma or sperms or whatever.

But if you meet these qualifications, you can sell options (yes, sell them) for $80-$120 a month. What’s the $5,000 for, you may be asking?

That is the cash you need to cover the transaction.

You see, there are two types of options, puts and calls. Selling a put is selling someone else the RIGHT but not the OBLIGATION to sell you 100 shares of a given security at a given price.

This money-making strategy starts out with you selling cash-secured puts. If you sell a put on a stock at the $10 price, you are on the hook to buy that stock if it drops to $10. That’s $1,000 you need to have in your account to cover the transaction.

If you get “put” those shares at $10, your brokerage will automatically execute the purchase at $10. Then you’ll own those 100 shares.

Oh no, you’re thinking, my $1,000 is gone!

No, because you can turn around and sell calls against those 100 shares. And no matter what else happens, you get to keep the premium, which is the amount of money you earned from selling the put or call.

Confused? Probably.

Why would anyone buy these puts and calls from you? Well, not to brag, but lots of people are much, much stupider than you and me.

Buying options is like buying a lottery ticket. You *can* make lots of money quickly. But usually, the only thing you win is making your kids go hungry and forget getting any beer out of the deal.

What’s smarter than buying a lottery ticket? Almost anything, but surely, selling them is the real non-stupid financial move.

I realize that might sound crazy.

Why doesn’t everyone do it? How is this not a widespread phenomena?

Well, because most people are too stupid to even try this AND because you can’t pay some financial adviser to do this for you. It takes way too much manual labor for way too few results on their end. Consider even the best paid advisers or money managers might earn 2% for assets under management. They get that 2% no matter what happens. Doing a bunch of leg-work for their clients to make even one options trade a month is not worth their time. 2% of that 1%-4% is pennies for them. They’re already earning dollars.

And they probably don’t want you buying beer either.

But you want to buy beer, right?

Ok.

I’m going to give you the first half of a simple blue print for earning at least 1% in any given month. 1% of $5,000 is $50. That might not sound like much, but it’s $50 more than your cash is earning for you right now sitting in a stupid bank, right? Yes.

And 1% really is the bare minimum I expect you could earn using this method.

Step 1:

Open up a brokerage account and deposit funds— unless you already have one. This brokerage is going to be linked to your bank account, and you’ll set it up so that you can transfer money back and forth. Transfers to bank accounts usually take at least one business day, but you can set them up to make regular withdrawals or deposits. Any cash you put into this account will (usually) get pushed into a money market account, which is FDIC insured on top of whatever guarantees your broker has about market security, which probably includes the SIPC, the Securities Investment Protection Corporation. The SIPC is kind of like the FDIC for brokerage accounts. To clarify, money sitting in a money market account in your brokerage is as safe as if it was in a bank.

Step 2:

Read and sign the options/margin agreement. This agreement may vary from broker to broker, but it basically gives you permission to sell cash covered puts and calls. If you can’t find it, call up your broker and ask them where it is. This agreement will ask you to list assets and provide income information. Don’t answer incorrectly or you will get denied, and you’ll be paying for your own beer forever.

You’ll need a tier 1 options agreement, which lets you sell cash and security covered puts and calls only. It’s the lowest level of options trading for literal babies in-utero. This agreement will not let you lose your house and your car and your pokeman card collection. That kind of risk tolerance is only extended to people stupid enough to ask for it, so don’t!

Step 3:

Sell a put. Ok, it’s not quite that easy, but after jumping through hoops 1 and 2, you’ve already done 95% of the work. The rest will only take you a few minutes every month.

To make it extra easy for you, I’ve made a small (but not comprehensive) list of securities you should sell puts on. You’ll notice all of these stocks sell for less than $50 a share. That’s because if you sell a put on these you need to have the full amount of cash on hand to “cover” the amount of shares for each put. Only sell 1 put contract unless the stock is selling for less than $25, in which case you can sell 2 puts.

Pfizer (PFE)

Keurig-Dr. Pepper (KDP)

Alcoa (AA)

Cisco (CSCO)

AT&T (T)

Your mission here is simple. Don’t worry about all of the bells and whistles. Click on the options trade tab, and open up the options chain on your brokerage. Type in the ticker symbol.

$0.83! That’s 2.1% and a decent Friday night beer bash

I picked AT&T here for no particular reason. You don’t have to trade AT&T. Maybe you hate AT&T. Don’t trade options on a company you hate, ok?

For our purposes, we’re looking at a few simple metrics. You want to sell preferably two strikes OUT of the money. The blue in the above imagine represents in the money options. If you sell in the money, your likelihood of getting put is pretty high. Sell out of the money. In this example, you could sell the 38.5 strike for $83. Or you could sell the 38 strike for $63. You might also put in an offer for $84 or $64 and maybe you get filled. If you put in AT the bid, you will almost certainly get filled.

The key is to make sure you are SELLING puts to OPEN. That’s the terminology you need to pay attention to.

How did I pick this $38.50 strike price, at this expiration date (about a month out as of this writing)? Well, I want to earn monthly income, right? So I can’t go out much more than a month… or I’m going to be earning income less frequently, and therefore buying beer less frequently.

I also want to earn AT LEAST 1%. In this case, I’m earning 2.1% on capital. That’s the $83 in premium divided by the cash value of $3,850. Don’t believe me? Fine, do the math yourself. If I sell closer to expiration (many options have weekly expirations) then I won’t make enough money.

Again, if AT&T drops to or below $38.50, I will get assigned shares at that price. My $3,850 will be converted into 100 shares of AT&T. Now I own 100 shares of AT&T, and I can sell covered calls on it. Or if I want, I can just sell back those shares and get most (or even all) of that $3,850 back.

OK but what’s the downside?

So, if AT&T has some kind of terrible PR issue in the next month like their CEO kicks a toddler or their phones cause ear cancer, and the stock drops MORE than below that $38.50, I still have to buy it at $38.50. If it goes to zero, I still have to buy it for $38.50. But what are the odds of AT&T dropping even 10% in the next month? Well it turns out that options market assigns a probability to that event, and that’s part of how options are priced. Right now, the odds that AT&T will drop below $38.50 in the next month are about 1 in 4. So about 25% of the time you make this trade, you’ll get put, but almost never at any significant loss to your total capital — and remember, you can immediately turn around and sell covered calls.

That’s not necessarily the end of the world, and I’m still better off than if I just bought the stock at the current price. In that case, I’d be sitting on a bigger loss AND I wouldn’t have the benefit of collecting that up front premium.

There’s actually a silver lining even if the stock falls below my $38.50 strike. That’s because I have some wiggle room equal to my premium that I collected when I sold the put. If the stock falls below $38.50 but at or above $37.67, I still come out on top.

Ok so what else?

I’ve left out a bunch of details, but this is the meat and potatoes of the strategy.

Again, to review:

Sell puts 1–2 strikes out of the money, about 1 month til expiration. Shoot for 1%+. Don’t sell puts on a company you hate, because you might end up owning it.

Sell puts to open.

Don’t and I mean DO NOT sell more puts than you have cash to cover. Do not. Donut. DON’T.

If this seems like the kind of thing you would like to seriously do to earn beer money, please comment below. I will reach out to you to give you more information if you are interested.



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