Criteria:
Look for stocks that are below $5 (I will explain why later)
Avg volume must be above 5MIL
IV must be above 70%
I prefer stocks that have jumped up in volume exponentially by 2 to 3x, This to me shows that something big has happened or will happen to the company which will allow you to place high iv cash secured puts (I only use these because it allows to me own the underlying if i get assigned)
Choose an expiration date of around 40 days to maximize theta decay
Choose a strike no more than 2 points above the current share price. This allows you to collect an avg of 40% ROI on premium.
Wait and buy back the option at a 80% profit
If assigned early avg down with the premium received from the cash secured put and open up a covered call at a strike below your avg cost of the shares but with a new exp of 40+ days. In this step make sure that the premium received for your covered call is higher than the difference of your cost avg. This part is the boring part but I would rather make $50 than loose $1000. You should be fine bag holding for a little bit but if the stock keeps coming down keep averaging down until you can break even or make a profit.
For example - 100 shares with an avg cost of $1.04 - premium received $0.1 with the strike of $1 would mean if you get assigned you will sell your stock for $1 for a loss of $4 but made $6 per 100 shares.
Note - we are buying cheap priced stocks because it allows us to buy more contracts to collect more premium. Dont stress the risk because there isn't any.
Rinse and repeat.
"How to handle assignment"
Make sure you believe in the company profits and future growth.
If assigned on a cash secured put use the premium collected to avg down
3.if assigned on a covered call then good we want cash only in our account.
If this helped you at all plz lmk or if you got any feedback I would like to hear that too 😁
*how I find the stocks
I use finviz here is how I find them on the screener
Average volume - over 2M
Current volume - over 10M I sometimes use over 5M (if there isn't enough stocks I like)
Option/short - optionable and shortable
Price - under $5