Salesman to Investor to Options Trader with Josh Calcanis

This is the interview with Josh Calcanis by Austin Bouley with 10% Credit Spreads! We talk about the beginning to his investing journey, how he got into options, and how he mitigates risk.

If you’d like to listen to the interview go here.

Austin: Hey, guys. Welcome to today’s podcast. I’m doing an interview with Josh here whose done a lot in the investing space and we’ll be able to talk about that here soon. He’s also recently found the options market. I’m doing a lot with that. And so, he’s had some, really good success with it and then got drawn down in the recent markets as we all have been. If you’re in the program, you know, trading these choppy markets is really hard and you have to be very careful how you set up options trade. So I really wanna go through and share Josh’s story and what brought him into the investing world and the stocks and then how we slowly transition into options. So enough about me talking Josh what would you like to share about yourself to get the audience to know you a bit better?

Josh: Yeah. Of course. Thanks for having me on. I’m really excited to talk through this because options has been a new tool in my tool belt for investing. I have been in sales for the past twelve years fresh out of college, used to do medical sales, and then got into software ad tech sales. And that allowed me to get the capital actually invest both in the stock market, real estate, and of course, the hated word crypto, which I do explore a little bit, but it allowed me to get in there and really start to learn the different ways to create additional income outside your your W2. I’m also an avid adrenaline junkie. Maybe that’s self proclaimed, and also a pilot, which is what the picture is behind me, but a whole bunch of extra stuff outside of investing to keep my mind fresh instead of just investing. 

Austin: That’s awesome.Flying is something that I’ve always wanted to learn how to do. So I’ll have to consult you when I wanna do more on that. But, yeah, so, obviously, you have your hand in a lot of different areas of putting your money to work for you. But how exactly did you get into it all? Like, I know it’s a thing, but I actually wanna do it and how did that come about?

Josh: Yeah. So my first introduction really to stocks was probably in my 401k and I think this is where a lot of people start. And my parents didn’t really do much outside of their 401k and retirement accounts. So I went through all of college expecting that was how I was gonna invest in the stock market. I graduated, got into medical sales, I survived my first seven months, got a promotion to sales rep, and that’s when you really start to make some money. At that point, I was like, well, I gotta find somewhere else to invest this stuff. The money, the extra discretionary income I was seeing. After I started doing research outside of the 401k I started to invest in my first self managed brokerage. And then also, playing around with the traditional and the Roth IRA.

And I actually wrote a book and I do have one of the chapters in there talking about how I think I lost $12,000 when I first started investing because there wasn’t really much of a metric I was looking for. Like, now I’m looking for three to five percent yields for dividend companies and a dividend growth of seven to ten percent. That kind of stuff. I wasn’t doing that. I was like, This is a cool blue chip stock that was a dividend aristocrat screw it – Let’s go ahead and do it. And then I let my emotions take over.But that’s how I got started into it and then been investing, I think, since probably 2011, I got out for a little bit to get into real estate. And then in 2018, jumped back in. 

Austin: Yeah. Cool. I mean, I know when I started my investing journey, I kinda learned the same thing. Where I’m more of like, let’s just jump in and we’ll figure it out in the process and you end up losing a lot of money, but you learn a lot. And so there’s always those two diff different types of people. Those who are like, okay, let’s jump in and learn. And then those who, like, okay, let’s learn everything, but then they typically wait too long to actually get involved. So it sounded like you actually jumped in. So that’s awesome. I think action, taking action is one of the biggest things no matter where you’re putting  your money to work.

So you kinda mentioned that you started off just going after normal stocks that you probably saw, like, everyone else buying saying they’re safe or something like that. And then you moved into dividends. And looking for specific growth metrics, could you explain like what you’d look for right now when you’re going for an investment in a stock? Like what are the dividends? What’s that?

Josh: Yeah. So I’ve actually transferred out of a lot of the individual stocks. Most that I have are actually more ETFs now. And I’m sure plenty of people that are watching are familiar with that. They’re basically just a bucket of stocks. And you get I think there’s an argument for both.

A lot of people talk about them being so diversified, but then at the other end of the spectrum is you’re getting access to stocks that really don’t make up much of the market cap for that ETF, but it’s easier to manage, and that typically is beating most advisors. So my big pitch for myself now has always been to get away from the two percent, one percent fee for other advising services. I’m not gonna name any names, but I did jump in with one, and that’s how I actually got started with the 401k and IRAs And I just realized this makes no sense if you can just invest the same amount and drip into those ETFs.

In terms of dividends, I did play around with, like, Abbvie, Johnson and Johnson, AT&T, which if you watch SeekingAlpha at all. You’ll see people just rip apart AT&T, but primarily it’s for the dividend, and management. But what I look for typically is that three to five percent dividend yield,  the payout ratio between thirty and about seventy percent. And the only reason means that there’s probably a little more room to grow and they’re not paying that out completely. And then I also make sure that there is some kind of dividend growth to it. So seven to ten percent, dividend growth over ten years.

Those are my big things. I also pay attention, and this is why it’s easier to just track a couple of stocks. I think when I first lost a whole bunch of money, I was trying to pay attention to like fifteen stocks. And that’s why I started to shrink things down. It’s hard. I have a day job. I’ve got a little bit of a side hustle. I enjoy my hobbies. It’s tough. So that’s why I transitioned really into the ETFs, and pay attention to those metrics. It’s a little easier.

Austin: So, obviously, I got my bachelor’s in finance, so I understand what you’re talking about all these numbers, but a lot of people may not. So is there a tool or website that you use to see these numbers in an easy way without having to go through, like, all the balance sheets statements and stuff?

Josh: Yeah. Of course. And really for the balance sheet stuff, I’m still, I think being in the startup space, I’m a little more familiar, but it is still tough. So I actually use which is a really good website that I pay attention to. I’ve actually got the paid version and I link my portfolio to it because they’ll send you alerts. The the secret to seeking alpha in my opinion is not just the articles because people always have bias and people always have different ways of reading stuff but the comment section is always a beautiful thing because people come in and and provide some really good insight, positive, or negative, and it makes you kind of think through stuff. So if I can’t read a full article there, I’ll actually go straight to the bottom. is another good one. So whenever I’m updating things, I actually have a little Google sheet that I track all of my stats, both my cost basis, the dividend itself when it’s actually announced and that kind of thing.  I’ll actually make sure that I have that kind of stuff, like, price to earnings ratio, that kind of thing on that sheet, and I get that from MarketWatch. 

Austin: Cool. Awesome. So, obviously, you just gave out the specifics of your dividends and what you look for. And you mentioned ETF, which is by default, a very diversified holding. For instance, if you go with SPY, it has over five hundred stocks in it.And so you’re very diversified you’re in a lot of stocks in every different type of sector because most of each ETFs are like that. Is there something that you look for in an ETF or do you just go for the big ones or do you stick with, like, different sectors? How do you look at ETFs?

JoshYeah. So it’s a little bit of both of those last things you said.So I think sector and then, the actual yield itself too. So my big ones are, VYM, Vanguard’s High Yield. I’ve got VPU, which is their utilities ETF. Right, so there are different sectors here. And then I also have VOO, which is essentially the S & P 500, and I actually have VTI in my Roth. And I think the growth itself was higher for VTI, but the dividend was higher for VOO. I can’t remember the actual metrics, but basically, I tried to line it up where the stuff that I’m not gonna touch and mess with and not do any kind of options on are staying in my Roth, and then everything else was in my self managed brokerage.

So they’re of course, Vanguard. And I’ve seen plenty of articles on Vanguard’s, VYM isn’t as great as a couple other high yield dividend ETFs, which is okay. I’m not looking for the best, but they do have a very long history of  performing. And I think a decent amount of management too, which is another thing. I haven’t been around and investing to see an ETF, I forget the actual word for it, but basically dissolve, but I don’t have to worry about that with those.

Austin: Okay. So you would say you pick, like, Vanguard, VOO over SPY because of the company and the historical performance. Like, you know, that they’re not going anywhere.

Josh: Right. Yeah. 

Austin: Okay. So, obviously, that’s how you invest, which is awesome. I think everyone regardless of if they’re trading or not, should have long term funds that they don’t touch and hopefully a broad market index or something like that. At least I do. Just because trading, you know, varies as you know and anyone listening to this podcast has traded before knows. So tell me how that transition from your long term mindset of investing to options how did you discover that? Like maybe I should try this crazy thing called options. And, so how did that work for you?

Josh: Yeah. I actually share this story all the time because it shows a couple of things. One, I’m 34. And I listened to one of my friends who was, I believe he was 22 at the time, and at first, I was almost closed off because I was the old guy that has done this before. But really, what happened in the back of my head I was thinking to myself, what all the financial advisors had said, what all the people who had heard about options but never actually used them about how risky they were. And there is obviously a point to this, because part of what you do for credit spreads is, you know, mitigate risk since options are inherently risky. You can lose money. There’s something to it, but you can also make a bunch of money. And so my friend, Nick Neral, actually got into Robinhood and started playing with that, and he told me all about covered calls. And it took about maybe a month or two before I finally heard he had made another two hundred bucks on, I think it was, like, lucid. 

And I was, like, well, this is ridiculous. I gotta sit down with you and figure this out. So He came over. We spent a Friday night, actually, and he walked me through Robinhood and just how to essentially place a covered call because I already had a portfolio. So I thought let’s go the easy route. And I feel that’s one of the least risky ways of getting into options, even if you don’t understand anything, and that was easy for me. So it’s basically betting that something’s gonna go in a certain direction. So the following Monday, I placed my first one. And I believe it was on, either AT & T or Johnson and Johnson. I ended up making, like, I don’t know, fifty bucks. It wasn’t bad, but nothing happened. I didn’t have to do any crazy things. I didn’t have to buy to close it or anything like that. I didn’t have to roll it. And, that’s how I got started. I think I started in August of that year. And I believe it was2021. Yeah. And I made $4500 that year till the end of the year, and it was without margin. So I did not use a margin account. And I was like, wow. Okay. This is gonna get fun.

Austin: That’s awesome. Yeah. I think for people who are more on the safer side who enjoy investing, I think covered calls are one of the first approaches they learn. Typically, because it’s very safe, but also they already have shares in another company. So, like, oh, we might as well leverage those shares and if you’re ever scared, you can just close it. But, yeah, I know. I love that story.

It’s awesome having, like, okay, I need to learn this and kind of try it out. And then, like, oh, well, I did a lot in my first year, or at least the first portion of it. And so how has that continued to go for you?

Are you still mainly doing credit spreads or how is that looking with your current pro portfolio?

Josh: Yeah. So I haven’t even started with credit spreads yet. So I mean, we met at FinCon, which was really cool. And then started to see you on YouTube and what you were talking through. And just the video that you just posted made me kind of think, well, I gotta probably go do a little bit more research. So My option story was the following year I explored a Vanguard margin account, which does have a higher rate than I would say, like Robinhood. I still use Robinhood, but Robinhood has been my, kind of like, my real time update for data. It’s really easy to figure what’s going on with the premium, the full bid ask spread. And that’s been really helpful, especially if I’m doing it on Vanguard. I haven’t moved everything over. I don’t think I will just because again, like, Vanguard’s been around for a while. They have my Roth, the retirement stuff, so it’s easier to sit right there and do that. 2022, I made $20,000  in options.

And that was a big year. If everybody remembers 2022, it was also, I think, a big up year for a lot of people. Maybe a little sideways, but still, like, a pretty positive market here. And all I was doing was selling calls and then selling puts. So selling covered calls and then selling puts –  one thing, In The Money Adam kind of talks about. So I really tried to do a little bit of research and  basically, the real easy wheel strategy. Like, sell a put bet against the stock. If you lose, you do have to put the money up front. You get the option, then you go ahead and sell calls on it. I was able to do that in 2022.

And then this year happened in the other direction. And I think not understanding all the Greeks as well as I should, and I’m still learning them, but not paying attention to what implied volatility was. That was a big one for me that didn’t make sense for me, because all of a sudden your premium would be absolutely destroyed. You’re like, this is going in the right direction. Why am I not making money from this? And then, time decay was another one that I kinda had to wrap my head around when you were buying calls or selling calls, like, how it’s gonna impact you. So I’m still learning in the process, but basically started out this year down. Pretty hardcore. I’m now up only $138, but I think that’s just 1)  letting my emotions get the best of me in some of these plays, and then 2) not paying attention to the metrics when I probably should be. So again, still up, but it’s a slightly different year than it was last year.

Austin: Yeah. So, is there anything that you look at charting wise?

Like, do you just look at a chart, or is it really just okay If I don’t have shares, I’m gonna do a put, if I do have shares, I’m gonna do a covered call. 

Josh: Yeah. So a little bit of both I think, the covered calls, I’m a little, a little more cautious with. I’ll typically do out of the money stuff because I don’t really wanna get rid of those. Now for the the the things like Opendoor, one of my big ones, the real estate company, I still have a relatively high cost basis for and I do place in the money covered calls, and that’s just because premium’s a lot higher. And I do think that there’s a spot for the stock to go down, which does come into play in terms of the actual chart. I’ll typically pay attention to support over a month, three months and then a year. And that’s only because of what’s going on. I don’t fully understand, like, the head and shoulders and a lot of those other things. I do have books on my bookshelf, which is on the other side of my office here. So I think probably a little bit of both of those.

Austin: Okay. Cool. Yeah. So, I guess even though you kinda had a rough start and you made your way back into profits, is this something that you see yourself continuing to do with your portfolio moving forward or how is that going to look?

Josh: Yeah. 100%. I will not take this out. I think I did an article on my website too. And  I will always be a proponent of options.I will probably always share that story too because there is always learning here. And then I think it’s a it’s a daily test for a trader, like, well, you’re I would say I would call you probably trade even more than I do, but If it’s just an extra tool in your tool belt for additional income, you have to be able to fight your own emotions every single day. It’s wild, but you have to trust a lot of the stuff that you learn. And if you don’t know it, it makes it really, really tough. So I think this is gonna be part of my income source, hopefully, an early retirement here, but, it will always be part of my income for sure.

Austin: Awesome. Yeah. That’s one thing that I love about trading is that it makes you or forces you to be better. Again, if you want to make money, if you wanna lose money, you don’t have to. But it forces you to be self aware. Like, when do I get scared? When do I not get scared? How do I navigate this? And so that’s the fun part that trading kind of elicits from you. But, yeah, that’s awesome. I’m glad to  hear that’s going to be a part of your money making type of approach. Even if it’s a small portion of your account, that’s still a nice thing to have in retirement as you move towards that. I guess what else are your goals with your investment and pushing towards retirement? Like, are you wanting to, like, scale up your stocks, scale up options, scale up real estate, like, what does it look like for you moving forward since you’re only in your 30s. And you’re probably going to retire what, like, around, like, 40, 50 something. And so what does that next twenty years look like? 

Josh:  I would hope a little bit earlier. That’s definitely the plan. I’ve always been a financial independence retire early kinda guy. I don’t like the retire early camp because I think – I don’t know if I will ever stop working, but at least being able to have the income to cover my bills that my W2 covers. And pick where you spend your time. So I think for me, real estate has always been a big thing that first foray into the stock market, I used a lot of the gains and got into my first property, and I’ve done cash out refinances and gotten into a couple other multi families. And, even the good old fashioned, like, house hacks to an FHA loan, living in it, renting it out. And so it’s been a little more challenging right now with the real estate market. And I’ve still been investing, though, but it’s actually through REITs. So, Realty Income has been a big one for me. And then, Vanguard, of course, has VNQ. So the dividends on those are just wild because the payout ratios are higher for REITs, I forget the actual rule or law behind it, but I think REITs have to pay out almost eighty or ninety percent as dividend income. There’s also some additional tax stuff with REITs that are a little different, but you still get to dip your toe in real estate. So I wanna continue doing that. 

I would like to get back into the brick and mortar stuff as well, but I  do have to see rates for a normal human being like myself to wait for the rates to stabilize just a little bit. I mean, when I first started investing, it was 4.5 to 4.75.  So 5% is realistic versus the threes that we were in. And, stock market, yeah, I’ll continue to drip into the ETFs and build that. I think last year, I was at $2,400 in dividend income and I’m tracking at $3,450 righ now for the year. So a small amount of dividend income, but I’d like that to step up to replace a portion of my living cost eventually.

Austin: And if you’re anything like me, you probably don’t have a lot of trust first stuff going on, like, we see inflation rates going up yet the Fed just announced that everything’s fine and the economy is strong. I don’t know if that bothers you. If it does, how do you react? What’s your view on that? And how are you adjusting or investing?

Josh: Yeah. Of course. So I think one thing to keep in mind is that in a market like this,

I do keep a little bit more cash on hand. I did sell one of my properties recently, and I think probably we’ll see what happens in the future, but I would probably say closer to the top of the market, now that inventory is kind of sitting around. And I used a lot of that cash to continue to drip into the stock market. I put a little bit into crypto, and then I did put a bit into my high yield savings. The silver lining to the inflation and the rising interest rates is that your high yield savings go up. So I think at this point, 4.4  for Ally, 5% for Wealthfront. I just got an email on it too. 

But you have to spread out your money because of the $250,000 FDIC insurance. But even then, to maybe further that answer, Another reason is probably why I’m careful with where my money goes too is because we just saw all the banks shut down and people took I mean, people probably still don’t have their money. And yet they are insured up to $250,000. So that’s just it’s crazy to think of that, but it’s probably a little better to keep stuff on hand. And at least that’s what I try to do to mitigate some of that.

Austin: So your solution is to mainly keep more cash, I guess, to be ready for investment opportunities. And make sure you’re fully spread out across the minimums.

Josh: Yeah. 100%. I think having a little more cash, but then also don’t be afraid to continue to invest even from the beginning of what our conversation was is understanding the metrics and what you’re looking for. And then drip trip into those stocks. 

Austin: So, obviously, I wanted to bring you on to share your story. Because I know a lot of people have gotten into the investing world just over time, they have money, they wanna put it to work, they just know, hey, I’m gonna put it into stuff. And then, there’s starting to explore the options market just because it’s starting to make a big splash in the news. Like, we’re hearing options everywhere. People are slowly starting to add it. So I wanted to hear how someone like you did that and what your plans moving forward were. So, you kinda got to share your story and explain how you do it.

But are there any pieces of information for someone who, let’s say, has an investing account now or maybe is starting to invest for them and their journey mainly in the stock world?

Josh: Yeah. The tips would probably make sure that you do your due diligence on the actual stock that you’re playing with and really probably don’t go over three. And by three, I mean, three that you’re trading options on. And this is for the beginner, And the only reason is because I was at that point, and it was actually overwhelming because I also have a day job. So to to pay attention to an actual chart and tickers all day long on your iPad and then having to jump back in and, like, close out if you think you’re actually crushed, it kinda plays on you all day. So do your research, get a general understanding. You don’t have to be necessarily, like, Austin right off the bat. But get an understanding and then, jump in with a couple of individual socks. If you already have a portfolio, start with the covered calls. Make it super easy to get going.

The other piece is I think you really need to understand why you’re trying to do it. And I think you probably hear this all the time, Austin, like, anybody listening to podcasts, it’s, like, understand your why. I think it’s really important. And it’s kinda cliche, but seriously understand why you’re trying to actually put your money to work? Is it to make sure that you leave your W2? Is it to just have extra income? What are you trying to accomplish? Because I think that’s gonna be sitting in the back of your head every single day. And then it also kind of probably changes what you’re willing to accept in terms of losses and wins too.

Austin: Yeah. That’s awesome. I definitely wanna hit on that first point because this is something that I say a lot, especially when you’re starting. Just pick one sock. Just one sign. And if you watch it and trade it, you’ll do so much better than people who are trying to find fifty stocks every day.

Anyways, that’s awesome and great advice. If people want to listen to you or to read more from you, where should they find you? 

Josh: Yeah. Of course.My personal brand is, Instagram and YouTube are pretty big for me there, but typically my pilot stuff, JoshCTV on YouTube and then, Josh Calcanas on Instagram,

The site that I’m the founder of right now, and if people are interested in writing and getting revenue share on any other articles, it’s called @theinvestingcirclemakescents on Instagram, and both of those have a bunch of articles, both on options and investing, stuff that’s supposed to be relevant to the beginners, the guys that are experienced, and then, of course, make a little bit money doing it. 

Austin: That’s awesome. Well, thank you so much for taking the time to join us on this podcast.

I hope people learned a lot, and I know they will. I’ve learned stuff from you. So that’s awesome. Thank you again.

Josh: Thanks, Austin. I appreciate it.

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