How I Use Options and Technical Analysis to Generate ~$2K Monthly (Part 1/5)
By Harsh Shah · Updated
Disclaimer:This information is for educational purposes only and should not be considered financial advice.
Everyone wants a steady source of extra income.
I’m no different.
Since I already work full-time, I needed something that:
- doesn’t require staring at screens all day
- is consistent
- is simple enough to repeat
After trying more than 10 trading approaches, one stood out:
Technical Analysis × Options
It’s structured, logical, and when used correctly, it has given me a 95–98% win rate over time.
This is a 5 part series, where I’ll cover:
- the basic options concepts you MUST understand
- how margin works (and its real risks)
- how Technical Analysis increases probabilities
- the strategy I use to generate steady income
Let’s start with the foundation.
“Options are risky!” — why that statement is only half true
You’ve probably heard:
- “Options are risky.”
- “I lost money trading options.”
- “Stay away from options.”
I’ve heard it too — and yes, I’ve lost money learning options.
But instead of quitting, I studied:
- how options really work
- why most people lose
- how professionals consistently make money
Eventually, I learned something important:
Options don’t have to be gambling.
Used correctly, they work a lot like an insurance business.
And that’s the perfect analogy.
Meet Mr. Tom and his Tesla stock
Tom owns 100 shares of Tesla at $250 each.
Total investment: $25,000.
When markets crashed, Tom worried:
“What if Tesla drops to $100?”
Someone told him:
“You can buy insurance on your stock.”
So even if Tesla fell to $100, Tom could still sell it at $250.
Sounds great, right?
That “insurance” is an option.
But just like real insurance, Tom must pay a premium to whoever sells that protection (because for every buyer, there should be a seller!).
If paying a small premium helps protect $15,000 in losses…
most people would happily pay it.
That’s exactly what options were designed to do:
They protect your investment — for a price.
Options Work Like Insurance
In the options market:
- Most people BUY options (like buying insurance)
- A smaller group SELLS options (like being the insurance company)
Buyers pay a premium hoping something big happens.
Sellers collect premium assuming most of the time, nothing crazy happens.
Just like car insurance:
- most policies never get used
- the seller keeps the money
Teaser: My strategy focuses on selling options — becoming the insurance company.
But first, we need to understand the key terms.
Key Concepts
1️⃣ Contract
An option contract is simply an agreement between:
- a buyer
- a seller
The buyer pays a premium to insure an underlying asset (like Tesla) for a set time and price.
In U.S. markets:
1 options contract = 100 shares
Examples:
- 1 Tesla contract at $450 → covers 100 shares i.e. 45,000$
- 1 Google contract at $310 → covers 100 shares i.e. 31,000$
2️⃣ Strike Price — The Price You Lock In
The strike price is the deal price both sides agree on.
If your strike is $250, you’re saying:
“I want the right to buy/sell at $250 — no matter where the stock moves.”
3️⃣ Expiration Date — The Time Limit
Options don’t last forever.
When expiration arrives:
- the contract disappears
- unused contracts become worth zero
- the seller keeps the premium (more on this in the next blog)
Exactly like insurance.
4️⃣ Premium — The Cost of Insurance
The premium is:
- what buyers pay
- what sellers collect
Once paid — it’s gone.
As a seller, this is powerful:
You get paid upfront, and you simply want the option to expire unused.
Why Most People Lose With Options
Most traders lose because they:
- chase jackpot-style bets
- ignore probabilities
- use too much leverage
- refuse small losses
They treat options like gambling.
But the consistent money is usually on the other side:
- predictable
- probability-driven
- structured
Just like running an insurance business.
And that’s what this series will teach.
Final Thoughts
Options can be risky — if used like lottery tickets.
But when you approach them like an insurance company:
- you price risk
- manage probabilities
- collect premium
Most of the time, nothing dramatic happens — and the premium becomes income.
It’s not risk-free — discipline matters.
But when used correctly, options can create a steady, repeatable income strategy.
Next, I’ll walk through:
- Call/Put options.
- Exact strategy I use (Risks, Stock selection, Margin, Tracker)
Step by step.
Stay tuned.
👉 Sign up for my upcoming TA course:datadriveninvesting.io/course
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