Product Reference

YieldGen implements a streamlined workflow and enriched analytics for options-income investing.

In an options-income portfolio — sometimes called "wheel" trading because the steps repeat over and over again — the focus is earning income by selling options. YieldGen organizes a simple, repeatable process around:

  1. keeping cash well deployed for high yield
  2. monitoring the portfolio for yield-enhancing actions all along the way to expiration, and
  3. recovering capital following any losses from stock assignment.

This reference describes application functionality around workflows and controls, as well as how the principal financial measures are calculated.

Please note that while in the app, you can press-and-hold most screen elements for a concise reminder of their description or definition from this product reference.

Section 1

Overview

YieldGen organizes the various workflows of options-income investing into five main screens.

Portfolio Summary provides a top-level view of the portfolio, along with recommended portfolio management actions (for risk mitigation, yield enhancement, or both).
Watchlist is the list of stocks you're tracking, and always includes any stocks with exposure in the portfolio.
Option chain is the live price sheet of options trading for a given stock, annotated with critical metrics to help your trade decisions.
Detail is the deep dive into one option contract or stock, tailored to the trade action you're analyzing.
Exposures shows a detailed view of the portfolio, to highlight performance, risk, or yield improvement opportunities.

Core terms and methods

Cash and cash equivalents (CCE)
Cash plus eligible interest-bearing holdings, such as a broker-approved money-market fund.
Cash secured
CCE is sufficient to buy all shares required if every short put is exercised.
Pledged cash
The full exercise amount represented by short puts: strike × contract size × quantity. Contract size is normally 100 shares.
Available cash
CCE − pledged cash. A negative result is shown as leverage: the additional cash required if all short puts are exercised.
Cash utilization
pledged cash ÷ CCE. More than 100% indicates leverage.
Annualized yield
The annual rate of return on an investment. In YieldGen, this is usually describing the rate of return on a sold put option, assuming the option is not exercised. It includes both the premium received on the option, as well as any interest, if any, on eligible collateral posted to secure the sold put.
Option Spread
Two or more options simultaneously entered into, with the objective of taking on the combined economics (risk and return) of the multiple individual options or "legs". In YieldGen, where short or sold put options are the primary method of generating yield, a user can hedge their exposure on these trades by simultaneously buying a put option at a lower strike, and with the same or later expiration date (becoming a "vertical put spread" when the long option expires on the same date, or a "diagonal put spread" when the long option expires on a later date). YieldGen always reports the combined or net economics of an option spread (net profit, net closeout cost, etc.).
Recovery target
The selling price needed on an equity position in order to achieve profitability. Where the broker provides detailed transaction history, YieldGen tracks and reports a recovery target reflective of potentially multiple rounds of dividends received, call options sold, and (as a user setting) can also grow that recovery target over time to reflect the opportunity cost of taking a long time to recover.

Prices used in calculations

  • Before execution. Option chain and new-trade values use either quote midpoints or bid/ask by leg, as selected in Settings. Bid/ask by leg uses the bid when receiving premium and the ask when paying premium. This preference directs which prices are used in the option chain and other displayed, indicative quotes in the app. It does not affect which prices are submitted in limit orders (these are set by the user in the trade ticket) or which prices are executed in market orders (these are determined by the market).
  • After execution. Yield at inception and opening premium use actual brokerage fills when transaction history is available.
  • Current position. Close cost, yield if closed, and yield if held use current market quotes.

Next: Summary