Your First 30-Days Roadmap to The Cash-Flow Trading Formula from Theta Trading

Welcome to the exciting world of Trading! If you’re a new investor looking to dip your toes into options trading without getting overwhelmed, you’re in the right place. The Theta Trading Formula is a straightforward, beginner-friendly strategy that lets you generate monthly cash flow while targeting high-quality companies you already know and love.

In this 30-day roadmap, we’ll walk you through how to start with paper trading (using fake money but real stock data), build a list of great companies, get paid to agree to buy stocks at a discount, and, if you end up owning them, get paid again to sell them at a higher price. Our goal? Aim for 1–6% monthly returns through a mix of cash flow and stock price growth—all while keeping things low-risk and fun.

No deep financial knowledge or complicated research is required. You’ll start with companies you’re already familiar with, practice the strategy, and deepen your understanding over time. Let’s dive into your first 30 days of Theta Trading!

Week 1: Build Your Stock List with Paper Trading

Your journey begins with paper trading—a risk-free way to practice trading using real stock market data but with fake money. This is your chance to test the waters, make mistakes, and learn without risking a dime.

Step 1: Look Around Your Life

You don’t need to be a Wall Street expert to pick great companies. Start with what you know! Look at the products and services you use every day. These are often the best starting points because you’re already doing hands-on “research” by being a customer.

• What phone are you using? If it’s an iPhone, Apple (stock symbol: AAPL) is a fantastic company to consider.
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• Do you love streaming? If you’re glued to Netflix (NFLX), that’s another great option.
• Are you into electric cars? Maybe you own a Tesla (TSLA) or know someone who does.

These companies are likely high-quality because you’re personally aware of their value. Write down 3–5 companies you use or admire. This is your initial stock list.

Step 2: Set Up a Paper Trading Account

To practice, you’ll need a paper trading platform. Many free platforms, like Thinkorswim by TD Ameritrade, Webull, or Interactive Brokers, offer paper trading accounts. Sign up for one (it takes just a few minutes), and you’ll get a virtual account with fake money to trade.

Once set up, add your 3–5 chosen stocks to your watchlist on the platform. Watch their prices move daily to get a feel for how they behave. Don’t worry about diving into financial reports yet—you’re just getting comfortable with the process.

Step 3: Why Paper Trading Matters

Paper trading lets you experiment with Theta Trading without stress. You’ll practice the strategy, see how stock prices affect your trades, and build confidence. By starting with companies you know, you’re already ahead of the game. Spend Week 1 exploring your platform and observing your stock list.

Week 2: Practice Getting Paid to Buy Stocks at a Discount

Now that you have your stock list and paper trading account, it’s time to practice the first half of Theta Trading: getting paid to agree to buy stocks at a discount. This is done using an options strategy called selling naked puts, but don’t let the term scare you—it’s simpler than it sounds.

How It Works

When you sell a put option, you’re agreeing to buy a stock at a specific price (called the strike price) by a certain date (the expiration date). In return, you get paid cash upfront, called a premium. Think of it like selling a coupon: someone pays you now for the promise that you’ll buy the stock later if the price drops to your agreed-upon level.

For example:

• Let’s say Apple (AAPL) is trading at $200 per share.
• You agree to buy 100 shares at $190 in 30 days.
• For making this promise, you’re paid $200 in cash upfront.

If Apple stays above $190, you keep the $200 and don’t have to buy the stock. If Apple drops below $190, you buy it at $190 (a discount from $200), and you still keep the $200. Either way, you win!

Step 1: Explore Different Prices and Timelines

Log into your paper trading account and look at the options for one of your stocks (most platforms have an “Options” or “Chains” tab). You’ll see a list of strike prices and expiration dates. Try these experiments:

• Choose different strike prices. Pick a price 5–10% below the current stock price (e.g., if Apple is $200, try $190 or $180). Notice how the cash premium you’d receive changes. Lower strike prices usually mean smaller premiums but less chance of having to buy the stock.
• Try different expiration dates. Compare premiums for 2 weeks, 30 days, and 45 days out. Longer timelines often pay higher premiums but tie up your promise for longer.

For example, selling a 30-day put on Apple at $190 might pay $200, while a 45-day put at $180 might pay $150. Play around to see how these choices affect your cash flow.

Step 2: Track Your Practice Trades

Make 2–3 practice trades by selling puts on your chosen stocks. Write down the stock, strike price, expiration date, and premium you’d receive. Check your trades daily to see how they’re performing. This helps you understand how stock price movements affect your strategy.

By the end of Week 2, you’ll feel confident about generating cash flow by agreeing to buy stocks at a discount. You’re targeting 1–6% monthly returns, and these premiums are the first piece of that puzzle.

Week 3: Get Paid to Sell Stocks at a Higher Price

What happens if a stock’s price drops and you end up buying it through your put option? That’s where the second half of Theta Trading comes in: getting paid to agree to sell your stock at a higher price. This is done by selling covered calls, and it’s a great way to keep generating cash flow while owning the stock.

How It Works

When you sell a covered call, you’re agreeing to sell your stock at a specific price (the strike price) by a certain date. In return, you get paid a cash premium upfront. It’s like offering to sell your stock at a price you’re happy with, while pocketing extra cash just for making the offer.

For example:

• You own 100 shares of Apple at $190 (bought via your put option).
• You agree to sell them at $210 in 30 days.
• For this promise, you’re paid $150 upfront.

If Apple stays below $210, you keep the $150 and your shares. If Apple rises above $210, you sell at $210 (making a $20-per-share profit plus the $150). Either way, you’re generating cash flow or locking in gains.

Step 1: Practice Selling Covered Calls

In your paper trading account, assume you’ve bought one of your stocks (e.g., 100 shares of Apple at $190). Go to the options section and sell a covered call:

• Choose a strike price 5–10% above the current price (e.g., $210 if Apple is $190).
• Try expiration dates of 2 weeks, 30 days, or 45 days to see how premiums change.

Track these practice trades, noting the premium, strike price, and expiration. Watch how the stock’s price affects your trade over time.

Step 2: See the Cash Flow Add Up

The premiums from selling puts and calls are your primary source of cash flow in Theta Trading. Combined with potential stock price gains (if you sell at a higher price), these premiums help you target 1–6% monthly returns. Week 3 is about seeing how owning a stock doesn’t end your cash flow—it’s just another opportunity to get paid.

Week 4: Deepen Your Knowledge of Your Stocks

By now, you’re comfortable paper trading, generating cash flow with puts, and earning more with covered calls. The final week is about building confidence in your stock picks by deepening your knowledge. You don’t need a fancy research team (though Theta Trading has one in-house to analyze companies). You can start your own simple research process to ensure you’re targeting high-quality companies.

Step 1: Expand Your “Hands-On” Research

Continue using your personal experience as a customer. Ask yourself:

• Why do you love this company’s products or services?
• Are their products still popular? Check social media or talk to friends to gauge demand.
• Are they innovating? For example, is Apple releasing new iPhones, or is Tesla improving its cars?

This isn’t about digging into balance sheets—it’s about confirming that the companies you like are still strong and relevant.

Step 2: Explore Simple Research Methods

Here are three easy ways to learn more about your stocks:

• Read news articles. Search for your companies on Google News or Yahoo Finance. Look for updates on new products, partnerships, or growth plans. For example, if Netflix is launching a new show or expanding to a new country, that’s a good sign.
• Check company websites. Visit the “Investor Relations” section of your companies’ websites. They often share simple summaries of their performance or future goals.
• Follow social media buzz. Platforms like X can show you what people are saying about your companies. Search for posts about Apple, Tesla, or Netflix to see if they’re trending positively.

Step 3: Refine Your Stock List

Based on your research, decide which 2–3 companies you feel most confident about. These will be your focus when you’re ready to trade with real money (after mastering paper trading). High-quality companies with strong products and customer loyalty are ideal for Theta Trading.

Wrapping Up: Your Theta Trading Journey

Congratulations! In just 30 days, you’ve learned the basics of Theta Trading:

• Built a stock list based on companies you know and use.
• Practiced getting paid to buy stocks at a discount using paper trading.
• Explored earning cash flow by agreeing to sell stocks at a higher price.
• Started a simple research process to deepen your confidence.

Theta Trading is all about generating consistent cash flow (1–6% monthly returns) while targeting great companies. By starting with paper trading, you’ve built skills without risking a penny. When you’re ready, you can transition to real trading with the same strategy.

Keep practicing, refine your stock list, and stay curious about the companies you’re trading. With Theta Trading, you’re not just investing—you’re building a system to grow your wealth month after month. Happy trading!