Selling Put Options For A Living

Yhoo current market price 49 70.

Selling put options for a living.

By selling put options. You can read that story to better understand how selling a put works. Cost basis 49 if order is filled 49 option 2. An exercise in selling puts.

In my last post i explained how selling put s can be used by the conservative investor to buy stocks at a lower price during almost any market conditions. Spo yhoo150130p49 1 68. Trader wants to own 100 shares of yhoo if price goes down to 49. If the stock has weekly options you make money selling straddles strangles every week 2 5 of your exposed capital whic is hedged also.

For example let s say you wanted to make a quick trade in vxx. With the goal of living off dividends i can increase my income and reinvestable capital by successfully writing put options for income. Writing puts for income offers the best combination of risk reward. Selling cash secured put options.

Pitfalls of selling stock options like naked puts. Naked puts are options trades in which you sell the right for another investor to sell put a certain stock to you at a specific price strike price if the stock falls below that. It is best to sell puts and calls if you want to make a living by trading. By selling the january 28 puts you can bring in approximately 1 06 or 106 per contract.

First you re able to collect a large amount of option premium. Sell a 49 strike put. Buy 100 shares of yhoo 49. Once my setup and hedging approx 3 of my capital with calendar spread is complete i start selling covered calls on assigned puts else sell puts for 6 months.

I ll highlight why selling weekly put options is the best weekly option trading strategy to learn. In this article i ll talk about how to either make a living or supplement your income by selling put s for a profit. Short puts may be used as an alternative to placing buy limit orders. Often selling naked puts is a trade of small amounts which over months of constantly selling naked puts against stocks can result in reasonable monthly income however there is nothing worse than selling a naked put for 50 cents and ending up buying it back for 1 50.

I do not recommend that traders buy a put or a call option. Selling a put obligates you to buy shares of a stock or etf at your chosen short strike if the put option is assigned. One of my favorite option strategies is a very simple trade that generates portfolio income and reduces equity risk it is selling a cash secured put.