Selling Put Options For A Living

By selling put options.

Selling put options for a living.

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. A quick primer on options may be helpful in understanding how writing selling puts can benefit your investment strategy so let s examine a typical trading. I mostly sell out of the money vertical credit spread put options because it provides a substantial amount of protection. With the goal of living off dividends i can increase my income and reinvestable capital by successfully writing put options for income.

Yhoo current market price 49 70. Trader wants to own 100 shares of yhoo if price goes down to 49. I do not recommend that traders buy a put or a call option. Short puts may be used as an alternative to placing buy limit orders.

Pitfalls of selling stock options like naked puts. Cost basis 49 if order is filled 49 option 2. You can read that story to better understand how selling a put works. Buy 100 shares of yhoo 49.

In this article i ll talk about how to either make a living or supplement your income by selling put s for a profit. Spo yhoo150130p49 1 68. 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. I ll highlight why selling weekly put options is the best weekly option trading strategy to learn.

For example let s say you wanted to make a quick trade in vxx. 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. 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. By selling the january 28 puts you can bring in approximately 1 06 or 106 per contract.

If the stock has weekly options you make money selling straddles strangles every week 2 5 of your exposed capital whic is hedged also. Selling cash secured put options. Place a buy limit order. Sell a 49 strike put.

Selling a put obligates you to buy shares of a stock or etf at your chosen short strike if the put option is assigned. An exercise in selling puts. 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.