Selling Put Options For A Living

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

Selling put options for a living.

I do not recommend that traders buy a put or a call option. I mostly sell out of the money vertical credit spread put options because it provides a substantial amount of protection. 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. Spo yhoo150130p49 1 68.

Short puts may be used as an alternative to placing buy limit orders. I ll highlight why selling weekly put options is the best weekly option trading strategy to learn. 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. Yhoo current market price 49 70.

An exercise in selling puts. For example let s say you wanted to make a quick trade in vxx. 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. It is best to sell puts and calls if you want to make a living by trading.

Place a buy limit order. By selling put options. Buy 100 shares of yhoo 49. By selling the january 28 puts you can bring in approximately 1 06 or 106 per contract.

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. You can read that story to better understand how selling a put works. 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.

Cost basis 49 if order is filled 49 option 2. First you re able to collect a large amount of option premium. 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. Trader wants to own 100 shares of yhoo if price goes down to 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. If the stock has weekly options you make money selling straddles strangles every week 2 5 of your exposed capital whic is hedged also. 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.