Selling Put Options For A Living

It is best to sell puts and calls if you want to make a living by trading.

Selling put options for a living. 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. If the stock has weekly options you make money selling straddles strangles every week 2 5 of your exposed capital whic is hedged also. 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. I mostly sell out of the money vertical credit spread put options because it provides a substantial amount of protection.

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. Selling a put obligates you to buy shares of a stock or etf at your chosen short strike if the put option is assigned. With the goal of living off dividends i can increase my income and reinvestable capital by successfully writing put options for income. Cost basis 49 if order is filled 49 option 2.

Sell a 49 strike put. Pitfalls of selling stock options like naked puts. 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. 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.

Yhoo current market price 49 70. Short puts may be used as an alternative to placing buy limit orders. Place a buy limit order. In this article i ll talk about how to either make a living or supplement your income by selling put s for a profit.

I do not recommend that traders buy a put or a call option. By selling put options. Spo yhoo150130p49 1 68. First you re able to collect a large amount of option premium.

Trader wants to own 100 shares of yhoo if price goes down to 49. Writing puts for income offers the best combination of risk reward. You can read that story to better understand how selling a put works. An exercise in selling puts.

Selling cash secured put options. 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. For example let s say you wanted to make a quick trade in vxx.