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.

Selling put options for a living.

I mostly sell out of the money vertical credit spread put options because it provides a substantial amount of protection. Selling a put obligates you to buy shares of a stock or etf at your chosen short strike if the put option is assigned. Pitfalls of selling stock options like naked puts. First you re able to collect a large amount of option premium.

By selling the january 28 puts you can bring in approximately 1 06 or 106 per contract. 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. Selling cash secured put options. 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. Yhoo current market price 49 70. If the stock has weekly options you make money selling straddles strangles every week 2 5 of your exposed capital whic is hedged also.

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. 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.

I ll highlight why selling weekly put options is the best weekly option trading strategy to learn. Cost basis 49 if order is filled 49 option 2. Trader wants to own 100 shares of yhoo if price goes down to 49. Place a buy limit order.

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. By selling put options. Sell a 49 strike put. With the goal of living off dividends i can increase my income and reinvestable capital by successfully writing put options for income.

An exercise in selling puts. Writing puts for income offers the best combination of risk reward. Short puts may be used as an alternative to placing buy limit orders.