Selling Put Options For A Living

With the goal of living off dividends i can increase my income and reinvestable capital by successfully writing put options for income.

Selling put options for a living.

Writing puts for income offers the best combination of risk reward. Selling a put obligates you to buy shares of a stock or etf at your chosen short strike if the put option is assigned. 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. You can read that story to better understand how selling a put works.

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

Yhoo current market price 49 70. 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 do not recommend that traders buy a put or a call option. Spo yhoo150130p49 1 68.

An exercise in selling puts. 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. In this article i ll talk about how to either make a living or supplement your income by selling put s for a profit.

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 mostly sell out of the money vertical credit spread put options because it provides a substantial amount of protection. 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. Short puts may be used as an alternative to placing buy limit orders.

Selling cash secured put options. For example let s say you wanted to make a quick trade in vxx. Pitfalls of selling stock options like naked puts. Buy 100 shares of yhoo 49.

Sell a 49 strike put. I ll highlight why selling weekly put options is the best weekly option trading strategy to learn. By selling the january 28 puts you can bring in approximately 1 06 or 106 per contract.