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How to Sell put options for income
Selling put options is the best way to produce income in your favorite companies. Master the art of put selling with the secrets I will show you
Put Options
What is a Put option? (Buying vs Selling)
- A Put option is a contract which gives the buyer of the contract the right, not the obligation to sell an underlying asset at a predetermined price for a specific amount of time.
How to sell put options efficiently
Choosing the stock
- A stock that is trending up. Moves up over an extended period of time
- A stock with liquid weekly options available. At least 500 open interest contracts for popular strike prices
- A stock that you can easily apply technical analysis to, based off past data. You want to be able to predict the movements with logic. Meaning no start up bio techs etc....
- A stock that out the money weekly options carry high premiums
Choosing the strike price
- The best way to choose strike price is good old fashion technical analysis.
- Identifying major support and resistance areas are good places to start
- Utilizing custom parameters on a technical indicator to give over 99.7% odds is another. Subscribe today to find out more on this.
Frequency
- Selling weekly will give you less premium upfront but will help you scale quicker.
- Selling monthly will give you more premium but leaves allot of uncertainty within 30 days.
- To take advantage of both, selling puts bi-weekly gives a great deal of premium and expires soon enough to give a good scaling effect
Hedging
- Hedging the sales of your short term put sales is a great way to reduce risk. Simply purchasing long dated strangles is one of the best ways to hedge.
- Having a high ratio of cash available vs position size is another way to lower overall capital risk. Not the best way and will lead to smaller gains.
- Making sells way out the money in a stock that carries high premiums is another way to mitigate risk
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