Selling Put Options My Way by Jerry LeeI must start by telling you that I have no 1-800 number, I am not trying to sell you any products, and am not inviting you to come to my house to view a cleaning agent. I will not try to sell you plastic bowls or any other “can’t miss” ideas. I do not sell recordings that promise you unlimited wealth, inner peace, or a flat stomach.
I am going to tell you the true story of how I have made a fortune, lost a fortune, and came back from the edge of disaster to prosper in the option market. I started with a modest amount of cash; also, I was lucky as I stumbled into the Internet bubble through accident and ignorance. Other than the school of hard knocks, I have no special talent or training in the stock market. My good and bad trades have been learned the hard way.
I will also tell you how I now invest, and how it might work for you. If you find that it does, great. We both will be winners. Once you read the book and start your own financial journey, I have no control as to whether or not you will follow my ideas. Your results might be different from mine. I hope better but maybe not. You alone must make the decision whether this strategy will fit your investment goals.
My method is not the only way to trade options and these ideas are definitely not the only way to sell puts. My methods are a way for the average investor to sell puts with some rules and guidelines. Just a few simple things to check each month, then make the trade and pocket some “free money.”
Selling Put Options: Why Just 5% Generates A Steady Monthly Income
Passive income through option writing: Part 3
What if you could buy stocks lower than the current market price? If either of those scenarios sounds appealing to you, then perhaps you should consider selling a cash-secured put. But selling a cash-secured put gives you another method of buying the stock below the current market price, with the added benefit of receiving the premium from the sale of the put. Sell an out-of-the-money put strike price below the stock price. In order to receive a desirable premium, a time frame to shoot for when selling the put is anywhere from days from expiration.
They want three to five risky trades each day! While we expect to present five to 10 opportunities each month, the trades will not be fixed to some sort of arbitrary investment schedule. The market will present us with the best opportunities to collect income from the safe stocks we own — not the other way around. If you would like to learn more about how we use options for income, please do not miss our event this upcoming Wednesday, Sept. We cover the primary strategies used in High Yield Trader , plus several real-time trades.
Back in , I wrote a few posts on trading derivatives, especially options, to generate mostly passive income:. Selling put options exposes me to the worst possible return profile: I have almost unlimited downside risk, i. Most people think that the return profile sounds unappetizing. Same logic with the lottery. Or buying an extended warranty.
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In finance, a put or put option is a stock market device which gives the owner the right to sell an asset the underlying , at a specified price the strike , by a predetermined date the expiry or maturity to a given party the seller of the put. The purchase of a put option is interpreted as a negative sentiment about the future value of the underlying stock. Put options are most commonly used in the stock market to protect against the decline of the price of a stock below a specified price. In this way the buyer of the put will receive at least the strike price specified, even if the asset is currently worthless. If the strike is K , and at time t the value of the underlying is S t , then in an American option the buyer can exercise the put for a payout of K-S t any time until the option's maturity time T. The put yields a positive return only if the security price falls below the strike when the option is exercised. A European option can only be exercised at time T rather than any time until T , and a Bermudan option can be exercised only on specific dates listed in the terms of the contract.