Strategy: Selling Put Options: The Best Income Method?

[botpro]

Stock at $50, you sell the $45 put for $1.00. Stock starts selling off and vols spike where option jumps to $3.00, stock is at $45 now and keeps sliding lower. Not hard to imagine but since you cannot then you are not taking into account all the risks. Anyone who says they can simply get out of a naked position before it turns to a loss should not be trading named options, even cash secured short puts IMHO.

This is a far fetched unrealistic example. Just see how much the premium increased: 200%
And the stock fell 10%.
Is this very realistic for you?
And, you have not answered yet the question about the timeframe of this change happening.
Come on optionscoach, fight, I'm challenging you for a strategic duell! ;-)
Won't you take? ;-)
I see, you have no arguments left, you can't go deeper into a discussion, now even posting silly images... ;-)

 

[El OchoCinco]

This is a far fetched unrealistic example. Just see how much the premium increased: 200%
And the stock fell 10%.
Is this very realistic for you?
And, you have not answered yet the question about the timeframe of this change happening.

 

[newwurldmn]

Stock at $50, you sell the $45 put for $1.00. Stock starts selling off and vols spike where option jumps to $3.00, stock is at $45 now and keeps sliding lower. Not hard to imagine but since you cannot then you are not taking into account all the risks. Anyone who says they can simply get out of a naked position before it turns to a loss should not be trading named options, even cash secured short puts IMHO.

This would never happen...

Now I have to check my VRX positions.

 

[El OchoCinco]

OK it would never happen....lot of option trading geniuses on this site...why ask for advice...just go short naked options..no need to understand volatility... nothing to see here...

<you are kidding about VRX I hope...the stock that plunged 20 points haha>

 

[botpro]

OK it would never happen....lot of option trading geniuses on this site...why ask for advice...just go short naked options..no need to understand volatility... nothing to see here...

<you are kidding about VRX I hope...the stock that plunged 20 points haha>

1.) you should at least finally understand that it is not about "naked put selling", but just normal "put selling"
Why are you repeating that "naked" like a parrot?
2.) In bad advice I'm obviously not interested, no thx.
3.) I understand volatility very well, you shouldn't draw wrong conclusions about others.
4.) The strategy is about solid stocks like INTC that have been throughly analysed before, and in which we would like to open a position.
Just read the original article if that point is still unclear to you.

.

 

[OptionGuru]

I was thinking that the said strategy is maybe something new, yes it seems it's a well known standard strategy...

Selling puts has been around since 2014, but the theory of selling puts has been discussed as far back as 2008.

FYI ......... My "Selling puts has been around since 2014" reply to botpro's "the said strategy is maybe something new" post was my attempt at being witty. The reply was not meant to be taken seriously - it looks as though some ET members did take the post seriously.

 

[El OchoCinco]

1) If you sell a put by itself it is a naked put position. Only variation if it is cash secured as required by your broker. Call it normal if it makes you feel better.
2) good advice being given to stop saying this strategy has no risk. Saying you could never lose money is a rookie mistake but you claim to know a lot.
3) When you say something is impossible as my example then you ignore volatility risk even if the stock is a blue chip.
4) I do not need to read an article on covered call/naked puts. It is the most basic strategy the newbies enter into thinking they can make 20% returns or more annually but not in stocks like INTC or MSFT with small premiums and low volatility.

Why come on here and claim this strategy is great...put your money in an account and tell us in 2 years whether you made 20% - 30% a year. Hypotheticals make no one money.

 

[botpro]

Options selling exists obviously since invention of the options.
But I think retail traders weren't allowed selling options for a long time.

 

[botpro]

4) I do not need to read an article on covered call/naked puts. It is the most basic strategy the newbies enter into thinking they can make 20% returns or more annually but not in stocks like INTC or MSFT with small premiums and low volatility.

You just have outed yourself, because you talk of a special strategy you don't know the details of.
It is a proven fact that the strategy has made 22% in just 3 months with INTC, and the best of it: the trade was pre-announced...

 

[El OchoCinco]

Yes a marketing article is a good reliable source. Load up on the strategy...