Strategy: Selling Put Options: The Best Income Method?

EdgeQuest said:
you mean short a put vertical spread right?
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It all depends on where the market is currently at!

http://www.theoptionsguide.com/put-spread.aspx

The opposite can also be done with selling calls, but not as effective as with selling puts.

Whilst most option traders use the models and greeks to seek out "value", there are some that use just charts to initiate trades at the most appropriate strike prices.

Different markets offer different opportunities, but overall, the principle is the same.

Naked put selling is a fools game..and is usually carried out by the inexperienced, or, the greedy.

Done correctly, even a market meltdown will not bother the protected put seller, providing the Options are European Style :)
 
MrScalper said:
The best income method for selling puts can be to sell index puts, but always protect yourself with a lower strike put.

Bad habits tend to cost you a lot of money in the long run.
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I find selling puts in the index ETFs such as spy or iwm not really worth it in current market conditions. But I'll often sell puts on the 3x ETFs because I can sometimes get decent pricing on otm options.
 
i960 said:
Which is why you should seriously be asking yourself why you're selling them. Know what what a unit put is? Do you really want to be the guy paying out for the other guy who's basically using you as insurance for his put spread closer to the money?
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You are recieving something in return, he gets cash and you get stock at an agreed strike price. If you wanted stock at the strike price the. You lost nothing, you made a transaction. You purchased stock at xyz price - premium.

You make it sound like he paid out and got nothing in return, no he got stock in return. I have sold many times a put and was more than happy to recieve stock on saturday. :) i might have already sold calls on those shares in anticipation of saturday delivery. :)
 
yobo said:
I find selling puts in the index ETFs such as spy or iwm not really worth it in current market conditions. But I'll often sell puts on the 3x ETFs because I can sometimes get decent pricing on otm options.
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I have not traded options on ETF's, but I would be very surprised if they offer better opportunities than puts on the index itself!

Easy to check if one has the time :)
 
yobo said:
I find selling puts in the index ETFs such as spy or iwm not really worth it in current market conditions. But I'll often sell puts on the 3x ETFs because I can sometimes get decent pricing on otm options.
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Unless you are talking about getting more efficient execution due to bigger premium vs fixed costs, 3x ETS are are priced consistently with the underlying index (vol is adjusted by the beta and some simple forward adjustment, every MM does that for sure).
 
Good thread. I've been on/off this site for many years and have found it to be one of the best for traders. I'm a long-time stock & commodities guy and chime in on occasion. See some of my previous posts. I love selling puts and been doing it successfully for 26 years, but of course you need to be aware of the risks and have a system for it. Some will disagree but I think it's one of the best strategies out there. If you care and need a lesson (or refresher) about selling puts, my free guide ("Put-Selling Basics") is on my website. Best to everyone.
 
syd697 said:
Good thread. I've been on/off this site for many years and have found it to be one of the best for traders. I'm a long-time stock & commodities guy and chime in on occasion. See some of my previous posts. I love selling puts and been doing it successfully for 26 years, but of course you need to be aware of the risks and have a system for it. Some will disagree but I think it's one of the best strategies out there. If you care and need a lesson (or refresher) about selling puts, my free guide ("Put-Selling Basics") is on my website. Best to everyone.
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Hello Mr syd697, do you have any more details in relation to your track record, as this really is not that much to go on!

https://www.smartoptionseller.com/track-record

Cheers.
 
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