Learn How to Sell Cash Secured Puts
Learn How to Sell Cash Secured Puts
Disclaimer: There are affiliate links on this page. This means that if you click through and purchase anything, I might earn a commission for the introduction with no extra cost to you. In no event will we be liable for any loss or damage including without limitation, indirect or consequential loss or damage, or any loss or damage whatsoever arising from loss of data or profits arising out of, or in connection with, the use of this website.
Limited Time Deal to Purchase Nate Bear’s Profit Surge Trader ASAP HERE
You can also watch a full interview with Nathan Bear discussing the Profit Surge Trader system here.
*******************************************
Investing Wizard Who Turned $37K Into $2.7M in Just 4 Years Makes His Next Big Move
 |
He started from nothing and became a multimillionaire…
He’s now one of the most sought-after trading experts…
Yet he operates 858 miles from Wall Street.
And now, he’s revealing his #1 favorite strategy that targets MASSIVE weekly profits with just one stock ticker.
*****************************************
Come and join my Stock Alerts Reviewed Facebook Group HERE!
If you’re looking to generate income from your investment portfolio, selling cash secured puts may be a strategy worth considering.
By writing (or selling) put options on stocks you’d be willing to buy at a lower price, you can collect premium payments from option buyers while positioning yourself to get a bargain on shares of the underlying stock.
Get your FREE guide on how to sell puts options on high IV stocks!
Of course, there are risks to selling cash secured puts.
If the stock price falls below the strike price of the put option you’ve sold, you’ll be obligated to buy shares at a price above the current market price. And if the stock price plummets, you could end up buying shares at a much higher price than you would have paid if you’d simply bought the stock outright.
Before selling cash secured puts, it’s important to understand the mechanics of how this strategy works and to evaluate the risks and potential rewards.
How Does Selling Cash Secured Puts Work?
When you sell a put option, you’re giving the buyer of the option the right, but not the obligation, to sell shares of the underlying stock to you at a specified price (the strike price) on or before a specified date (the expiration date).
In exchange for this right, the option buyer pays you a premium.
Bullseye Trades: Best Alerts Service
Every Monday at the market open, Jeff sends you his weekly Bullseye Trade.
2022 has been AMAZING for these Bullseye Trades!
(+50% to 300% per week in my experience)
LEARN HOW TO WIN 90% OF YOU TRADES IN 90 SECONDS!
>> CLICK HERE TO LEARN MORE! <<
If the stock price is above the strike price when the option expires, the option will expire worthless and you’ll keep the premium as profit. If the stock price is below the strike price when the option expires, you’ll be obligated to buy shares of the stock at the strike price from the option holder.
When selling cash secured puts, you must have enough cash in your account to cover the purchase of shares if you’re assigned an obligation to buy them.
That’s why it’s called “cash secured.” The amount of cash required is equal to the number of shares you would be obligated to buy, multiplied by the strike price.
For example, if you sell a put option on 100 shares of stock with a strike price of $50, you must have $5,000 in your account to cover the purchase of shares (100 x $50).
Limited Time Deal to Purchase Nate Bear’s Profit Surge Trader ASAP HERE
You can also watch a full interview with Nathan Bear discussing the Profit Surge Trader system here.
*******************************************
Investing Wizard Who Turned $37K Into $2.7M in Just 4 Years Makes His Next Big Move
| |
He started from nothing and became a multimillionaire…
He’s now one of the most sought-after trading experts…
Yet he operates 858 miles from Wall Street.
And now, he’s revealing his #1 favorite strategy that targets MASSIVE weekly profits with just one stock ticker.
*****************************************
What Are the Risks and Rewards of Selling Cash Secured Puts?
The biggest risk of selling cash secured puts is that the stock price could fall sharply and you could be forced to buy shares at a much higher price than they’re currently trading for. If this happens, it’s possible that you could lose money on the trade.
However, there are ways to mitigate this risk. First, only sell put options on stocks that you would be willing to buy at the strike price. This way, if you’re assigned an obligation to buy shares, you’ll be buying a stock that you were interested in owning anyway.
Second, only sell put options with strike prices that represent a discount to the current market price. This will give you a margin of safety in case the stock price falls and you’re assigned an obligation to buy shares.
For example, if a stock is trading for $50 per share, you might only sell put options with strike prices of $45 or lower. That way, even if the stock price falls to $40 per share, you would still be getting a bargain on the shares (assuming you wanted to own them at $40 per share).
Get your FREE guide on how to sell puts options on high IV stocks!
The potential rewards of selling cash secured puts include the premium payments you receive up front and the possibility of buying shares at a discount if the stock price falls and you’re assigned an obligation to buy.
If you sell a put option for $1 per share and the stock price is above the strike price at expiration, you keep the entire $1 per share premium as profit. If the stock price falls below the strike price at expiration, you’ll be assigned an obligation to buy shares and will pay the strike price for them.
However, since you collected a $1 per share premium up front, your effective cost basis on the shares will be reduced by that amount.
For example, if you sell a put option for $1 per share with a strike price of $50 and the stock price falls to $40 per share at expiration, you’ll be assigned an obligation to buy 100 shares at $50 per share. However, since you collected a $100 premium up front, your effective cost basis on the shares will be reduced to $4,900 (100 x $50 – $100).
Another potential benefit of selling cash secured puts is that it can help you get paid to wait for a stock to reach your desired price. For example, let’s say you wanted to buy shares of Stock X at $50 per share but it’s currently trading for $60 per share.
If you sell put options with a strike price of $50 and the stock price doesn’t fall to that level by expiration, you’ll keep the premium payments as profit. And if the stock price does fall to $50 per share or below, you’ll be able to buy shares at your desired price.
Bullseye Trades: Best Alerts Service
Every Monday at the market open, Jeff sends you his weekly Bullseye Trade.
2022 has been AMAZING for these Bullseye Trades!
(+50% to 300% per week in my experience)
LEARN HOW TO WIN 90% OF YOU TRADES IN 90 SECONDS!
>> CLICK HERE TO LEARN MORE! <<
Of course, there’s always the risk that the stock price could fall sharply and you could be assigned an obligation to buy shares at a much lower price than you wanted to pay. But selling cash secured puts can still help you get paid to wait for a stock to reach your desired price.
The Bottom Line
Selling cash secured puts is a strategy that can be used to generate income, acquire shares of stock at a discount, or get paid to wait for a stock to reach your desired price.
Get your FREE guide on how to sell puts options on high IV stocks!
Related Articles
Jeff Bishop Bullseye Trades Review
Ben Sturgill Raging Bull Review
Mike Shorr Trading Reviewed (Scam or Legit?)
Learn How to Sell Cash Secured Puts
Comments are closed.