💰Selling put options is a high-probability options trading strategy.
📈This strategy can yield attractive results in rising markets.
🌐Put options can be used in neutral markets as a way to generate income.
⬇️The value of put options increases as the stock price declines.
⚖️Selling put options for income has a defined risk, making it an attractive strategy for income generation.
What are put options?
—Put options are financial contracts that give the buyer the ability to sell 100 shares of stock at a fixed price before a specified date.
How does selling put options generate income?
—When you sell a put option, you collect a premium from the buyer. If the stock price remains above the strike price, the option expires worthless, and you keep the premium as income.
What happens if the stock price declines?
—If the stock price falls below the strike price, you may be assigned the stock and will need to purchase it at the strike price. However, you still keep the premium received, which can help offset any losses.
Is selling put options a risky strategy?
—Like any investment strategy, selling put options carries risks. However, the risk is limited to the difference between the strike price and the stock's actual price.
How can I reduce the risk of selling put options?
—You can reduce risk by selecting strike prices that are comfortably below the current stock price and by diversifying your option trades across different stocks and sectors.
00:00Selling put options is a high-probability options trading strategy that can generate attractive results in rising, neutral, and even declining markets.
03:57Put options are financial contracts that give the buyer the ability to sell 100 shares of stock at a fixed price before a specified date.
05:59When you sell a put option, you collect a premium from the buyer. If the stock price remains above the strike price, the option expires worthless, and you keep the premium as income.
07:56If the stock price falls below the strike price, you may be assigned the stock and will need to purchase it at the strike price. However, you still keep the premium received, which can help offset any losses.
09:59Selling put options carries risks, but the risk is limited to the difference between the strike price and the stock's actual price.
12:55Reduce the risk of selling put options by selecting conservative strike prices and diversifying your trades across different stocks and sectors.
