Learn the ins and outs of selling put options for monthly income with a performance study in AMZN.
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==== Chapters ====
0:00 Download This Video’s Presentation PDF (Link Below)
0:33 Buying vs. Selling Put Options
2:58 Short Put Trade Example in AMZN
5:46 Short Put Loss Example in AAPL
7:13 Exercise & Assignment
10:11 Short Put Margin Requirement & Return on Capital
11:17 Selling Put Options in AMZN (Performance Study)
13:38 How to Reduce Risks When Selling Puts
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===== Summary =====
In this video, we’ll quickly walk through the essential things you need to know about selling/shorting options for monthly income.
The short put options strategy (selling puts) allows traders to make money as long as a stock remains above a specific price (the put’s strike price) over time. Because of this, the stock price can go up, sideways, or slightly down and the strategy can make money, giving it a high probability of profit.
If the stock price falls significantly during the trade period, the short put trade will lose money, but not as much as buying 100 shares of stock at the initial trade entry point.
If assigned on a short put, the trader will buy 100 shares of stock at the put’s strike price, and can hold the shares indefinitely, or sell them.
In the video, I highlight a monthly put-selling strategy in AMZN to highlight the potential profits and losses the strategy can experience.
Since it is a bullish strategy, I do not recommend shorting puts every month in a down-trending market/stock. I would personally wait for a strong support level (look to the weekly/monthly time frames for the strongest levels) to begin selling puts, and ideally, have short-term moving averages above longer-term moving averages (indicating a bullish trend).
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Disclaimer: Nothing contained in our content constitutes a solicitation, recommendation, promotion, or endorsement of any particular security, other investment product, transaction, or investment. Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involve substantial risk of loss and are not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time. Past performance is not necessarily indicative of future results. I am not a financial advisor. The ideas presented in this video are for entertainment purposes only. You (and only you) are responsible for the financial decisions that you make.
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