Apple Stock and Naked Puts VS Put Credit Spreads

While I love Put Selling strategies, sometimes naked puts are not the best choice, particularly if investors are worried a stock could tumble. Presently I have received about a dozen emails from investors who sold naked puts on Apple Stock and are worried with the continuing decline. Now down almost $100.00 from its recent high, a lot of investors are wondering how much further the stock may fall.

Naked put strategies are wonderful especially when investors want to own the underlying stock but often when a stock takes a tumble many investors begin to have doubts about wanting the stock. After all why own a stock at $690.00 when it is now down to $609.

Naked puts are not the best of strategies if investors need more protection. Often a put credit spread is a much better strategy. Apple Stock lends itself readily to a put credit spread. If an investor were willing to accept a slightly larger loss in a put credit spread than that which is defined at the outset, there is the potential that a losing trade could be turned into a winning one. An investor, Joe wrote to explain he had sold 2 naked puts on April Stock in mid-September and on Oct 19 he sold out for a loss unable to stand the worrying and strain of the continuing decline in Apple Stock.

In this article I look at how a credit put spread could have turned his loss into a profit and made it a lot easier to sleep night. This is a Fullyinformed Members Article. It is 8 pages in length with 2463 words. Members can login to read it. Non-members can join here.