Put Selling Index

Put Selling – Naked Put Definition

Put selling is referred to as “Naked” because when an investor does put selling, they have “exposed” themselves to assignment as they do not own the stock shares they have sold the naked put against. The investor is therefore naked the shares. Like any strategy there are pros and cons, but the naked put option trade is not risky itself, it is the investor who blindly sells puts without understanding the strategy that makes it risky. Some investors define Naked Put as when they do put selling without having enough capital behind them to actually pay for the stock if assigned shares. Select this Put Selling link to read Wikipedia’s definition of a put option.

Put Selling – Cash Secured Put Definition

Cash secured puts is a term investors use to refer to put selling and having cash in an account that will pay for the stock if the puts the investor sold are assigned.

Put Selling Articles Index

This is a complete index of all articles I have written on put selling. I created this index of my put selling articles for other investors to understand how I use put selling as an investment strategy.

After understanding my put selling strategies, investors can develop their own put selling strategies that suit their risk level and investing style.

This Index is updated with each new article on Put Selling. If you want to be notified of each new Put Selling article consider signing up for email alerts or join my RSS Feed.

Put Selling – Why

This is a great place to start when wanting to learn about Put Selling. Many investors cannot understand why I would set up put selling as a principal financial investment strategy. In fact most investors do not consider stock option selling as “investing”. Every week I get emails from readers “complaining” that put selling is not investing. I also always hear that options are “too risky”. Understood properly, options selling as a financial investment strategy is among the finest of strategies. It is very worthwhile for investors to learn what is option trading and how to implement it. Put selling offers a lot of potential, is exceptional for rescuing capital caught in downturns and it is very enjoyable to see earnings month after month, year after year from put selling.

Put Selling As A Principal Investment Method

I have put this as the second article in the Put Selling index as it should be read next for investors to understand my principal investment method. Put selling is looked upon by most investors as not “truly investing”. For myself, Put Selling is my principal investment method. It is important to remember that for me, I am not “just” randomly put selling for income. I am put selling as a long-term investment method. I need consistent stocks that stay within a trading range to make selling puts consistently profitable. Put selling is a strategy that earn small monthly sums that compound over time. One or two bad trades can wiped out months of profits. Instead consider a different approach and take the steps necessary to turn put selling into a principal investment method that consistently is successful.

Understanding Put Selling

This third article on put selling is a brief introduction to understanding what is meant by put selling whether as a naked put or cash secured put and how it is used in a trade. This brief outline will assist in forming a basis by which an investor can then expand their knowledge to determine the suitability of put selling as a major part of their financial investment objectives.

Example Trade- Put Selling

This is the fourth article in the index as it’s an example of selling a single put on a stock. This is done to demonstrate what is meant by the put selling strategy and how it works. Investors who have sold puts before will not need to view this article.

Put Selling Is Superior To Covered Calls

The debate over whether put selling or selling covered calls are basically the same strategy, has raged for years. They are both selling stock option strategies. Go to any financial forum and post a note about how you feel as an investor that covered calls are better or put selling is better and you will stir up a debate. Over the years I have developed various put selling strategies that have shown to me how flexible and truly exceptional selling puts are in the arsenal of financial investment. Leaving aside tax implications involved in covered calls and put selling, I believe put selling is far superior to covered calls and here are my 10 reasons.

4 Basic Rules For Put Selling

Put Selling can be profitable and highly rewarding if some basic rules are applied. On the other hand put selling without a strategy or plan can be a recipe for disaster. Here are my 4 Basic Rules For Put Selling.

Put Selling For Profit & Avoiding Assignment

Many investors look at put selling as “free money”, which is not correct. There is nothing free about put selling. As soon as the put is sold I can easily be assigned shares; watch the sold put triple in cost to close if the stock collapses; or end up running repair strategies for months or even years in an effort to regain lost capital. Put selling does not result in “free money”. Nonetheless there are often many trades that appear where the premiums are so compelling that I would sell puts even if I had no intention of ever owning the stock. After all, selling options as a financial investment is all about gathering income. I found that when I sold naked puts with no intention of owning the underlying stock, these became my rules or guidelines. Remember nothing on my site is financial advice or recommendations. Trade at your own risk. My site is for discussion and presentation of my ideas only.

Tools For Picking Put Strikes

Here are the tools I use and how I would approach any stock, to decide on strike put prices. The most important aspects of put selling as an investment method is stock selections and strike selections.

Put Selling By Design – Exxon Mobil Stock

In this article I look at the steps taken to determine the prime put strikes to consider for selling. The focus is on safety of not being assigned, excellent valuation should the stock collapse and I be assigned shares, and determining adequate option premium. The article shows how put selling is not done randomly but through a careful process of stock selection, put strike and chart pattern as an ongoing financial investment.

Put Selling By Design – Microsoft Stock

In a similar article as the Exxon Mobil Stock article above, this same put selling process is shown with Microsoft stock. While many people think put selling is done by randomly selecting puts that are at or below the money, I actually have a design when selling puts. This article explains how I sell puts based on historic patterns and bear market lows in stocks and through the use of capital earned, try to ensure that if assigned shares my cost basis will place me at historic low levels in the underlying stock. I hope through posting such articles, other investors will take time to consider selling options as more than just an attempt to earn income but as a long-term strategy that is neither complex nor difficult, with significant profit potential.

Put Selling On Over-Valued Stock – Part 1 – Coca Cola Stock

Strong stocks make excellent put selling candidates for the simple reason that they provide increase protection against possible assignment. However when a strong stock becomes over-valued the temptation is to stay with the same put selling strategy as the stock rises. But over-valued stocks fall quickly when selling commences and often the put seller finds himself stuck either holding shares at over-valued prices OR buying to close sold puts that were once out of the money and overnight can become in the money. Taking losses is never pleasant and can be avoided. In this two part series I look at Coca Cola Stock and how an investor can lay out a put selling strategy to continue to benefit from an over-valued stock while protecting his position from possible assignment or loss.

Put Selling On Over-Valued Stock Part 2 – Coca Cola Stock

In the second and concluding article on put selling on over-valued stock, I take the lessons learned from Part 1 and show how to establish a winning put selling strategy based on a stock’s past performance and applying it to the future. I have used this put selling strategy for over 3 decades including when options were available on only a handful of blue chip stocks. Yet despite the thousands of stocks available today with options, this put selling strategy continues to reap large profits for my portfolio while protecting against being assigned shares at over-valued prices.

Put Selling On Cat Stock

A question from a reader regarding put selling on Caterpillar stock resulted in this article in which I discuss married put, naked put, spread and collar as financial investment strategies to consider.

Put Ladder On Barrick Gold Corp

In this article I look at establishing a put ladder on Barrick Gold Corp, stock symbol ABX. As a financial investment strategy, the put ladder should be learned and used by all option investors. It provides exceptional income, strong protection and significant profit potential particularly in a bear market.

Rolling Put Options Strategy

Often put selling can end up with sold puts that are deep in the money. In this article I explain a somewhat simple formula to avoid early assignment. While it does not always work, on some stocks the formula works very well because the stock is fairly predictable in relation to other risky asset classes such as commodity stocks. It’s because of volatility. Commodity stocks have a lot more volatility than stocks like Johnson and Johnson stock, and JNJ Stock is not alone. Other similar stocks include PepsiCo Stock, Coca Cola Stock, Microsoft Stock, Intel Stock, Clorox Stock and many more. In this article I look at rolling put options over a period of months to years as a prime financial investment strategy that pays strong returns for the minimal amount of time involved by the investor.

When Assignment Beats Rolling Puts Down

In this article I look at Visa Stock and AT&T Stock and discuss why sometimes it is better to accept shares as part of my ongoing financial investment when my sold puts end up in the money at option expiry rather than buying back the in the money puts to roll down and/or out.

Chevron Stock – Rescuing In The Money Puts

Often when investors sell out of the money puts and the puts fall in the money, it becomes difficult to decide what strategy to use next. Because of this many investors buy to close their “in the money puts” and take the loss to get out. This can be damaging to the oveall financial investment strategy being employed and an investor’s portfolio as a whole. The key to avoiding such losses is to plan what your strategy will be if the stock falls, BEFORE you place the original trade. Here are 5 financial investment strategies that this investor could consider to use after his Chevron Stock Puts ended up deep in the money.

Stock And Option Strategy – Teach The Bear New Tricks

Equities of every kind have always been risky assets but with the ongoing credit and debt crisis those markets could become even more volatile. As a small investor the option market is an area that very few large fund managers can invest in. With their billions of dollars to invest they could never buy enough options without moving the options market dramatically. This mean that through put selling techniques I can invest in a market that the big money players have little to no manipulation effect. In this article I discuss the use of large cap dividend stocks and put selling during market dips and buying to close sometimes within days of selling puts. This is a strategy I have used through many volatile markets and it has rewarded me immensely.

Bull Put Spread Explained

Bull put spread strategy is more conservative than put selling, with defined losses established right at the outset. The bear put spread is popular among option investors and is in wide use. Yet it is often not understand by many option investors which is a shame since while it may not at times provide as high an income as put selling, the fact that maximum losses are known at the time of establishing the trade can make a very big impact on a portfolio. Like any option strategy there are many variations to the bull put spread that can create more income and better protection over the lifetime of the bull put spread. This article looks at Cat Stock and demonstrates a bull put spread.

Put Selling And The 12% Goal

Many investors find that earning 1% a month or 12% a year is difficult when stock markets move higher. But by having both a 1% a month and 12% a year as goals, an investor finds that put selling works well if an approach is taken where the trade is balanced against the income earned and the risk taken. Uptrend stocks often move into overvalued territory and yet investors continue selling puts either at the money or in the money in an effort to earn more than 1% a month in put selling income. When this occurs results can be disasterous for a portfolio as overvalued stocks plummet faster than they climb often trapping the put seller and leaving behind large losses. In this article I discuss the importance of managing risk while implementing the 1% put selling income monthly strategy.

Put Selling Using Margin To Compound Earnings

After my first 5 years of put selling I saw the power of using margin in a conservative manner. Margin made an enormous difference in my put selling portfolio of stocks. This article looks at put selling with and without margin and the returns that a conservative approach can produce.