2 Keys To Successful Put Selling Weekly Options On Intel Stock

Put Selling weekly put strikes can be quite profitable. The intriguing aspect of weekly Put Selling is that there is no need to aim for 1% for each weekly trade. An investor interested in Put Selling weekly options can aim for half a percent and still earn 2% in a month. The problem for a lot of investors is their desire to not own any shares of the underlying stock. When I am Put Selling stocks on a weekly basis I look for two things.

2 Keys For Weekly Put Selling Stocks

Step 1 – Watch For Extremely Oversold Signals

When engaging in weekly Put Selling I watch my favorite stocks for moments when they are extremely oversold. To do this I use the Ultimate Oscillator and Fast Stochastic stock technical analysis tools. For example Intel Stock this week fell to the point where it was extremely oversold. The strategy I use is straight forward. I have my list of favorite large cap dividend paying stocks to follow. From that list I watch for oversold signals. Once the extreme oversold indicators are shown, I watch for the fast stochastic %K to fall below 5.00. Once that happens I move to Step 2

Put Selling Weekly Intel Stock

I watch my stocks for extremely oversold indicators to look at the possibilities of weekly put selling

Step 2 – Put Selling Only Near Support Zones

The second step for weekly Put Selling is to make sure that the extremely oversold reading has pushed the stock to defined support levels. To establish support levels in a stock I go back 12 months in the stock.

For example in Intel Stock for the past 12 months $25 and $24 have a lot of support. There are numerous articles on my site describing how to establish support and resistance levels in stocks so I won’t got into in this article. Suffice to say that the extremely oversold level must be at or near a support level. If the stock is not near support levels, then I do not sell naked puts weekly.

For example in the latest pull back this week in Intel Stock by the time the extremely oversold indicator was signaled, it was working its way down to the support levels I had established for Intel Stock.

Intel Stock chart for support levels

The one year stock chart for support levels

I then watch the pullback as it falls to the support levels.

Intel Stock Recent Pullback

To follow the strategy further let’s review the most recent pullback in Intel Stock which ended with my Put Selling the Sept 7 weekly option at the $24 strike. Let’s review the days leading up to the extreme oversold reading on Thursday August 30 2012.

The first indication of Intel stock being oversold was on August 23. The stock closed at $25.04 right at the $25 support level. I never sell weekly puts on the first oversold reading. Normally a stock will exhibit a number of oversold readings and I wait for the reading to reach extreme with the Fast Stochastic. For example the %K reading on August 23 for the Fast Stochastic was 5.58. Definitely extreme but not below 5.00 on the fast stochastic.

The next day August 24 the reading was $24.91 but the fast stochastic was higher. The following day was August 27 and while Intel Stock closed lower at $24.84 the fast stochastic was still higher. On August 28 the stock closed back at support $25 and the fast stochastic was higher still. On August 29 Intel Stock closed at $24.67 and again the fast stochastic was at 5.42. The following day, Thursday August 30 Intel stock dipped lower and closed at $24.27 and the fast stochastic %K fell to 4.48. The Sep 7 $24 put hit .21 cents, almost one percent for the week. I sold the $24 naked puts for .21 cents.

Intel Stock Weekly Put Selling

The pullback in Intel Stock

Consider The Extreme Oversold Signals

Once the %K has fallen to below 5.00 there is a very good chance of a bounce in the underlying stock the following day or two. This makes Put Selling the weeklies at support an easy and profitable trade. Patience is key when Put Selling weekly options. Remember, to stack the odds of success in my favor I do not sell the weekly put options if the pullback which gives an extremely oversold reading does not push the stock to support levels.

Weekly Put Selling Summary

The advantage of weekly Put Selling is two-fold. The short duration means risk of capital is for a very short period of time. My capital is at risk for no more than a week. The puts sold can earn less than 1% for the week and still provide an excellent monthly return.

One of the worst problems with weekly Put Selling is the premiums for out of the money puts is poor as it is only for a week. Therefore the best premiums are for at the money puts which earn decent premiums but increase the risk of the shares ending up in the money.

I have tried a number of strategies for Put Selling weekly options. The best I have found is using the Shark Strategy For Trading Options. However the weekly Put Selling strategy just described is the simplest weekly Put Selling strategy for earning a reasonable return while protecting my capital from assignment. As long as the odds of success are stacked in my favor I have confidence in Put Selling the weekly options on stocks like Intel Stock. But if the two key aspects are not met, I never consider put selling the weekly options.

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  • Chester the Income Investor

    Very nice weekly trade on Intel. As always, thank you.

  • Dan

    Thanks Teddi, straight forward strategy as long as you follow the rules.

  • Most strategies fail because investors do not remain consistent. Once they break the original strategy they must be aware that the outcome will most likely change. They should then have ready other strategies to put in place in the event that the original strategy no longer will work.