This is a series of strategy articles on Put Selling is for FullyInformed Members. It looks at knowing when not to sell puts and when to sell puts for prime put premiums. Put Selling is a great strategy but knowing when NOT to sell puts can certainly help to avoid selling puts too early and ending up with in the money puts and increasing the odds of assignment of shares.
By using the right tools when Put Selling, you often can be selling puts, earning great income and avoiding Put Selling at a time when the stock might fall leaving you holding in the money puts. The dilemma a lot of put sellers face though is the juicy put premiums that develops when a stock pulls back. If it is just a dip then Put Selling the dip works out well. But it becomes problematic when it turns out not to be a dip in the stock but instead a change in stock direction. This can result in months or trying to apply rescue strategies and as we have seen in many stocks (think Cliffs Natural Resource CLF) it can take possibly years to recover lost capital.
Knowing When Not To Sell Puts Is Essential
Knowing when to sell puts and at what strike and when to hold off and wait is essential whether you are Put Selling to never own stock or as in my case, Put Selling and willing to own the underlying shares. Why set yourself up for a problem if there are methods you can use to help avoid the problem from happening in the first place.
The Tools For Put Selling Successfully
The method I am discussing in this series of 3 articles I use on all of my positions to keep an eye out for prime Put Selling entry points and to know when to wait.
Put Selling Strategy Article Part 1
The first part of this Put Selling strategy series looks at Aflac Stock over the past two months. FullyInformed Members can can login directly through this link to read Part 1 of this Put Selling strategy article or Members can sign in to the full members site here. Non-members can join here.