Welcome to the Great Option Trading Strategies Naked Puts page. Explore all aspects of selling puts with these comprehensive resources for short or naked puts.
Naked Put Basics - Writing or selling is often viewed in terms of insuring the price of someone else's stocks, or else as a mechanism designed to generate potential discounts on the acquisition of a stock. This article provides an introduction to naked or short puts, along with examples, scenarios, and variations of the trade.
Why You Should Sell Puts - In this article I make two key points - that we're almost ALWAYS better off selling puts rather than buying stocks, and when you sell and manage puts the way we do, you're not so much insuring a stock at a certain share price as much as insuring against the possibility that the underlying business completely falls apart.
How to Use Technical Analysis to Sell Puts - Here's a great example of why I love basic technical analysis and how to incorporate it into the selling of puts. In this example, it resulted in me doubling my annualized returns, allowed me to ring the register twice on a trade, and my capital was still freed up more than a month early.
Using Basic Technical Analysis to Sell Puts - Another example of how using basic technical analysis to time put selling trade entries and adjustments resulted in short term, but lucrative returns.
Put Selling Trade Selection - When selling naked, short, or cash-secured puts, which factor is the most important? Fundamentals? Technicals? Valuation? These (and more) are all important, but in my experience, one factor really outweighs the others.
Repairing Short Puts - Heads You win, tails Mr. Market loses. With the right option trading strategy - which in my biased opinion is the customized put writing strategy I've developed and fine tuned over the last 15 years - you no longer have to play by everyone else's rules. In this article I share the four possible outcomes of my trades - and explain how, at the end of the day, each one is profitable.
Short Put Trade Repair - The Pros and Cons of Repairing Short Puts - I rarely, if ever, book a loss selling puts at the end of the day. Is there a catch? Too good to be true? What are the trade offs - the pros and cons - of attempting to never have a losing trade?
The 4 Stage Short Put Trade Repair Formula - The 4 Stage Short Put Trade Repair Formula is a 28 page special strategy guide included in the Sleep at Night High Yield Option Income Course inside The Leveraged Investing Club. It's designed to take the stress and guesswork out of the trade repair process while making sure that we get the most effective use of both our capital and time.
Emotional Impact of Short Put Trade Repair - Yes, it's great when a difficult trade is over and we see that we have, in fact, outsmarted and outplayed Mr. Market yet again. But while we're in the midst of such a trade, it isn't confidence and superiority we often feel but rather turmoil and a sense of ill foreboding. So how do you handle that inner turmoil if it rears up while you're riding out and repairing a challenging trade?
When Not to Sell Puts - In this article, I share a cool stock market adage from Jeffrey Saut of Raymond James and show you how it helped me perfectly time a trade and score an insanely high annualized rate over a 3 day holding period (or if you prefer, how I was able to capture 60% of a short put trade's potential gains in just 5% of the original expected holding period - 3 days vs. 81 days).
Selling Puts on Margin - Should you use margin selling puts? In this article, we explore the pros and cons of using margin, why those new or relatively new to the strategy should stick with cash-secured puts until they've gained experience, how margin affects the trade repair process, and the absolute worst use of margin in my view.
Selling Puts on Unprofitable Businesses - When you sell puts on the stock of an unprofitable business, you're working without a safety net - in this article, I explain why I finally stopped selling puts on struggling teen retailer Abercrombie & Fitch (ANF), even though I made fantastic returns for a long time.
Part 1 Naked Put Watch List - In Part 1 or this 3 part series on How to Find Great Put Selling Trades, I make the case for you building your own personal Naked Put Watch List - along with some important tips to make the process easy and effective.
Part 2 Selling Puts for Income vs. Discounts - If you're going to be successful selling puts, you need to be 100% clear - and unapologetic - re: why you're selling them in the first place. Ignore the wishy-washing platitudes of generic put writing and take a stand - are you selling puts for income, or are you selling them in order to generate discounts on your favorite stocks?
Part 3 Flexibility and Psychology in Selling Puts - What can the 2014 film "The Imitation Game" teach you about finding great put selling trades? In this concluding article in our three part series, I make the case for adopting an attitude of flexibility - if you're going to crack Mr. Market's code, you need to understand him both at a mathematical level and a psychological one.
Part 1 Why Credit Spreads Are So Hard to Repair - In this introductory article in our Naked Puts vs. Credit Spreads series, we explore what makes a bull put spread different from a cash-secured put, why selling puts (and covered calls) is the most forgiving option trading available, why most credit spread traders choose bull put spreads over selling cash-secured puts (hint - it's not about risk control), and why credit spreads are so damn hard to repair.
Part 2 Uses and Misuses of Credit Spreads - The best use of a credit spread like a bull put spread - because it's the safest - is to treat it as a regular cash-secured puts. And an examination of the traditional insurance business model helps to illustrate.
Part 3 Credit Spread False Logic and Faulty Math - It can be maddeing when you constantly hear credit spreads touted to new option traders as both low risk AND high return. They can be one or the other, but they can't be both at the same time. And how exactly does Dave Righetti's 1983 no-hitter on the 4th of July for the New York Yankees tie in to all this?
Part 4 Safe Sanctuary for Credit Spread Refugees - The high potential risks of credit spreads is not an abstract concept because the capital that gets ignited when a credit spread goes south impacts real human beings. In this article, we take a look at some of those real life credit spread disasters and where you can go if you ever find yourself becoming a credit spread refugee.
From the Trading Options FAQ Section . . .
KO - 125 shares
KMI - 100 shares
BP - 100 shares
MCD - 30 shares
JNJ - 25 shares
GIS - 25 shares
PAYX - 25 shares
Open Market Purchase Price: $20,071.83
Less Booked Option Income: $16,341.71
Tot. Discount: 81.42%
Adj. Div. Yield: 19.59%