DO THIS Instead Of Buying Stocks...Amazing!

[@florencioello325]

Thanks Lee for understanding what selling put option ITM is.

[@leelowell]

Glad to be of help

[@daho808]

Thanls for the video! Would you recommend leaps put? Say a year out, wouldn't this be a lot safer where u can buy n close the position anywhere inbetween?

[@bballgtr]

Thank you. You seemed extremely excited in the video - We now know why. I'll be working on this tonight!

[@michaelperkins3003]

You saw excitement? Funny.

[@leelowell]

Ha! Isn't all options trading exciting???!!!

[@mziobro7934]

Outstanding video. Thanks for the info and the very clear explanation!!

[@leelowell]

Thanks for watching

[@Woodstock625]

also, nice pro-tip there with buying the Call option!

[@leelowell]

😀

[@michaelmounce9482]

Very interesting. I usually sell put ratio spreads for any time I want to sell a put. That way if the stock does come down I make money BEFORE the sold put strike is reached - if it is. How do you manage your trades with your deep ITM sold puts? Do you exit at 21 DTE to try to avoid assignment, Do you watch the extrinsic value and roll the Put once it's very small. Do you just hold till expiration in all cases? Do you use other trigger(s) to take actions/close trades? Or do you use some other technique(s)? Might be a good topic for a follow-on vid. I'm going to papertrade a couple of these and see how they work out for me. Thx.... I look forward to your response.

[@leelowell]

Hi - thanks for the questions. The whole point of selling DITM puts is knowing that assignment is most likely to happen because we want the stock. The only way to manage it would be the same way you manage long shares of stock - have a stop-out point if desired. If you're a buy and hold forever person, then no management is necessary.

[@PrinceSingh-wc5fn]

Great video!!

[@leelowell]

Thanks for watching

[@petediaz9310]

Quite a bit more risk for such a conservative put seller; more time should be spent on the downside possibilities for a better understanding of what could go wrong. Never the less very informative & I appreciate it enough to sign up. Thanks

[@leelowell]

Just showing other bullish types of trades. The downside, as with any bullish trade, is that the stock could move lower. I always explain that. thanks for watching.

[@Woodstock625]

great strategy Lee. Have already sold some ITM puts on INTC and PINS which worked out great these last couple weeks. Will play with this strategy some more on other set ups.

[@leelowell]

Great! Thanks for sharing.

[@sb-nk2ns]

if you sell ITM put, aren't you gonna get assigned immediately , no matter when. the expiration date is?

[@leelowell]

No. If there's time value left on the option, then it won't be assigned early. How do you tell if there's time value left and whether you're in danger of getting assigned early? A quick trick is to look at the corresponding call option, and if it has less than $.10 of value, then you're in the danger zone of being assigned early. For instance, if the stock is at $100 per share, and you sell the $150 strike ITM put, just look at the $150 call option (in the same expiration) and see how much it's worth. If it's worth more than $.10, you shouldn't get assigned early. That $.10 is the time value that's still left in the put option, and if someone exercises it early, they will forgo that last $.10 of profit. Not 100% guaranteed obviously, because there's lots of newbie option traders that don't understand this concept. Hope that helps.

[@sb-nk2ns]

thank you!!!@@leelowell

[@12496k]

Ty!

[@leelowell]

Thanks for watching all the videos!

[@RT-wl3jf]

Calls and puts are different instruments. Then how is call value greater than .10 related with exercise of put? I was thinking put time value will be the key.

[@leelowell]

When the corresponding option (call option in this case), gets under $.10 per contract, it means the extrinsic value of the put option is almost all gone, which opens the put option up to potential early assignment. It's just a hack to alert you that any short in-the-money option you have can be assigned on you at any moment. Doesn't mean it will, but it's a warning sign. I've been in the biz 30+ years - this is what I've seen.

[@bballgtr]

Does this mean that it becomes self duplicating? This works becasue you invest in the Option and collect the interest but is it interest from THE OPTION or the THE HOST -- SPY??

[@fouedgrayaa5849]

Appreciated

[@leelowell]

Thanks for watching

[@investandcyclecheap4890]

Thanks for the video! What are your options for the ITM put when say your bullish and then bad news comes out and the stock drops. Would you set the stop loss, take the loss and that's it or is there a good strategy you'd suggest for maybe extending your contract to allow the stock to rebound.

[@leelowell]

It all depends on your outlook for the stock. If I'm going to hold for years because I know it's quality (think AAPL, KO, WMT, etc), then I don't worry too much. Maybe I even sell more ITM puts at that point. On the other hand, if you're there to just try to scalp a few points and don't have much interest in the stock itself, then you definitely need a stop-loss. Everyone's threshold is different. Do you want to lose only 10%? 20%? 50%? Up to you.

[@brianyoung2468]

Using this strategy you can terminate before having the option executed correct?

[@leelowell]

An option trade can be closed out at any time you wish (as long as it's before being assigned).

[@brianyoung2468]

@@leelowell Thank You SO MUCH!! I love your video's!!!

[@leelowell]

@@brianyoung2468 - glad to be of help

[@orkayen]

Thanks for sharing. Since, this is cash secured put selling, we need to keep aside $10K when we enter the trade. Alternatively, since we are very bullish, we could buy 100 contracts of $100 strike of Oct Expiry for $2.5K. Weekly ATR for MU is 5.2. By Oct $100 strike will be ATM/ITM and premium will be around $10 per contract and $100K in total. So, $2.5K to $100K. Isn't it cool?

[@leelowell]

Just buying the $100 calls (and not selling the puts) is a bit more gambling, in my opinion. MU travelling to $100 by October is a good distance, so I'm not sure I would want to just buy out-of-the-money calls like that. If MU finishes at $99 at October expiration, the $2.5k investment will be lost. Not my kind of trade.

[@orkayen]

@@leelowell Thanks. I would peel off most by $99 to get cost +80K and leave 2 for the last week of the expiry. Still ROI is very lucrative.

[@Miramar2024]

​@@leelowellhow u lose the $2500 on otm call. If mu move from 65 to 99 like u said ucalready making money on the way up I don't need wait mu go to 100 lol. U need to learn more about options pls

[@leelowell]

@@Miramar2024 - let's clarify. If someone was to hold the $100 calls all the way to expiration and not take profits along the way, then yes, they would lose the whole investment if MU finishes at $99 at expiration. Many option players don't know (or want) to take early profits. Smart option traders do though. Which one are you? Just buying the $100 call option is pure hope & speculation. Also, if MU slowly creeps up little by little every day, the $100 will not make money either because of the daily time decay. Lots of ways for the $100 to act, you just don't know if you'll be able to make profits on it or not. I wouldn't make that trade. But you can do whatever you want. Maybe you need to learn more about options.

[@Miramar2024]

Well speculation on everything in market same with your selling option hopping to hit your target. Same as the guy was talking about buying calls. I don't buy calls and hope in 3 months I make money. I sell csp and vcsp so is all good

[@garybaxter3871]

What about the buying power reduction vs the 6,500 not spent on buying shares ? If you receive 3,500 credit from the 10,000 held in collateral, it equals the same 6,500 needed for this option trade as buying tge shares ? What am I missing ?

[@leelowell]

If using a margin account, you will not be required to hold the full $10k as collateral (margin requirement). It'll probably be more like 50% needed ($5k) since it's so deep in-in-the-money. All that money still stays in your account and earns interest (if your broker pays it) at 5% right now.

[@JohnMandersonBM]

You have to have a significant amount of cash in your account to do this thought right?

[@leelowell]

At most, you would need whatever it would cost to buy the 100 shares. In this case, $10k. But if using a margin account, the initial hold would be 10% to 20% of that $10k, so depending on your broker, you would need $1k t $2k to initially place the trade.

[@choski76]

Tldr. Did you show the worst downside case

[@leelowell]

The worst case for the put option seller is if the stock drops. No different than if you bought the shares outright.

[@orkayen]

What is your opinion on this play for ER? (MU's ER is this week)

[@leelowell]

We typically try to close out trades before earnings, but that's up to you. Hoping for a bullish move!

[@MrSimp75]

My broker does on pay interest on credit received. Do you know who does? Any referral link ?

[@leelowell]

Good question, and it can be different for each broker, and their policies can change at any time. Best to call around. Scroll to the bottom of our FAQ page for potential brokers - www.smartoptionseller.com/faqs

[@mouadbenaicha4378]

I don't understand the benefit of this over a long synthetic (Selling an ATM put and buying an ATM call). Same max loss but with a long synthetic you're entering at a very small debit/credit and are not capping your upside gains.

[@leelowell]

Thanks for commenting. The video just shows another way to get long a stock. And compared to the synthetic, selling DITM puts yields a very large credit which can now earn a fat 5% interest. That's something that hasn't been available for at least 15 years. Plus, if you buy the $100 call for $.24 as shown in the video, your upside is unlimited now.

[@larry6774]

lee can you use this stratigy monthly ?

[@leelowell]

Any option strategy can be used on any timeframe. Just make sure you understand all the risks (and rewards).

[@xporkrind]

I thought about this but was afraid to try. Why would someone else be on the other side of this transaction. Who would want to buy a put at 120 when the stock is at 100 ???

[@leelowell]

Two things I can say - 1. Who cares who's on the other side, as long as someone is. 2. Buying a deep-in-the-money put option is a great way to short the stock (bearish) without the unlimited risk you would have if you shorted the stock instead. Those put options have almost a 100% delta, which means if the stock drops, those put options would gain value just as quickly as the stock falls. That's good for the put option buyer.

[@bballgtr]

Math in the above does not seem to make sense. Lines 1, 2, 3, good - but not sure how $57 of interest has been earned but will agree with dollars earned. Who is paying the interest? Is it part of the Premium? Confusing to me.

[@leelowell]

If your broker pays interest, the current APY is roughly 5% for free cash, money market funds, CDs, T-Bills, etc. If the broker doesn't pay interest directly, you can take the premium payment received from selling the options and invest it directly in 1-month CDs, money market funds, etc. The $57 comes from investing the $3,475 into 5% money market funds for 4 months. $3,475 x 5% = $173.75/3 = $57.91 Make sense?

[@bballgtr]

@@leelowell Yes, it does - I've been continuing my study and understand your comments. Would you call it imprudent to expand this methodology to "every" investment? To add - I've listened to many authors or experts over the past year + and find you are the best. That is not a puff statement. It is based on your desire to make sure everyone listening has the chance to study your method of common sense without fear that it only helps you. Thank you for your hard work in spreading the word about SMART ways to invest. Finding the best stock to invest in given the investor's interest and then doing so in a SMART way to stretch and protect each person's investment dollars.

[@quantum7401]

MU -->🚀$75 August

[@leelowell]

Fingers crossed!

[@kwamewiafe-akenten2843]

This is interesting

[@quantum7401]

Lumber futures are up, and home building is increasing, maybe it will rocket off. I also like NRDS, MAT, BYND.

[@leelowell]

Keep us informed!

[@MariaTang-x7v]

What is the price under 100 before expiring date

[@leelowell]

Not sure what you mean. What is the option price if the stock is under $100? Is that what you're asking? If the stock finishes below $100, the option price will have whatever intrinsic value is left. If the stock finishes at $80 per share, the option price will be $20 per contract. If it finishes at $90 per share, the option will be worth $10 per contract. Just subtract the stock price from $100, and it will give you the final option value. Since the option was sold for $34.75 per contract, the seller will make money as long as the stock closes above $65.25

[@GR-1111]

if the stock price plummets is there a high probability of getting assigned to buy the 100 shares ? and if that happens you could quickly sell the 100 shares, and you still have your $3475 premium

[@leelowell]

If MU stays anywhere below $100, you WILL have to buy the shares at $100 per share. Collecting the $3,475 upfront just means your eventual cost-basis will be $65.25 per share. If MU is anywhere below $65.25, the trade will be losing.

[@JohnMandersonBM]

Also, lets say you did sell the puts, if the stock goes above $100, the calls you buy are not going to be in the .25c range, they will likely be in the $25 range and very expensive.

[@leelowell]

That's why I discussed buying the call option at the same time as selling the put option. If done, it would cost only $24 ($.24 per contract)

[@Cr74lyf371]

Please add time stamps to videos it will

[@leelowell]

Thanks for suggesting.

[@nationalnotes]

The chart looks good and very bullish on MU. Risky strategy however in an overbought market. I prefer to sell deep ITM covered calls giving me good protection on the downside and the chance of keeping the premium if the stock moves higher. It all comes down to risk tolerance.

[@leelowell]

Thanks for chiming in. A made it a point in the video to make sure the investor is VERY bullish on the stock before jumping in. Also, selling DITM covered calls is the same thing as selling a deep OTM naked put. Same risk/reward.

[@alex.username]

How much ITM (%) do you consider DITM?

[@leelowell]

@@alex.username A Delta of at least 90

[@michaelperkins739]

Lee, I love the information on this topic, but your repeating and one step forward and one back, gets confusing and takes up time. Video could be 12 minutes instead of 25. And w/these type of trades, can you be called to purchase at any time under the $100 strike or only when it hits and/or goes above?

[@leelowell]

The length of the video is to make sure there's no confusion. Helps the newcomers. And yes, you can be assigned at any time while the stock stays below the strike price. But as mentioned in the video, that's pretty rare as long as you stick to the trick of making sure the corresponding call option has value left in it.

[@markkoh4871]

If expiration date fall on Quadruple Witching Day, and we didn't close the contract and the stock price is at $80. Will we be assigned at $100 on the Quadruple Witching Day?

[@leelowell]

You will always be assigned if the stock closes below the strike price, no matter what kind of expiration day it is.

[@MariaTang-x7v]

If the price didn’t hit 100 , you keep the premium ? Correct

[@bodymodsMONTE]

You keep the premium no matter what, but if you let it ride til expiration, and if the stock is anywhere at or below $100 (because it's a put that you've sold) you'll likely get assigned and have to pay $100/share.

[@leelowell]

Yes, that response is correct, but the final outcome will depend on where the stock finishes at expiration. If it finishes above $100, the put will expire with zero value, and you'll profit with the whole $3,475 intact. If the stock finishes at $90 let's say, then the option will be worth $10.00 per contract, and you'll have locked up $2,475 in profit. You'll still have to buy the shares at $100 though and can hold them and see if the stock goes back up. Hope that helps.

[@RobtJude]

@@leelowell Let me re-iterate this as I understand it. The 100-dollar Oct strike price can be assigned at any time during the option time frame (in this example June-October). You could be assigned when the stock goes up to 80, 85 or 90. The point is the stock does not need to reach the 100-strike price to be assigned. If you are assigned, you will pay 100 for the stock even if it is selling for less on the market. I would then surmise that this strategy works best when the stock goes up and you buy to close the option for a profit, (selling price minus the buying to close price) before the ending strike date.

[@leelowell]

@@RobtJude yes, the option can be assigned at any time, but unlikely until it gets closer to expiration. The higher the stock goes, the lower the chance for assignment. And yes, as the stock goes up, you can buy back the option for bigger profits.

[@_Island_Boy]

You should also mention put spreads in case some traders want to cap that risk of buying a stock and just pay the loss

[@leelowell]

We've covered spreads in other videos, but yes, spreads can be helpful.

[@Miramar2024]

When u selling 100 put u have a 10k collateral minus the premium you get so u not saving $6500 like you saying ok. Just to make this Claire

[@leelowell]

Thanks for chiming in. Let's discuss. We only use margin accounts when doing these trades, so your broker will not require you to hold the full $10k as collateral when initiating the trade. Even still, if using a cash account, yes, you will have to keep $10k as collateral, but you're not spending that $10k, nor is it removed from your account. If you bought the shares outright, then you would have $6.5k debited from your account. It's different when selling the put options. The $10k remains in your account so you're still saving $6,500 from leaving your account. Plus, with the infusion of $3,475, you're earning interest on that too. I stand by my assessment of the video.

[@choski76]

Why wouldnt someone who bought your put make you buy it when its less than a 100. They make a clear win.

[@leelowell]

The put option buyer can exercise it anytime they want, but most will wait until expiration. Also, if the stock goes up, the put option buyer will be losing money. Why do you say it's a clear win?

[@doumel3462]

Math doesnt add up. How u end up with $3450 from selling one contract at 3.45. To me that add up to $345 not $3450

[@leelowell]

Hi - the put option in the video was worth $34.75 per contract ($3,475), not $3.45 per contract.

[@GR-1111]

This trade idea looks like a way where you cannot lose. 1. If price gets near $100 You could buy the Put option back at a super low price, and make close to $3475 profit. 2. If the stock price plummets you still have your $3475 premium profit

[@leelowell]

You're correct on #1 - if the stock rallies above $100, you make the full $3,475 profit. #2 needs explaining. By selling the $100 put for $34.75 per contract, you're essentially buying the stock at $65.25 per share. With MU at $65.15 currently, any price below your cost-basis of $65.25 will end up a loser. So no, it's not can't lose. If MU stays below $65.25, you will have a losing position. That's why it's very important to know that selling an ITM put is an EXTREMELY bullish play. The appeal in selling an ITM put in today's environment is that you can take the $3,475 credit, put it in your bank or brokerage account and earn 5% interest. If MU stock stays below $100, you WILL have to buy the shares at $100 per share. The $3,475 payment just reduces your end cost to $65.25 per share. Make sense?

[@daimu7971]

Way to messy for teaching please clean it up make it easier and cleaner and to the point people get lost after 5m

[@leelowell]

Thanks for the feedback.

[@Jamerican284]

There is a higher probably that an in ITM option will NOT expire worthless and that is what you want it to do. I would not risk this.

[@leelowell]

The point of this strategy is that you WANT to buy the stock and get assigned. I made sure to mention that you must be bullish and want the stock. Selling the puts is just a different method of getting there. And if the stock does finish above $100, then that's why I suggested to buy the calls too. The risk is the same as being long shares.