Selling Put Options Basics + Robinhood Demo in 10mins (Beginner-friendly)

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This video is tailor-made for beginners to explain SELLING PUT OPTIONS (with Robinhood Demos), all in 10 mins. If you just started option trading, this would be the best video to go for. I will walk through what it is, how it works, and give you a demo on both good and bad scenarios, without confusing graphs and maths.
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If you're interested in more option trading tutorials, here are the rest:
► Buy Call: • Buying Call Options Ba...
► Buy Put: • Buying Put Options Bas...
► Sell Call: • Selling Call Options B...
► Sell Put: • Selling Put Options Ba...
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Questions? Drop a comment! Cheers mate!
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Just a practical guide.
Music: Joakim Karud / joakimkarud
#optiontrading #sellput #robinhood

[@cherenechan9256]

So glad I found your channel! I am also a designer here and have been trying to watch various videos about options (mostly with complicated graphs and maths). However, I can instantly understand how options work just by watching those visuals you put up. Kudos to you! Keep doing what you do!

[@Justeen15]

Thank you Cherene! If you have any topic you want me to cover, feel free to let me know too! :)

[@cherenechan9256]

@@Justeen15 Are you able to cover the wheel strategy for options?

[@Justeen15]

Yea I can do that!

[@Justeen15]

@@cherenechan9256 Hii Cherene! I finally made a video on the wheel strategy! Here you go: kzbin.info/www/bejne/sKevqoJmbpaSfdk

[@gregorymcallister3864]

Thank you Justeen for giving to others from your heart so that others can learn to make money for themselves to survive in the modern world.

[@Justeen15]

Hi Gregory! Thank you for the kind words! It's my passion to solve modern problems with design thinking and craft :). Out of curiosity, what in the video do you find the most useful?

[@olo290]

You're videos answered my questions, I am so happy that I found you today.

[@Justeen15]

Great to hear! I have a live demo video on selling put this Sunday! Check it out :) kzbin.info/www/bejne/iWe8e42HlKpol8U

[@naimali123]

us a beginner I will probably watch it a few hundred times to understand it :) Very nicely done.

[@Justeen15]

Hey thanks Mohammed! Glad that you like it. I tried to make it simpler to understand than other ones out there, but still there is some learning curve :) Out of curiosity, how did you find this video?

[@MrCarlnatalizia]

Great job Hope to see your channel grow

[@Justeen15]

Thank you Carl! :) Let me know if I can help clarify some questions you have or if you have any topics you want me to cover in future videos! Cheers!

[@Mrtrunks]

Ok so I think I understand it. If I sell a put and the price is above the strike price the contract is worthless, meaning I don’t do anything and I get to keep the profits If the prices is at or below the strike price I’m “buying” 100 shares at said price that I agree too. At the time of this contract my funds are held until the contract is expired And you should only do this if, your willing to spend the money on said stock I think the most confusing part about Puts is the wording of buy and sell as in my head it’s backwards or at least that’s how I’m interpreting it. Great video series btw

[@Justeen15]

Yes Matt! That's right! Yep the put + buy/sell is definitely confusing as it could appear to flip your brain in many ways. For selling put, another way to look at it is (say sell an AAPL $140 put), I am okay/comfortable buying 100 shares of AAPL at $140/share (as more of an investing mindset). Then $140 x 100 = $14,000 is held until I close the this position (buy back or expiration). At the same time, I collect some fees from that put option buyer, aka I make money from selling a put. And thanks Matt!

[@finalcut567]

@@Justeen15 will it let me buy that if I don’t have the purchasing power? Aka. Will I be held back from accidentally buying 14k in unwanted shares via selling a put?

[@Justeen15]

@@finalcut567 Hi there! Let's imagine this scenario: - You want to sell a put on AAPL at $140 strike price - In this case, you need to have $14k ($140 x 100) in your account as collateral to sell a $140 put on AAPL. Otherwise, you won't be able to sell that $140 strike put - Say you sell this $140 put to Mike, and since Mike now has the put option contract, he could technically exercise that put option which will eventually make you buy 100 shares at $140 ($14k in total) - Or Mike does not exercise it, and on expiration date, the AAPL stock price is $139 (less than $140 strike price), and Mike did nothing. Then after market closes, Mike's broker will exercise the put option for him, which mean you will will get assigned/be forced to buy 100 shares at $140 (you will see those 100 shares in your account the next Monday likely) - If you don't want the 100 shares, there are 3 ways: 1. you buy the put back to close the position any time before the expiration 2. the put ends up out of the money (strike price < actual stock price) 3. Still Mike (who bought your put), can still exercise and force you to spend 14k to buy 100 shares, at any point, whether it's rational for Mike or not, so that's some risk there for sure, so if you 100% don't want that 100 share assignment, then the only and simple way is to not sell a put. Did I answer your question?

[@finalcut567]

@@Justeen15 I believe so. I need some serious laymen terms I think. Or to watch your videos a hundred times over. I sat down and took notes all this morning. Looks like it’s just gonna take some getting used to. I’m gonna try that TD paper trading tip for sure. Thank you for taking the time out of your day to answer my question and help us out! ♥️

[@Justeen15]

​@@finalcut567 Absolutely np! There are just a few terms you have to get used to. The best way to do that is through doing it yourself (well watch some of my walkthrough videos first I guess haha), so you are already on the right tracking playing with paper trading in TD. I actually have a sell put live demo video up this weekend, you might find it helpful! kzbin.info/www/bejne/iWe8e42HlKpol8U

[@timmyy24]

Do you actually buy the stocks if they exercise? Or do you not have the option to exercise your option?

[@Justeen15]

You will be forced to buy the shares yes. As a put seller, you don’t have any choices. The buyer has choices to decide whether they want to exercise or not. Benefit summary: - buyers have choices to exercise (cuz they pay for it) - sellers get money (premium) right away (cuz you sell it and taking the risk of being exercised on/forced to buy shares) Does that help?

[@jackieip1694]

Hi Justin, where can I find the deposit needed for selling a put option? Say i want to sell a $800 TSLA put option , do I need to deposit $800 x 100 shares in the account before I can sell?

[@Justeen15]

Hii that's correct, to sell a $800 TSLA put, you either need $800 x 100 = $800k cash or you have a $800k loan with margin account (it gets pretty dangerous though with margin so be aware).

[@Justeen15]

@Heavy Oolong when you sell a call, there is technically a collateral, which is actually 100 shares of that stock. It's not really in an actual amount of money but just shares that you own. That's why you hear people say selling a covered call "against" your own shares. Your call is covered by your shares. Also think about it, when you sell a call or a put, you gain money/premium upfront, but it must also need something from you to be fair for both parties. In the put selling, the something is cash collateral. In call selling, it's 100 shares for each call option contract. Does that make sense?

[@Justeen15]

@Heavy Oolong There are a few possibilities about what they are talking about, but overall I don't think they are being clear most of the time: - They might be talking about selling uncovered calls, which could be very risky and requires high level option trading. - They might already have 100 shares of that stock when they sell a call. They just didn't say it. (And yes, each call contract you sell, you need 100 shares, so if you want to sell 5, you need 500 shares as collaterals) - They might be talking about buying and selling calls in that exact order. If you buy a call, you just need cash to buy it and then you can just sell it back to the market to close your position. However, if you sell first, it's different, you can't just sell a call out of thin air, there is always some requirements. Otherwise it's a money glitch. If you to Robinhood and try to sell 1 call, it should say it requires "100 shares as collateral". I just looked it up, Robinhood does not allow uncovered calls.

[@Justeen15]

@Heavy Oolong Thank you for being curious :)

[@Justeen15]

Selling put options is not that complicated overall, isn' it? ;) Let me know what your thoughts are!

[@bl4ckb3ll]

Hi, I'm from outside US, can i do this as foreigner? i check robinhood doesn't allow me to sign up.

[@Justeen15]

Seems like Robinhood only allows US residents to use the platform. There should be other alternatives in your county though.

[@bl4ckb3ll]

@@Justeen15 7:20 i am having difficulties to understand this part when price goes down, "*technically didn't lose anything. You just bought shares." how can we have the share When we just actually close the position? I mean since the beginning we would have -1 in the account (agreed to sell) then when closing it we are doing +1 so, it is actually -1+1 means we are only losing the premium (the risk we take). Am i right?

[@bl4ckb3ll]

@@Justeen15 also can you make 2 more scenarios, one is if price goes up and you don't close the position (let it expire) Another if the price goes down and you let the contract expire as well. Thank you ver much.

[@Justeen15]

@@bl4ckb3ll Hey! Great question. Here is an example: Stock: Apple You: sell a put on Apple John: buy the put that you sell - If John exercises the put, then you have to buy 100 shares of Apple (at the strike price) - If John exercises the put, your put position will be closed. - After you sell a put, yes you are correct, you will have -1 in the account. - Selling anything is always minus/negative, and buying is plus/positive. That's just the convention. - If you sell a put on Apple, you actually "agree to buy" Apple shares at the strike price, NOT "agree to sell" (I know this can sound confusing). - If you sell a put, there are 3 ways to close your position: 1. you spend $$ to buy the put back (-1 +1 = 0), 2. John exercises put (auto-close), or 3 the put ends up out of the money/above strike price and it will expire worthless (auto-close). - I said "*technically didn't lose anything. You just bought shares", because if John exercises the put, you will have to buy 100 shares of Apple (because that's what you agree to when you sell a put option contract). In this case, your put option (-1) will be closed. Say the strike price is $120, then you need to buy 100 shares of Apple at $120/share. Now, you will have an open position on Apple stock (+100) If Apple drops to $100, ON PAPER, you account value will drop from $12000 to $10000, but you still have 100 shares of Apple. Profits and losses are only calculated/realized after you close your position. Maybe 2 months after, Apple goes back up to $130, then your account will go from $10000 to $13000. - I am only explaining from your/the seller perspective, so you don't get confused. If you understand this already and want to know more details, let me know, and I can elaborate more :)

[@Octavia1890]

He forgot to mention that you can just sell your Put without exercising it

[@Justeen15]

I think I that's the first example I covered at 4:56 (Just sell the put and keep the premium)? Or you mean a naked put selling?

[@fofo_qoqo]

Hi Mike, I think another scenario is to exercise my put before the expiration date when the actual price is above strike price? If so, do you mind explaining how I should think about this scenario using your Apple example?

[@Justeen15]

Hi Frank! So this video is about selling put, and as a seller, you cannot exercise (you don't have the right to exercise. Only buyers can exercise). If you want to buy a put and exercise it, I made 2 videos about it (I added the timestamps to the links as well): 1. kzbin.info/www/bejne/oZ6qfHZ4na1lgtE 2. kzbin.info/www/bejne/npSug6GjbqmaiK8