Selling Put Options For Income! (5 Easy Steps!)

[@vicbarnes1084]

BRILLIANT you dealed with the Maybe need to Buy Shares- realistic. How can I get the Book?

[@leelowell]

Free e-book, or my paid book?

[@coplain]

Is there a possibility of assignment before expiration ? Thank you for

[@leelowell]

Yes, it can happen but it is very rare.

[@vicbarnes1084]

Where and how can I get the book - and where can I get the option-chains (prices offered?)

[@leelowell]

Our free e-book is on our site - www.smartoptionseller.com/put-selling-basics Option chains can be seen on various free financial websites on the web, as well as through your broker (if you have one).

[@quantum7401]

Thanks @Lee Lowell. I gotta see way higher IV. I have been looking at BYND.

[@leelowell]

Thank you!

[@michaelarcy]

Great video. Thank you

[@leelowell]

Thank you!

[@nancymarie7733]

Great video as always. I have been writing credit spreads to minimize capital used. So for that Dec NKE I would do -60/+40 then it would be $135 premium for only 2k of collateral which would then be over 15% annualized return.

[@leelowell]

Thanks for sharing!

[@crazyegyptain510]

are cover options the same a naked?

[@leelowell]

If you're talking about covered calls, option spreads, or married puts, then no, they're not the same.

[@crazyegyptain510]

@@leelowell any big difference on covered calls or they don't work the same with naked cover calls

[@leelowell]

@ - there's only one type of covered call, and that's when you own 100 shares of stock and sell 1 call option against those shares. Selling naked call options (without owning the stock) is the THE MOST RISKY type of trade you can do. Unlimited risk. There is no such thing as a naked covered call. It is just called a naked call. The word "covered" implies that one option contract is covered by another trade, whether that's stock shares or a different option trade. A "naked" option is one that is just traded by itself with no other trade to cover it.

[@crazyegyptain510]

@@leelowell i see okay so i hve covered calls or puts only b.c i own 100 shares already how would I apply for the naked one thru webull?

[@leelowell]

@@crazyegyptain510 - you would have to apply with Webull for a higher approval level. Selling naked calls is the most risky you can do. Selling naked puts can be risky also, but only to the point of the stock dropping to zero. Can't lose more than that. But selling naked calls can be unlimited risk.

[@jimd1617]

thank you

[@leelowell]

Thanks for watching

[@TennisIsLife-t2n]

Hi, Lee! How do you get to choose between the bid and ask price, please? Also, who do you end up buying the stocks from? The option buyer?

[@leelowell]

An option's bid/ask price works the same as a stock's bid/ask price. Have you ever bought or sold stocks before? When you sell a put option, it's best to try to sell it for a price that's in between the current bid/ask spread. If a put option is $.50 bid/$.55 offer, you could try to sell it for maybe $.52 or $.53 to start. If you aren't filled, then you could move your offer price down to $.51 or $.50. Make sense? If you do get assigned on the put option and have to buy the shares, your broker will handle the transaction for you, as you won't ever know who the other party is.

[@TennisIsLife-t2n]

@@leelowell No, this is my first attempt at investing! So, no, have not purchased or sold any stock (yet!). So, are you saying that when we sell/buy an option, we have a chance to choose the exact price? All you were trying to say was that we should choose a price that is between the bid and the ask range?

[@leelowell]

@@TennisIsLife-t2n - you can try to sell/buy at whatever price you wish (it's called a "limit" order), but if you want to get filled relatively quickly, you should aim to buy/sell at a price between the prevailing bid/ask price at the time of your entry.

[@TennisIsLife-t2n]

@@leelowell Okay, great, thank you! How much do you pay when you are selling options?

[@leelowell]

@@TennisIsLife-t2n - pay, meaning commission cost?

[@Sammyd67]

Does your broker charge interest on the margin used for naked put?

[@leelowell]

No, the margin requirement when selling options (puts or calls) is taken from your free available cash. The $1,200 mentioned in the video is completely different than "buying on margin", which is what you do when you buy stocks on margin - you pay for half and then you take a loan from your broker for the other half. Your broker charges you interest on that loan. This is NOT what happens when selling puts. Now, if you're ever assigned the shares on the put options that you sold, then, maybe, you can take out a margin loan to pay for those shares at that time.

[@Sammyd67]

@@leelowell ok. Thanks for taking the time to answer.

[@leelowell]

@@Sammyd67 - No prob!

[@citizenm9590]

Do you only like to sell put only after like Nike stock which sold off a lot after drop from earnings? What are other stocks you like to sell puts which you have used in the past you had goo results if assinged as well are worthy stocks do sell puts?

[@leelowell]

We definitely like to sell puts in our newsletter when really good stocks sell off hard, knowing that they will eventually rebound. Do you think Nike is a stock that is going bankrupt? I don't. I can't tell you what to do, but if you like the stock, and you're okay possibly being assigned, then you know the answer. Of course there are no guarantees, and the stock could keep dropping, but that's a decision you have to be good with.

[@codegeek98]

Is it at all possible to use this in a retirement account to offset the cost of leverage when buying DITM calls on stocks I'm extremely bullish on?

[@leelowell]

You can sell put options anytime you want. Not sure I completely understand your question though. In the U.S., if you sell put options in a retirement account, it will have to be cash-secured, as using margin is not allowed in retirement accounts. Ask again if this doesn't help.

[@ampiciline]

can you talk about synthetic naked put option please ?

[@leelowell]

A naked put can be created by using a call option and the underlying security (the stock). If you want to create a synthetic long (purchased) put option, you would buy the same strike call option that matches the put option you're targeting and then sell 100 shares of stock, in this case. This would give unlimited gains to the downside (to the stock falling to zero) just like a purchased put option would, and limited losses on the upside. If you want to create a short (sold) put option, then you would sell the call option and buy 100 shares of stock. It has the same risk profile as a naked short (sold )put option - unlimited downside loss (to the stock falling to zero) and limited upside gains. Now, with all that being said, most people want to know the reverse of what you ask. They would rather sell a naked put instead of being long shares and a short call, which is what a covered call strategy is. Covered calls = short (sold) put, as far as risk profile is concerned. Selling a naked put incurs one trade while a covered call strategy incurs two trades - buying the shares and selling the call option. Two commissions vs one commission. Selling the put has one less commission. Make sense?

[@ampiciline]

@@leelowell I thought similar to (Poor man cover call = synthetic cover call , there is a poor man selling put = meaning you are buying a very low(- delta) or very last strike #in option chain) put option(buying put deep in the money ) and then you " sell put against it and that is called synthetic put option .... is that wrong ? by doing do that you don't have to lock down so much capital to do cash secure put

[@leelowell]

@@ampiciline - a synthetic put option in the classical sense involves a call option and the underlying security, as I mentioned in the other post. You are confusing me though with how you're describing your synthetic put. You say to buy a very low delta that is deep in the money, which contradicts each other. A low delta would be an OTM option, not a deep in ITM option. What I think you're describing is a put option credit spread, where you want to sell a DITM put that has a high delta and buy an OTM put that has a low delta. That's just a very wide put spread. Ask your question again if I'm not answering what you're looking for.

[@ampiciline]

@@leelowell Yes , I made huge mistake in terminology .sorry about confusion . I am going to give you an example .... As the fed is going to cut rate very soon in September , selling Put option on TLT is a great choice. so , as I am writing this one share of TLT is 98.28 $ ..... so , if I am going to sell cash secure put ( CSP ) i have to lock 100 X 98.28 $ or almost 9800 $ ( that is lot of capital to lock ) OR I can use synthetic short put option by Buying 100 shares an inexpensive low delta ( - 0.01 ) with strike of 74 $ way far OTM and selling put OTM at -20% delta ( strike of 90$ ) . against the Long leg that I purchase very cheap earlier .... . is this called synthetic short put or vertical put spread with VERY wide wing

[@leelowell]

@@ampiciline - to me, what you're describing is a $16-wide OTM put option credit spread. You're selling the $90 put and buying the $74 put. That's just a plain old spread.

[@unchangingawareness535]

how about buying deep ITM call options like a 50$ call with expiration dt of 1/26/2026 that has a high Delta?

[@leelowell]

Hi, that strategy can work too if you're very bullish. Even in that case though, you'd still be "buying" the shares at above current levels as the cost-basis/breakeven price of those Nike 1/16/26 $50 calls (if that's what you're referring to) is roughly $76.40, which is above Nike's current price of $72.50. The breakeven is the strike price ($50) + its cost of $26.40 per contract = $76.40. In the case of the put-sell, our cost-basis would be below $60 if we're assigned. Watch one of my videos (there are multiple on my channel) about buying DITM calls - kzbin.info/www/bejne/ZnynaaSKgdiee6c

[@UziOptions]

Lee, so you are selling puts for 30 years? Please tell me how well you have done in the bear markets and how did you change your strategy in those years? thx

[@leelowell]

I'm a bull long-term, so I hold. Not all put-sells worked out, but when we enter bearish trends, I pull back on the amount of put-sell trades. The charts tell me most of what I need to know. For instance, in the bear market of 2022, we had the least amount of put-sell trades in our newsletter because it wasn't the best environment to sell puts. I like to wait until I see more of an up-trend emerging.

[@UziOptions]

@@leelowell Thanks for your reply Lee... What then do you think someone who tries to do this for a living does in those nasty bear markets like you're describing when you cut back on most of your put sells ?

[@leelowell]

@@UziOptions - sell call option credit spreads! My 2 cents.

[@12496k]

☑

[@9miltr8der]

Lee, as a new trader with Schwab how do I convince them to allow me to sell out options which I think is a Level 3 trade?

[@9miltr8der]

“Put” options not “out” options. Spellcheck is my own worst enema. Lol.

[@leelowell]

That's one of the biggest obstacles most future put-sellers face. If you understand the strategy, understand the risk, understand that "speculation" is one of the components of put-selling, knowing that they're going to ask you how many years of experience you have trading, and how many option trades you make in a typical year, then you can tailor your answers to accommodate them to approving you. Now, I can't tell you to lie or fudge your numbers for your answers, but at least now you know what they're going to ask. Your answers are based on the honor system, so it's up to you to answer as you see fit.

[@9miltr8der]

@@leelowell I understand it as well as you’ve taught it. In paper money on TOS I’m backtesting this strategy as well as Leaps and Condors. I’ve put over $5k in my paper account in the past 3 weeks and should see twice that with the Leaps.i hope when they look at my account they see the profits I’ve already made in the paper money account on TOS. Not sure if that will improve my status with them or not. Thanks for the lessons. I’m using your strategies alone as I move forward.

[@9miltr8der]

@@leelowell so in your opinion with a small account at Level 1, what strategies could be used with the same probability and success as selling puts?

[@leelowell]

@@9miltr8der - hi, selling put option credit spreads has a very high probability of profit as well, and usually has a lower approval level from the broker. Plus, the margin requirement for spreads can be much smaller than when selling naked put options. Members of our spreads newsletter love it for those reasons alone.

[@Patriots2004]

why do you think selling a put is better than buying a call? Both of these are based on the view that you were long on the equity. So I’m trying to understand why you would prefer selling a put instead of simply buying a call.

[@leelowell]

In my opinion (and based on years of experience), most option buyers (of calls & puts) will fail because the stock just doesn't move enough in the time frame they need it to, to produce consistent profits. And more often than not, they get the direction completely wrong, which of course will lead to losses. On the other hand, selling out-of-the-money put options offer so much more room for directional error, that you can still win on the trade and be wrong on the direction. The payoffs are smaller, but the wins are so much more consistent.