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Tag Archives: put selling
selling cash-secured puts calculations

Selecting the Best Put Strike Based on Overall Market Assessment

Selling cash-secured puts requires us to master the three required skills: stock (or ETF) selection, option selection and position management. This article will highlight how to select a put strike based on our overall market assessment.   Market assessment data published in BCI newsletters Investor Business Daily’s market assessment Dr. Eric Wish’s GMI Index BCI […]

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put-selling calculations

Selling In-The-Money Puts to Generate Higher Premiums: Evaluating a Real-Life Trade

Selling Cash-Secured Puts can be used to accomplish several goals; Generate cash flow Buy a stock at a discount Used as part of a multi-tiered option selling strategy along with covered call writing (PCP strategy) Our strategy goal along with overall market assessment, chart technicals and personal risk tolerance will ultimately guide us to the […]

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risk-reward profiles for covered call writing and put-selling

Comparing Covered Call Writing and Selling Cash-Secured Puts

An accepted myth is that covered call writing and selling cash-secured puts are precisely the same strategy. The reason this statement is generally accepted by many investors is that they have the same risk-reward profiles or profit and loss graphs:   In this article, other similarities will be discussed as well as some distinct differences […]

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selling cash-secured puts

Rolling Up When Selling Puts To Buy A Stock At A Discount

Selling out-of-the-money cash-secured puts is a fantastic way to buy a stock at a discount. It can be used in lieu of setting limit orders. If exercised, our cost basis is the put strike minus the put premium generated. If unexercised, we get paid not to buy the stock! For example, if a stock is […]

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covered call writing and put-selling in bear markets

Why We Should Avoid ATM and ITM Put Strikes in Bear Markets + A Discussion of Brexit

“Selling cash-secured puts is the exact same strategy as covered call writing”. We hear that over and over…except that it’s not. These two strategies have the same risk/reward profiles and that is why the claim is made so frequently. On page 214 of my book, Selling Cash-Secured Puts, I highlight a comparison chart showing similarities […]

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selling options in bear markets

Defensive Call and Put Positions in Bear and Volatile Markets

Strike price selection can be tailored to our covered call writing and put-selling trades based on overall market assessment. In bear and volatile market conditions we favor in-the-money calls and deeper out-of-the-money puts (lower than current market value). In this article, we will evaluate defensive trades for Smith & Wesson Hldg (SWHC) as of 1/11/2016, […]

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How Bankruptcy Impacts Call and Put Options

We sell a covered call or cash-secured put and then the underlying company files for bankruptcy. What happens next? How are our positions effected?  Let me premise my remarks by saying how unlikely this scenario is for investors who follow the rigorous screening process of the BCI methodology. But there is a difference between unlikely and impossible […]

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put-selling

Creating Multiple Income Streams in the Same Month when Selling Puts

Selling cash-secured puts allows us to generate a monthly cash flow by undertaking the option obligation. There are many occasions when we can enhance these returns to even higher levels using our position management skills. This article will highlight several put-selling trades executed in the same contract month by one of our members, Dan of Minnesota.   […]

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selling cash-secured puts

Can We Use Deep-In-The-Money Puts to Buy a Stock at a Discount?

One of the practical applications of selling cash-secured puts is to buy shares “at a discount” In my books and DVDs I use out-of-the-money puts in lieu of setting limit orders in order to accomplish this goal. Some of our members have inquired about using deep in-the-money puts (strike well above current market value) instead […]

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