![How to SELL a PUT Option - [Option Trading Basics]](https://blog.bc.game/wp-content/uploads/2019/09/How-to-SELL-a-PUT-Option-Option-Trading-Basics.jpg "How to SELL a PUT Option - [Option Trading Basics]")
Some people don’t understand that you can actually be a seller of options. They think that you can only buy a put or buy a call, but this is not the case. Just like a car dealer will sell you a car before it’s even in their inventory, you can do the same thing with option contracts; you can sell them, even if you don’t have them.
You’re selling these contracts to other people that are interested in buying them. The issue is you will have to deliver what you promised based on the contract, which can go in your favor, but it can also go against you. That’s why you have to be very careful when trading options.
You need to understand that there are four parts to a trade. You can be a buyer of a put or a seller of a put, and you can be a buyer of a call or a seller of a call. Those are the four parts to trading an option contract.
If you’re a buyer of a call, you want stock prices to go up. If you’re a buyer of a put, you’re looking for that price to go down in the stock.
However, if you’re a seller of a call, you want prices to go down. And if you’re a seller of a put, you want prices to go up. These are the combinations that you have available.
In this video, we’re going to take a look at the risk profile picture when it comes to selling a put. We’ll also take a look at selling a put option contract on a trading platform. That way you can understand how it works, and how you can make money from it.
The problem with selling option contracts is that you have unlimited loss. When it comes to selling a put, your unlimited loss can actually only go down to zero, because the stock price can only go down to zero.
Another issue with selling contracts is that you’re capping or creating a max profit potential, whereas if you’re buying a call or a put, you have unlimited profit potential.
However, the advantage of selling option contracts is that you don’t have to worry about the theta or time decay because this actually works in your favor. And also, you don’t really need that stock to move, whereas, if you buy a call, you often times need to move to the upside. In this case, that stock can actually stay still, or even move down against you a little bit and you can still make money.
That’s one of the huge advantages to selling these put contracts because it allows you to have a larger chance of success.
Posted at: http://tradersfly.com/2018/01/selling-a-put-option/
★ REGISTER FOR A FREE LIVE CLASS ★
http://bit.ly/marketevents
★ GETTING STARTED RESOURCE FOR TRADERS ★
http://bit.ly/startstocksnow
* Please note: some of the items listed below could and may be affiliate links **
* Trading Software / Tools *
Scottrade: http://bit.ly/getscott
SureTrader http://bit.ly/getsuretrader
TC2000: http://bit.ly/gettc2000
TradeKing: http://bit.ly/gettradeking
TradeStation: http://bit.ly/getstation
★ SHARE THIS VIDEO ★
★ SUBSCRIBE TO MY YOUTUBE: ★
http://bit.ly/addtradersfly
★ ABOUT TRADERSFLY ★
TradersFly is a place where I enjoy sharing my knowledge and experience about the stock market, trading, and investing.
Stock trading can be a brutal industry especially if you are new. Watch my free educational training videos to avoid making large mistakes and to just continue to get better.
Stock trading and investing is a long journey – it doesn’t happen overnight. If you are interested to share some insight or contribute to the community we’d love to have you subscribe and join us!
FREE 15 DAY TRIAL TO THE CRITICAL CHARTS
– http://bit.ly/charts15
GET THE NEWSLETTER
– http://bit.ly/stocknewsletter
STOCK TRADING COURSES:
– http://tradersfly.com/courses/
STOCK TRADING BOOKS:
– http://tradersfly.com/books/
WEBSITES:
– http://rise2learn.com
– http://criticalcharts.com
– http://tradersfly.com
– http://backstageincome.com
– http://sashaevdakov.com
SOCIAL MEDIA:
– http://twitter.com/criticalcharts/
– http://facebook.com/criticalcharts/
MY YOUTUBE CHANNELS:
– TradersFly: http://bit.ly/tradersfly
– BackstageIncome: http://bit.ly/backstageincome
source
Why can't you stay on topic? When you throw in all the other buy a call, sell a call, buy an option, it confuses everything. The video title is "How to sell a put option".
A question born of complete ignorance; What is the advantage of selling a Put if the downsize risk is so great-AND-how can I sell a Put(Naked), when TOS will not allow that risk? In other words, If the platform doesn't allow the trade, due to high loss potential, how then, mechanically speaking, do I sell a put? Please respond…
Thank you !!
I sent you a email
So when I buy a put I want the price to go down because when I sell it back I want a profit. However you're saying if I sell a put I want the price to go up + the time decay is on my my side. This is not been my personal experience selling a out however. If the price goes up when I'm trying to sell my put as it nears expiration the value goes down. Please explain.
If i sell ONE put with a 200 strike and it goes way below strike it
at or by experation I will then need to buy 100 shares of the stock correct? 100×200= $20,000
very nice explanation
Talk and demo too fast to follow
i thought theta was bad
Super Helpful Thanks! How and when do you get out of the trade?
Good content and easy to understand you Sasha
I hope you can answer this question. If I sell a put option that expires in two weeks, but the stock price was going down in stead of up and now I'm in the negative. Let's say I was -(230) and then My option expires while im in the negative -(230). Does that mean that I need to pay those 230 or is my option worthless since it expired?
Hi Sasha,
can you help me with these few little questions?
first question: suppose an investor sells a put option. what happens if the stock price on the exercise date exceeds the exercise price?
second question: please explain which determinants increase the value of a call option
3rd: show graphically the general value of the following call and put options on the exercise date, depending on the stock value. assume that strike price is always the same if more than one option is bought
a) buy one stock and one put option on the stock
b) buy one call
c) buy one stock, buy one put, and sell one call
4th: discuss the following statement: " the buyer of the call and the seller of the put both hope that the stock price will rise. therefore, the two positions are identical."
thanks a lot
why do i earn money every single day? is it because of the contract fees?
When the sell option is losing money, do the sellers get the stocks or pay the difference of the stock price and the strike price?
Very good Video. Thanks. Im new at this but I have started to learn a lot from your videos and its what got me interested in doing them.
Love all your videos ( my first son also name Sasha ) when you sell put options, don’t you need a large capital to do so? Thanks
ok so what happens when i sell a PUT and it goes lower than what i purchased for but in a week it turns around and goes in my favor. Do i still lose money because it went lower or does it have to stay above the price i purchased it for?
If I were to sell a put and it expires in-the-money, only a few cents in the money like say 10 cents, is it possible the buyer of the put won't sell his shares?
Good video, thanks!