selling put options is just like
dividend stocks but on steroids
this month i made over 400 off of a 1600
investment and very minimal effort so
today i'm going to be teaching you
how to sell put options are you ready
let's get into it
if you're new here my name is greg and i
make videos about the stock market
and options trading strategies in
today's video we're going to talk
all about selling put options and i make
tutorial videos on options trading
pretty much every week so if you want to
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getting into the topic of selling put
options first we're going to talk about
the strategy itself
and how to actually sell a put then
we're going to talk about the expected
returns that you should see
from the strategy and finally to wrap
this video up i'm going to give you the
best stocks to sell
put options on now that you know the
structure of this video let's get into
it
everyone here has probably already
bought a put option you expect the price
of a stock to go
down then it ends up going against you
ends up going up
you lose all the value of that put
option now when you sell a put you
actually make money no matter which way
the stock goes if you go
up down in circles anywhere whenever you
buy a put you're paying someone premium
in order to get that contract
the person that sold you that option
actually gets to keep the premium
no matter which way the stock goes
meanwhile you on the other hand
only get to make money if the stock goes
down
in a certain amount of time the seller
on this put option is basically like a
casino and they're letting you
gamble your money away while they
receive recurring
weekly paychecks selling puts to their
patrons now the casino might let you win
once or twice hell you might even win a
million dollars but at the end of the
year
who's profiting you or the casino
selling put options is probably one of
the most consistently profitable
options trading strategies but it does
come
with a little bit of risk you see
whenever you sell a put option you're
agreeing to buy
100 shares of the stock if it closes
in the money in other words if the
underlying share price
is below your strike price at the time
of expiration
then you have to buy 100 shares at your
strike price
for example if you sell a put option on
stock xyz
for a 100 strike price and at expiration
closes at 99 you're still gonna have to
buy
100 shares at 100 even though it's
trading at 99.
you might be thinking wow this strategy
is super expensive
and yes it is in order to sell a put
option you actually have to have the
collateral in order to buy the 100
shares at your strike
price so if we use the example from
earlier with the 100
stock xyz then you're gonna have to put
ten thousand dollars down
as collateral now you can go with
cheaper stocks in order to bring the
amount of collateral you have to put
down
but you should only sell puts on a stock
that you're actually comfortable
holding 100 shares of because ultimately
you could be filled for this order so
now that you know the fundamentals on
how selling a put option works
let's get into an actual example and
show you how simple this is
since i'm comfortable holding 100 shares
of workhorse i'm going to sell a put
option
on their stock so we're going to go with
an expiration date of this week
on september 4th i can pick whatever
strike price
i want on their stock if we go with the
16 put
we're gonna be paid ninety dollars in
premium and if we go with the seventeen
dollar foot we'll be paid
148 dollars in premium i'm gonna go with
a happy medium of the 1650 put because
it offers a pretty good premium
and the chances of workhorse actually
falling to 1650 at this point
is probably pretty low whenever i sell
one of these puts i'm gonna be paid 115
in premium to put on this trade in order
to put this on i'm gonna have to have
sixteen hundred and fifty dollars of
collateral
the one hundred and fifteen dollars of
premium that i'm gonna be getting is
going to be paid to me
up front so that means i can do whatever
i want with that 115
personally whenever i get premium i like
to use this money on
buying shares of the company because
essentially they're free shares
you can use it for rent beer money
whatever you want just be smart with it
whenever i swipe up to submit this
contract i'm agreeing to buy
100 shares of workforce at 16.50 a share
on or before september 4th so if
workforce comes below
1650 the buyer of this contract can
execute it at any point
and if it closes below 1650 at the time
of expiration
then i am obligated to buy 100 shares at
16.50
on the other hand if this option expires
worthless or in other words
workhorse closes above my 1650 strike
price
then i'm off the hook i don't have to
buy any shares and i just get to keep my
premium
after my expiration date of september
4th i can then go and sell a put option
for the next week
and then i can just rinse and repeat
this collecting premium
every single week so you can basically
think of this like dividend stocks but
instead of getting paid
every three months every year every
month depending on what stock you're
buying
you actually get paid once a week but
unless you're super unrealistic with
your strike prices
at some point it's going to fall in the
money and you're going to be filled for
your order
at this point you'll have 100 shares of
the company and then you can go about
selling a covered call if you want me to
make a video about selling call options
make sure to smash the thumbs up button
and if this video gets 100 likes i'll
make that video for you guys
we covered exactly how to sell a put
option we covered the fundamentals now
let's talk about how much money you're
going to be making by using this options
trading strategy
now as the famous saying goes the rich
get richer and the more money that you
have to sell put options the more money
that you're gonna make
i like to basis offer percentages as a
minimum you should expect between one to
two percent of the collateral you're
putting down
every single week if you only have one
thousand dollars to sell put options
with then you'll be making ten dollars a
week or forty dollars a month which
isn't bad
but it's not great if we step it up a
notch and you're putting ten thousand
dollars down as collateral you'll be
making one hundred dollars a week or
four hundred dollars a month which is a
little bit better
and finally if you have 100 000
smackeroonies
you're gonna be making one thousand
dollars a week or four thousand dollars
a month
since i am trading a more volatile stock
with workhorse i get paid a little bit
more in premium
i expect around six percent every single
week
since i'm putting down sixteen hundred
dollars as collateral i'm making four
hundred dollars a month which is able to
pay off my car note and its insurance
over the next year if i continue to sell
these workhorse options i'm gonna be
making
forty eight hundred dollars which is a
two percent return
on my initial investment but that's only
if workforce continues to trade between
15 to 20 obviously if it falls i'll be
making
less money in premium but if it gains a
ton then i'm gonna be making
even more than i'm making now and this
leads me into how you should pick stocks
to sell put options on
whenever you're selling put options you
want to pick a stock that has a stable
price
workhorse is a terrible example you can
either pick a stock that trades
relatively flat like att or
coca-cola or it could end up choosing a
growth stock that way
every week you're getting paid a little
bit more premium now the premium
on an option is heavily based on the
share price
of a stock so if you got jeff bezos type
of money and you're able to sell puts on
amazon you should expect about six
thousand dollars a week
i'm assuming you guys probably don't
have hundred and forty thousand dollars
to put down on a single auction
but honestly there are some solid growth
stocks for under one hundred dollars
the most popular stock for this strategy
would probably be amd
if you're willing to buy 100 shares on a
microchip company that has a cult like
following
you can expect about 200 a week selling
premium on
amd if you sell four put options on amd
every week that's enough to probably
cover about half of your rent
8 500 might be a lot to you guys and i
understand that
back in march i had a 3 000 account and
if i were to go back in time
i would probably sell put options on
stable stocks like bank of america
or wells fargo both of these stocks are
under 30
so you can sell premium with only three
thousand dollars in collateral
if you're not interested in buying 100
shares of a bank stock
honestly i don't blame you bank stocks
are pretty boring
so if you're looking for something a
little bit more interesting i would
probably go about selling put options on
snapchat which is around twenty dollars
obviously the choice is completely up to
you guys and you should only sell put
options on a stock that you're actually
comfortable holding 100 shares of
at some point you're probably gonna be
filled for one of these orders so you
might as well choose a company that you
actually enjoy and that you think is
actually going to be going up the only
reason why i sell workhorse options is
because i'm comfortable holding 100
shares of the company
i think that it's going to continue to
grow especially with a usps contract
if you want to keep up with what
investments what trades i'm making on a
day-to-day basis i post literally every
single trade that i make over on my
discord
it's gonna be the first link down in the
description so with all that said guys
remember to stay positive stay green
i'll catch you in the next one bye guys