sell

Generate Passive Income with this Options Strategy - How to SELL PUTS for Beginners

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

keep up to date make sure to subscribe

and hit the bell so you're notified

every single time that i make a video

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