Selling Puts For Income - The Way I Made a 75% Return Within A Single Working Day
Profits are what it is all about. It's right there inside of the verbiage: selling puts for income. If it does not generate income, what can be the point? Selling puts is only the approach, the aim is money.
This article is another case study about how the whole method performs. The article will summarize exactly why I decided on the stock that I chose, the way I picked out the option which I picked, the amount of money I had to put towards the asset, and exactly how much profit I got out from the trade.
This particular investment was entered on September 8, 2011.
Step One: Find the stock
Picking the stock is fairly simple. I check out stock charts. I am searching for a share that's increased gradually in the last 6 months. In other words, I would like to find an upwards angled 200 day moving average. A stock ought to be above the long-term average. Your oscillating indicators need to be minimal on their ranges, and the company must be going upwards with a pattern with higher peaks and also elevated lows.
Apple Computer was the particular share that caught my eye today. Over recent market moves, AAPL bottomed out two times about the $360-$364 region . It then started heading upwards and made an encouraging trough. The parameters mentioned previously were in the right positions. Over the last few days there was clearly a small retracement in the stock, but buyers have come into the arena and forced the share price up. It is a wonderful scenario for selling puts.
The Second Step: Choose the option
There's always some sort of balancing act whenever selling puts between several issues. We would like time to generally be as short as is possible, which in turn decreases the premium we get yet increases security. We wish the contract value to generally be the highest practical without having your gains in jeopardy. So I finished up selecting a 365 exercise price, approximately 20 dollars beneath the present bid and ask level. The option will reach its expiration date in a work day, therefore the time remaining couldn't be any better. I could have chosen the three hundred seventy exercise numer, yet the added profit simply wasn't worth it.
Step # 3: Sell the put for income
I sold the puts for $0.10. Considering that option positions are bought and sold in sets of a hundred shares, this means every contract gave me $10 (ten cents x one hundred equals $10). I sold 20 contracts, and twenty x $10 equals $200, thus my net profit was $200 for the trade. Using the deposit requirement calculations, that is a profit of 0.3% in a 24 hour trade. Over the course of a year three tenths of one percent gets to be a whopping seventy-five percent return!
Step 4: Profit
There's 2 methods to cash in on a sold put. You can purchase the contract back for under what you formerly sold the option for or else you allow the option end with no value. For this transaction, AAPL continued well outside the strike price zone, thus I kept the whole premium.
This complete operation took roughly half-hour from start to finish, this includes locating the security, selecting an option, plus keying in the trade. Then I had to reluctantly wait around for 24 hours to obtain the gains. Have you got time to create a simple and fast $200 by selling puts?
Profits are what it is all about. It's right there inside of the verbiage: selling puts for income. If it does not generate income, what can be the point? Selling puts is only the approach, the aim is money.
This article is another case study about how the whole method performs. The article will summarize exactly why I decided on the stock that I chose, the way I picked out the option which I picked, the amount of money I had to put towards the asset, and exactly how much profit I got out from the trade.
This particular investment was entered on September 8, 2011.
Step One: Find the stock
Picking the stock is fairly simple. I check out stock charts. I am searching for a share that's increased gradually in the last 6 months. In other words, I would like to find an upwards angled 200 day moving average. A stock ought to be above the long-term average. Your oscillating indicators need to be minimal on their ranges, and the company must be going upwards with a pattern with higher peaks and also elevated lows.
Apple Computer was the particular share that caught my eye today. Over recent market moves, AAPL bottomed out two times about the $360-$364 region . It then started heading upwards and made an encouraging trough. The parameters mentioned previously were in the right positions. Over the last few days there was clearly a small retracement in the stock, but buyers have come into the arena and forced the share price up. It is a wonderful scenario for selling puts.
The Second Step: Choose the option
There's always some sort of balancing act whenever selling puts between several issues. We would like time to generally be as short as is possible, which in turn decreases the premium we get yet increases security. We wish the contract value to generally be the highest practical without having your gains in jeopardy. So I finished up selecting a 365 exercise price, approximately 20 dollars beneath the present bid and ask level. The option will reach its expiration date in a work day, therefore the time remaining couldn't be any better. I could have chosen the three hundred seventy exercise numer, yet the added profit simply wasn't worth it.
Step # 3: Sell the put for income
I sold the puts for $0.10. Considering that option positions are bought and sold in sets of a hundred shares, this means every contract gave me $10 (ten cents x one hundred equals $10). I sold 20 contracts, and twenty x $10 equals $200, thus my net profit was $200 for the trade. Using the deposit requirement calculations, that is a profit of 0.3% in a 24 hour trade. Over the course of a year three tenths of one percent gets to be a whopping seventy-five percent return!
Step 4: Profit
There's 2 methods to cash in on a sold put. You can purchase the contract back for under what you formerly sold the option for or else you allow the option end with no value. For this transaction, AAPL continued well outside the strike price zone, thus I kept the whole premium.
This complete operation took roughly half-hour from start to finish, this includes locating the security, selecting an option, plus keying in the trade. Then I had to reluctantly wait around for 24 hours to obtain the gains. Have you got time to create a simple and fast $200 by selling puts?
About the Author:
Neal McSpadden has been selling puts for income and other money making strategies for over ten years. Use the technique of selling puts for income to make quick and safe market gains in the markets right now!. This article, How To Make 75 percent On Your Investment In A Trading Day is released under a creative commons attribution license.
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