Options

Options investing is a field that most people do not know about. I am currently involved in selling naked puts and covered calls, but I hope to cover advanced options strategies eventually.  Options trading and investing has to do with taking a position that a particular stock may go up, down or stay the same which makes the contracts very versatile.

Option Strategy – Understanding the Bull Put Spread

I have been selling a lot of naked puts this year.  A lot.  Taking a look at my spreadsheet I would estimate that just 2 months deep I have been in and out of 50 or so trades.  If I had to guess that is a tremendous amount of trading for a retail investor (but maybe I am wrong).  Since options trading is currently what I am obsessed with I have been reading and thinking about the topic at an increased rate, and the more I read the deeper the rabbit hole gets.  There are a ton of strategies out there, so [...]

By | February 27th, 2017|Options|2 Comments

Rolling Option When You May be Assigned a Naked Put

I have become semi-obsessed with options and the income they can generate since I first learned how to sell naked puts.  However, selling naked short puts has risk and one of those risks is being assigned the stock you "bet" against.  There are are two main strategies that everything else builds off of.  The first is just taking the stock; I took this route with my Under Amour trade.  The second is known as rolling. What Does it Mean to Sell a Naked Put? Discussing an option "out" of a unprofitable trade means nothing if you don't understand the underlying trade itself.  [...]

By | December 21st, 2016|Options|1 Comment

What is Time Decay and Why Do I Love It?

I know I have been writing about options a lot lately, but currently that is the shiny object that has all my attention when it comes to investing and creating wealth. When I sell a naked put I collect a premium to take the risk that someone can put to me 100 shares of a particular stock if it goes below the predefined strike price by a certain expiration.  Time decay (also known as Theta) is an option seller's friend, and let's take a look why. Breaking Down a Put Sale Example I always find an example is the best way to explain options Stock is worth [...]

By | December 9th, 2016|Options|2 Comments

Re-engineering My Exit Strategy when Selling Naked Puts

I only started selling naked puts a few months ago, so my it is natural that my strategy is going to change.  At first I thought I would only sell naked puts against dividend champions, but I quickly learned that the premiums were not enough to make it worthwhile so I adapted.  Recently, I have been bothered with my closing strategy. My Current Buy to Close Naked Put Strategy When I first started (and up until this post) the current strategy is to take a 50% gain on the premium collected. The easiest way to understand the strategy is with an example. Stock [...]

By | November 25th, 2016|Options|2 Comments

Selling My First Covered Call Option

I have written about covered calls before, as it is a strategy I have used for years, but this is my first covered call sell in the current iteration of my Undervalued Dividend Growth Portfolio.  The trade and post comes from being assigned 100 shares from the sale of a put contract last week. What is a Covered Call? Investopedia defines a call option as. A call option is a contract that gives the buyer of the option the legal right (but not the obligation) to buy 100 shares of the underlying stock at the strike price any time before the expiration [...]

By | November 9th, 2016|Options|4 Comments