Selling put option yield


Selling put option yield


A:The incorporation of options into all out of investment strategies has quickly grown in popularity among individual investors. For beginner traders, one of the main questions that arises is why traders would wish to sell options rather than to buy them. The selling of options confuses many investors because the obligations, risks and payoffs involved are different from those of the standard long news about forex trading videos understand why an investor would choose to sell selling put option yield option, you must first understand what type of option it sellint that he or she is selling, and what kind of payoff he or she is expecting to make when the price of the underlying moves in the desired direction.Selling a put In matters of personal finance, income is king.

The only way to get enough income worth thinking about in Treasurys or CDs is to lock your cash away for five or ten years. But even then we are only talking 2% to 2.5%.Not the ideal scenario for someone looking for additional income.Thankfully, there is a better selling put option yield. The sale of put options can be an excellent way to gain exposure to a stock on which you are bullish with the added benefit of potentially owning the stock at a future date at a price below the current market price.

optipn To understand how selling puts may benefit your investment strategy, a quick primer on options may be helpful to some.TUTORIAL: Options BasicsCall Options Vs. Put OptionsVery simply, an equity option is a derivative security that acquires its value from selping underlying stock it covers. Owning a call option gives you the right to buy a stock at a predetermined price, known as the option exercise price.

A put option gives the owner the right to sell the underlying stSelling put options (deep in the money) is an alternative way of purchasing shares of a company. More specifically, when one sells deep-in-the-money puts, it is equivalent to owning the corresponding shares as long as the stock price does not exceed the strike price of the options on their expiration date. The strategy exhibits certain advantages and suits well the profile of most investors that are interested in high-dividend stocks.

It is particularly suitable for individuals that have their dividends taxed (see table at the end).The most important advantage is that the investor receives in full the time value of the options, which will be greater than the dividend if the strike price is properly selected. Important legal information about the email you will be sending. By using this service, you agree to input your real email address and only send it to people you know. It is a violation of law in some jurisdictions to falsely identify yourself in an email.

Even though it srlling like an investment strategy that is too good to be true, rest assured it is very selling put option yield a put sell, you sell a put option and pocket a premium. To continue, please register at Stock Options Channel for unlimitedpage views and our free weekly newsletter, by entering your name and email address below.




Selling put option yield

Selling put option yield


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