Back To Main | Back To Previous

Writing Out Of The Money Put Options

 Simplified Version / Comprehensive Version


Purpose Of Writing Out Of The Money Put Options
To Profit On Rising Stocks While Shooting For A Chance To Own Your Favorite Stock For A Lesser Price.


Expectations Of Writing Out Of The Money Put Options
Stagnant, Up, Slightly Down


Type Of Spread
Naked Option Selling


How To Use Writing Out Of The Money Put Options
Sell To Open nearest month Out Of The Money Put Options.

explosive option trading mentor Personal Option Trading Mentor
Find Out How My Students Make Over 87% Profit Monthly,
Confidently, Trading Options In The US Market!

Profit Potential Of Writing Out Of The Money Put Options
Maximum profit occurs when the underlying stock closes above the strike price of the short put options.


Risk / Reward of Writing Out Of The Money Put Options:
Upside Maximum Profit: Limited
Limited to net credit recieved.

Maximum Loss: Limited
Limited to strike price less premium gained.


BreakEven Point of Writing Out Of The Money Put Options:
Breakeven = strike price of out of the money puts sold - Cost of out of the money puts sold


Advantages Of Writing Out Of The Money Put Options:
  • Enables you to profit if the underlying stock goes up or remains flat or drops slightly.

  • Allows you to buy your favorite stock at a slightly better net price when exercised.


    Disadvantages Of Writing Out Of The Money Put Options:
  • Need to maintain enough money to take delivery of the stocks when exercised.


    Alternate Actions for Writing Out Of The Money Put Options Before Expiration :
    1. If the underlying stock has rallied and is expected to rally further, you could continue to roll up the put optoins or to even start selling At The Money put options instead.


    cool feature! Don't Know If This Is The Right Option Strategy For You? Try our Option Strategy Selector!





    Continue your journey of discovery...
    Click Me For Content Index
    Click Above For Content Index

    Got Question / Suggestion?
    What Is Naked Put Write?
    What Is Bear Call Spread?
    What Is Bear Put Spread?
    What Is Buy Put Options?
    What Is Hedging?
    What Is Short Bear Ratio Spread?
    What Are Protective Puts?
    What Are Married Puts?
    What Is Bear Ratio Spread?
    What Is Calender Put Spread?
    Back To Strategies Page

    Back To Main | Go To Option Trader's HQ

     

    • Javascript Tree Menu

    Keep in touch with our updates through RSS...NOW! Follow www.Optiontradingpedia.com on Twitter

    Our Sponsors


    Important Disclaimer: Options involve risk and are not suitable for all investors. Data and information is provided for informational purposes only, and is not intended for trading purposes. Neither www.optiontradingpedia.com, mastersoequity.com nor any of its data or content providers shall be liable for any errors, omissions, or delays in the content, or for any actions taken in reliance thereon. Data is deemed accurate but is not warranted or guaranteed. optiontradinpedia.com and mastersoequity.com are not a registered broker-dealer and does not endorse or recommend the services of any brokerage company. The brokerage company you select is solely responsible for its services to you. By accessing, viewing, or using this site in any way, you agree to be bound by the above conditions and disclaimers found on this site.

    Copyright Warning: All contents and information presented here in www.optiontradingpedia.com are property of www.Optiontradingpedia.com and are not to be copied, redistributed or downloaded in any ways unless in accordance with our quoting policy. We have a comprehensive system to detect plagiarism and will take legal action against any individuals, websites or companies involved. We Take Our Copyright VERY Seriously!