What is the best time to sell put options? Before I answer this question let me explain how selling a put option works. When you sell a put option, you are selling someone the opportunity to sell you security at a specific price on or before a specific date. For instance, if I am interested in INTC and want to buy it at $50 next month I could sell a put with a strike price of $50 expiring next month. When someone purchased my option contract, I would be paid a premium. If you would like to learn the basics on how to sell a put option, here is a good link. Getting Started Selling Put Options
You might be thinking I am going to say that the best time to sell put options is a specific day or time. For instance, in the first hour or so the market is open. Well actually, this is partially true. I do find the best premium in the morning. However, another time exists to really find great premium. This is during down days or corrections. The premiums can be good on down days but it’s outstanding on corrections. These are days where the market is down by more than 2%. I have seen in some instances the premiums double for puts.
On Monday, July 19th the market was down by over 700 points. It was a bad day for the market but a good day for me. I had four trades and made nearly $600. Not the best average per trade but I was able to sell some puts on good stocks that were not worth it the day before. I have learned that days, where the market is down more than 1%, are good days to sell put options. Also, statistics show that over 40 percent of trading days are down days. So, you can wait an extra day or two and get more premium. It is important to be patient and at times wait for a better premium to show up.
Typically, people pay higher prices for puts, and with some stocks that are not overpriced, you can gain some great premium for taking little risk. One example is selling ATT at 20. What is the likely hood of ATT going to 20? I think it is very unlikely. In July I sold an ATT put that expires in over a year and gained nearly $100 for each contract.
In my YouTube video below discuss the best time to sell puts in more detail. Please take a look and hit the like button. Also, please subscribe to my mailing list. I am getting ready to start sending newsletters that contain recommendations and announcements. Finally, if you want some real hand holding sign up to be a Patron and you will get access to my trades, securities of interest, and live events.
Thanks, and Happy Investing!
