Selling Put Options is a great way to make extra income. I sell put options on stocks that I would like to own and make some premium on my excess cash. I only do 1 or 2 contracts and typically invest in high dividend-paying stocks that are not too high priced. A couple of the stocks I am currently looking at are INTL and CSCO. Both pay a good dividend and are not overpriced at this time.
Getting Started is not difficult. First, you must request option access from your broker. I use Schwab and was able to request access to selling non-naked options. This is the beginner level, and, in most cases, Schwab will allow you to have access to the first level. Once you have been trading for a while you can request higher levels of access. My post on Requesting Options Approval on Schwab goes into more detail.
Please note that I am not a professional, this is a hobby for me. A way to make extra income. Here is how I would get started. If you want to purchase an investment like INTC, you can sell a put option contract on it. For instance, if INTC is trading at $50 you could sell an INTC option with a strike price of $45 expiring in 30 days and make some premium. You would need to have enough cash to cover the 100 shares required for each contract. Soo with INTC at $45 you would need $4,500 minus any premium you receive.
If the price of INTL goes below the strike price it can be assigned to you. However, most of the time the shares are only assigned on the expiration day. However, you have choices to make when you get near expiration. If it’s way out of the money, then just let it expire. If it is close to or in the money you can close or roll it. I have sold many contracts and have been able to manage all of them without assignment. Looking back, I should have taken a bit more risk and let some get assigned. I missed some opportunities to get some shares at a really good price.
Below you will find my YouTube video that discusses this in more detail. At the end of this video, I included an actual trade where I sold a put contract on INTL. This way you can see firsthand how it has done. In a matter of minutes, I made some nice premium.
Thanks, and Happy Investing.
2 thoughts on “Getting Started Selling Put Options | Sold Put Option on Intel.”