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What about the risk of someone exercising the option on the naked puts?
I really enjoyed your videos. Your videos really helped me to generate very nice income by trading options I do have one question/comment. Don't naked puts and calls take more margin requirement? By defining the risk by using credit spread, you can reduce the margin requirement. In other words, you can increase the number of option contracts with Iron condor using the same margin requirement as naked strangle so the Return on capital actually is better.
For the 3rd strategy (naked Puts and Calls bracketing), would I do 'Sell to Open' or 'Sell to Close' for the put order? and what about the call order?. Also, can I let it expire to take the profit if I know it will not escape the bracket?
aren't naked calls and puts extremely risky as well? it seems like credit spreads and iron condors have a limited risk but the loss seems unlimited for the naked call/puts. Correct me if i'm wrong I'm new at this. Great video btw.
Hi, very nice video. My questions is If I sell necked puts or call . do I need to covered it before it expire ? because you are shorting these options. It is similar to shorting the stock right ? When you sort the stock you need to cover it. Please explain it to me or if you have any video that explain this please send me the link . Thanks in Advance.
Great video! thanks for making it simple to understand.
Hey Option Alpha, excellent video about option strategies! Very informative and helpful. I'm currently using TD Webroker (Ameritrade) as my broker, and they don't seem to allow naked puts and calls… If I can't use that strategy for a market neutral position, iron condors would be my best bet correct?
I love this video, but I'd have to disagree with the statement about reducing risk with Naked Calls/Puts. I know of a few friends who've been burned by the naked selling strategy. I personally like selling naked for low beta securities, but I don't think being completely exposed on one end of the leg is proper risk management in the traditional sense.
Hi Kirk. Very nice explanation. But I have a question – Suppose a stock(bullish) is trading @50 and I sold a far put of 42 @4, after few days stock splits to 50% and comes @25 then what will happen with 42 @4 naked put? Thinking of this for long time!!! and that's stopping me to step out for naked puts and call… Please clarify..Regards
Brief and clear explanation. For passive trading, which of these three is the best strategy?
The worst case scenario with Iron Condors seems if the stock trades too high or too low on either end you would break even. Is this true?
Isn't sellimg naked puts extremely risky? At least theoretically losses can be very high if the asset price goes in the wrong direction… And then combine them with naked calls? Maybe I am missing something, cwn you clarify?
+Option Alpha It is great video for strategies or plane for monthly income.I am impressed by video.
This is a great video. So much clearer now is my option strategy understanding. Much to learn I have more videos must watch.
Thanks for the video.
Hey I am just starting this option stuff…and still ahve to get sued to the terminology, but these strategies you explained are writing out puts based on stocks you already own am I right?
Another great video. Good point about just focusing on a few strategies to start out.
Top Strategy for Options, don't buy options.
Hey option Alpha can u give me some basic info regarding future trading.. Thx
Hi, in the first case study, I wonder if the stock price moves below $45 (the sold leg) before options expiration, will I get "called away" ….meaning that the buyer exercises it (before expiration) and ended up I have to pay $4,500 for the stocks (suffer losses)? Is this possible? and how to prevent this from happening? (anyone can help?)
I don't understand at all; you said that you buy an option way out of the money and you have to "hope and pray" in order for you to make a profit, but if the stock the options if for increases the price, the option will still be out of the money, but less out of the money, and instead of implementing the contract, cant you just sell the contract to someone for a much higher price. Furthermore, isn't doing this the best way to trade options, because it means that instead of turning an "at the money option" from 1 dollar to 1.40 dollars, you can turn an out of the money option from 0.01 dollars, to 0.40 dollars, which is a 4000% increase rather than a 40% increase… ?
The Question I have with the naked puts and calls is what happen if the stock fall below that price that is farther away from the market? I assume that you would have to come up with the stock that is going against you. How do you protect yourself against that happening?
Nice Work! I think I will keep following to see where this goes.
You do a good job of explaining things but I would add the "risk" for each strategy also especially on naked puts & calls.
When selling a put….What happens if when you sell a put and between the time you sold it and the expiration date the stock did drop below the strike up to the strike but then went up and closed higher at the day of the expiration. Did you get put the stock because it dropped during the strike even it raised higher and closed higher than the strike price on the day of expiration? Or do they consider putting you the stock only if it hits the strike price or lower at the expiration date? Thanks.