Sunday, September 21, 2008

 

A few points on Selling Naked Puts

Here are a few things I realized selling Naked Puts...

1. Try to cover the position when your profits reach a certain point. There were multiple times when I could have closed these positions a long time before the expiration for a 50-90% gain, but I wanted to collect the entire premium. Holding a put on SKF during one of the most volatile week for financials on Wall Street was nerve-wracking.
2. Selling way out of money options don't lose value that quickly (at least when the stocks are volatile). So I'll need to sell something closer to the money.

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