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.
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.
Labels: Nake Puts
