I do not like talking options on this or any thread, though i am an options principal, as it is probably one of the most complicated concepts in investing, though not rocket science. Selling puts is the writing of a contract which gives the buyer, (you being the seller) the right to put something to you at a particular price in the future. Selling puts is bullish on the stock. You feel it will go higher, the put, right to put stock to someone at 80 will be valueless in MArch as stock , you think, might go to 100. WHo would put it to you at 80 if the open market will take 100 for it?<G>
No such thing as low risk in selling any contract. It is less risky than selling calls because there you have unlimited. Atleast with selling puts, you cant lose more than 80. LEts say stock goes to 0 , some could put the stock to you at 80, you lose 80 minus the premiums you received for writing the contract.. So please dont minimuze the risk. its big. Its not simply losing what you wrote.
If you are concerned about risk, buy calls if you are bullish, yet here you need move to the upside where selling calls can be profitable with sideways or even slightly negative action.
Its complicated. do your homework, before you even put 1 buck into options, as in any financial product.
-steve@yamner.com |
