SELLING PUT OPTIONS Tutorial on Interactive Brokers Trader Workstation IBKR PRO
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- Опубліковано 25 сер 2024
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Following on from my video on how I get paid to wait for my investments. Today I am going to show you exactly how to do this inside of the Interactive Brokers platform. This is one of the Brokerage accounts that I use and although not as simple as Saxo Trader Go, it is still easy enough.
If you have a different platform, try and apply these same steps to your platform.
If you don’t know what a Put Option is, please go back and watch my video called, “Selling Put Options - How I Get Paid to Wait Like Buffett and Phil Town”. There I explain what I am doing and what the point of this is.
Now you cannot do this through the Client portal online. You need to download the Trader Workstation. This is a software that will sit on your computer's hard drive.
It is also called IBKR PRO.
Hit the like button if this helped you. Subscribe to my channel so you don’t miss future video’s and I’ll see you next time.
I've watched dozen of options videos but this is the first one that showed me how the math actually works. Thanks Andrew!
no worries, happy to help :)
I've been meaning to look into this strategy! Thanks for laying it out so clearly Andrew, very helpful!
Thanks Brad, it actually took about 2 weeks to make sure I really understood this topic. Glad it helped you a little. Was meaning to tell you that I'm digging into Shinoken, have you thought more about it since your video a few weeks back?
@@AndrewBrownInvesting I plan to open a position tomorrow. Pabrai's latest talk gave me the nudge I needed.
@@BradKaellner I watched that today as well. Haha. I like his spawners logic
@@AndrewBrownInvesting it’s a very compelling framework 📈
After a lot of research I figured out that the best way to trade options in the EU is via IBKR.
Best video so far that explains how it works !!!
Maybe you can explain how it works with covered calls / sell calls as well - just an inspiration idea ;)
Again great work!
Thanks a lot, very kind. Covered calls are not my thing. Don't see the point. But I have been asked this before so I'll take a look
Really useful video. Thanks a lot for sharing.
Awesome video mate. You kept the video simple and easy to understand!
Thanks, glad it helped 🙂
Great video, thanks for explaining the process so clearly. I have got a question: can you do the same procedure or something similar for ETFs on IBKR?
Hello Andrew, may be I don't understand something, but what can you tell me for example if in one month price will be $9 a share? What you will do? I mean In case price getting close to strike price or even bellow what to do in this case?
Thanks for your time and efforts in making the video Andrew. Great 👍
Thanks a lot. Happy to know it is helping
Thanks !!
No problem 😊
Amazing, I learnt so much, deffo gonna try this out. Thanks, keep up the great work!
Thanks for the kind comment :), Maybe just sell one put option and see what happens. Keep it small and test. That's what I did.
@@AndrewBrownInvesting Thanks for the reply :-) Will follow the advice!
lets say you sold put options and you think your trade was a bad idea. What is the easiest/cheapest way to reverse that trade? I sold some put options and things are all still looking good. Price moved a little up meaning that the contract is more likely to expire and I can keep the premium. However, my plan was actually to buy the underlying shares via options. Is there a way to get rid of my current trade (do I just have to buy the same put option I sold?! That way I would loose money on fees for once selling and buying I guess. Any ideas?
hi, I was unable to see the bid and ask prices on my workstation, may I ask why?
Hey Andrew, great content. I've learnd a lot from your videos. Can you share with us your return on investments calculator spreadsheet? Or go into more detail how you calculate the ROI on your spreadsheet. Cheers.
Thanks for the kind words. Ok about ROI. What is happening in my spreadsheet is I'm adding up the next 10 years of free cash flows factoring in a growth rate then what pe ratio we could value the shares. Once that is added all up, I discount that back to today at a ROI that I want to achieve. If I put into the calculator 15, based on my assumptions, if I buy at the price the calculator suggests, I should get 15% per year of value. But I go for 20% per year or even 22% per year, because if I'm right, that's great, but if my assumptions are a bit off, which is likely, I should still get 15%. This safety net is my margin of safety. The difference between aiming for 15% and 22% is a big difference. These two growth rates compound very differently over 10 years. Hopefully that gave you some more info. Did that help?
Thanks for the reply, however I was talking about the ROI on your put option spreadsheet , the one you are aiming for 8% minimum, not on your intrinsic value calculator sheet
What happen if i choose the « ask price » to sell put option ?
Andrew, as allway thanks for the video. As you know I was waiting for it patiently. As Brad said I am also interested in Shinoken love to hear your view on the stock !!!!
I've been researching for a few weeks now. I'll have a video soon. Glad this helped
thanks this video was very helpful 🤟🤝
Thanks 👍, looking forward to your next snowboarding video.
Very useful video! tnx man.
Glad it was helpful
Hello I dont understand what math did you do to get $ 1.000 from 100 shares?
Hey Andrew. Do you recommend Saxo for trading options?
Well Saxo is really easy to use for options, so easy. But interactive brokers i think have more liquidity.
Great video
Thanks 😊
can you please show us more examples of selling puts and covered calls. different examples. im currently a long term investor sitting. on 60% cash but i want to buy qqq at 260, should i sell a put at 260? for 1 contract that will be $26,000.
Yes, selling a put at $260 if that is the price you want to buy it, that is a great way to enter the position. $26,000 correct
Very useful. Thanks!
Great, happy it helped
Hi, I'm new to interactive brokers. when I opened up the option screen, the bid and ask price was blank and I don't have any idea why it doesn't show the price like the one you show on the video. Please advise. Thanks!
Hi Andrew! First off thanks for making this video and all the videos you make. I found selling puts it's a nice strategy. I got a question though, I sold a put option and I saw the premium go to my cash position right away (which is pretty good :) ) But what I don't understand is why has the same premium been taken off from my equity.. It is kind of confusing to me. And I guess it's all about how they book the trade, or something like that.. Please help me understand. Because to my understanding it should work like this: let's put it simple.. let's say a had 10K in equity and 10k in my cash position. Let's say the premium I got was 200 bucks..so I expected the trade to be booked like this: 10K Equity, 10,2K e Cash. But instead it went like: 9,8K Equity, 10,2K Cash, so, shouldn't the account be up 200 bucks? Thanks in advance and keep up the good work!
Great question, so I haven't solved this for every brokerage platform, but my understanding is they can do it a few ways. I honestly don't take notice until the put has expired, but I think it should happen as soon as the put is sold. Unfortunately I don't have a good answer for you as I get a confused myself. I do know the money hits my account when I go back and look through the accounts, but I don't know what happens immediately after the put option is sold. Good question for interactive brokers support to answer for you
@@AndrewBrownInvesting Thank you Andrew! I really appreciate your reply. I will continue to do more research about this topic.. on how they book this trades. Have a great week!
For example if I sell Pfizer put options in USD, can I keep colateral in euro?
Good question, I just don't know the answer..
Great video and informative..please keep it up👍👍👍👍👍👍👍
Thanks, hope it helped a little
great video, thanks!
Thanks, hope it helped
@@AndrewBrownInvesting It did! Thanks form making it on interactive brokers as you said you would, really appreciate it! 🙌🙌
Been trying to wrap my head around how to sell contracts and this interface looks quite tricky. Have you had a chance to use the Client Portal? It seems like all the features you mention in this video are available there, but as a newbie I'm not quite sure.
Also, any chance of a tutorial on covered calls?
Thanks!
Yes I second please do a video on covered calls!
Covered calls i might not get to for a while, but I do have a video about the client portal somewhere on my channel. Hopefully you can find it.
Hey also Andrew, did you need to fund your account with USD to buy/sell US options? Or does IB convert our AUD?
Great question, so I had US dollars already so I didn't need to convert. But I did have to convert to Euro to buy Prosus options, therefore I guess you will have to convert to USD before you can sell put options. I think...
@@AndrewBrownInvesting what happens if u don't have the cash in your account if you get assigned?
Thanks Andrew! Quick one: when do you actually receive the premium? Only when the contract closes or immediately? I can see that in my IBKR the option shows the premium as negative market value in my portfolio… wonder how this works
Good question, I thought it shows up at the start. Don't worry about negative premium number, that's just how ibkr track it for your reference. Because, regardless of what happens, you get the premium.
@@AndrewBrownInvesting thanks! So, I don’t need to close the position, right (buy back the contract, although it seems this is also a possibility)? I can just wait until it expires, and then the premium is automatically mine?
Ok - just sold a contract as a test and see that the money immediately were added to cash - so it makes sense that ibkr would have negative market value on the option. I think I get it - thanks again! :)
Do u need to have the money already deposited into your account b4 u sell the put option? Or do u only need to deposit the money to your account when the put option is exercised?
I have never tried this strategy, but I would think so.
IBKR how to sell call options video maybe:)?
Good idea, but call options are not my style, I don't see a need for them
@@AndrewBrownInvesting similar just to the other way:) and you have to posess the 100 shares instead of cash or have a margin account. anyway I am about to start both and see how it goes, good video.
Thanks man ,is this the same as selling covered calls or im wrong
Not the same strategy, I'm not planning on doing any calls. But it is a similar process
Is there any reason you don't just use the online portal? Great vid btw
I just made a new video using the online portal. I agree, far easier
@@AndrewBrownInvesting Awesome, thanks man. Really appreciate the effort in putting these together.
@@AndrewBrownInvesting Where is it? I can't find the video.
Can I adjust the limit price by my required rate of return higher even if there is a lower ask price for put option?
You definitely can, but it might not get fulfilled. Someone on the other side has to accept that price
@@AndrewBrownInvesting in your practice, if you set a little lower price than ask price, is it often gets accepted?
Thank you for your video. I just discovered selling puts and found your easy to understand video. Are selling puts only for NEW stocks, or can you use them for current holdings already? (ie if I want to add 100 of the stock at a future price of my choosing). And has there been a negative downside for you related to selling puts? I can't really see the negative side to this given the stocks I'd want to buy would be unlikely to go bankrupt short term.
Hi, thanks for the kind words. The only downside is if you change your mind and you don't want to buy the stock after you sell the puts.
Yes, you can sell puts on your current holdings. :) Good luck
@@AndrewBrownInvesting What happens if the price you want is too low and it doesn't hit it within the time frame? Do you still get the premium, but just no stock. If that is the case, why wouldn't everyone just set a low price and just cash in on the premium? still trying to get my head around this, thank you very much.
If the price is too low, yes you get the premium. But if it is a long way away from the current price, no one will take your contract on the other side. So you won't be able to go crazy low. Maybe 25% - 35% lower than the current price is about the limit
@@adelinalo7692 Yes, you will get the premium and no stock. It's pretty great. Returns get very low the further away from the price you put the strike compared to the current stock price. So the returns are not great, but even a few extra percent on your cash is pretty good. More people should do this. It's just difficult to understand and you have to be committed to buy the stocks at these prices IF the price falls to your strike price.
@@AndrewBrownInvesting Thank you. In my reading I've come across rolling options. Do you use this? I haven't been able to get my head around this, but rolling options seems to be a possible choice if the stock price drops below your strike price but I can't find a better explanation what the benefits or downsides may be for this (sorry, very new at this). Could you explain or make a possible video about this in relation to selling puts? It'd be great to have a better idea of the choices coming up to the expiry date.
Is the amount needed to buy shares at the strike price held as collateral as in blocked or deducted from my account from the time I sell a put or is it deducted at the end of time of the contract if the option is exercised? (In an IBKR brokerage account)
Blocked at the time you sell a put. (not at the end)
@@AndrewBrownInvesting so my cash balance will be different (less) when I execute the option trade? (Sorry for asking such questions I’m new to this 🥲😅)
But is it possible to sell your own shares as puts?
i think you are referring to calls. take a look at my buying and selling calls videos
so do we need a Margin a/c to write options?
No, should be fine without.
@@AndrewBrownInvesting so we can sell puts using a normal cash a/c?
Stupid question, when sold a put, if you get assigned does IBKR automatically purchase the stocks for you?
Yes, correct. Not a stupid question. I had to go through it myself to see exactly what happens. And I can tell you that it is all done automatically. You don't have to do anything
Does the required funds have to be available in ur account? What happens if the there is insufficient funds to buy 100 shares?
@@kabsolute6548 If you got a "cash account", as far as I know you cannot sell a put if you don't have necessary cash do the purchase. If you got a "margin account" - you will loan money from IBKR to buy the 100 shares.
@@jaskamakynen7766 so I just have to make sure I’m selling a put under a cash account and not a margin account right? 😅
@@kabsolute6548 Your account is either cash or margin account :). So cash account in a sense is a bit safer that you shouldn't be able to go overboard with your options that easily. However don't quote me here as I have a margin account. I don't know for certainty how IBKR handles for example "naked calls" (selling a call option without having the stock yourself. The price to buy/sell could in theory be infite ) -- I wouldn't recommend naked calls!
Start small and keep track always that how much would you need money if all your puts would get assigned :). Remember that one put = 100x of the stock.
I go with strategy that I only sell puts for stocks and prices what I'd be ok to buy anyway.
but you can do all this on the actual client website portal anyway. TWS is like the worst software ive seen. its like its based on a 8bit game from 25 years ago.
Yes, client portal can do all this now. Which is great
@@AndrewBrownInvesting ah brill.
If you do not know what a Put Option is - for gods-sake get 3 or 4 books on options and study everything - one youtube video is not going to give you a proper education on what can be an area of investment that can be very high risk!!!
Good advice, there is a lot to learn on options.