@@RickOrford I couldn't login Discord on my laptop because I installed Discord app on my mobile as well with the same mobile number. I have to wait for support to remove the mobile number from my app.
The thing to me is, if you invest and have other income outside of dividends then you will be able to live off dividends without selling. Which means you can pass that on to your kids which will give them a leg up in life. $52k dividends received in 2022.
I agree! That's why it is advisable that you have to invest while you still have a regular job or earning a regular income, and do it constantly. You still need to have something that will keep you going even if you're investing. Good financial planning and money allocation is the key.
I had my share of ups and downs when I first started looking for a consistent passive income so I hired an expert advisor for aid, and following her advice, I poured some money in value stocks and digital assets,i accrued over $80K in dividends last year
'Catherine Morrison Evans’ is the coach that guides me. She’s a verified coach and she helped me see that returns can be made in both bull and bear markets. She covers things like investing, insurance, making sure retirement is well funded and looking at ways to have a volatility buffer for investment risk, look - her up .
I just Googled her name and her website came up right away. It looks interesting so far. I'm going to book a call with her and let you know how it goes. Thanks
I admire the financial independence of people, But you can live better if you work a little more. After watching this I think there are people out there, on the extreme, who plan to die early just to be able to retire early. To each their own but to me, retirement isn't just about not having to work, it's about having the freedom to do whatever you might reasonably want, such as travel, buying things, enjoying life, etc. I don't think I could retire with less than $3m in income-generating investments, maybe $2m at the very minimum. I plan to work until I'm at least 45
Nobody knows anything, you need to create your own process, manage risk and stick to the plan, through thick or thin while also continuously learning from mistakes and improving
@@BrunoLuke Having an investment adviser is the best way to go about the market right now, especially for near-retirees, I've been in touch with a coach for a while now mostly cause I lack the depth knowledge and mental fortitude to deal with these recurring market conditions, I netted over $220K during this dip, that made it clear there's more to the market that we avg joes don't know
Having a working trading strategy is far the most important step to becoming a successful trader. I have tried multiple unsuccessful methods in the past but so far I’m making progress with professional help.
Herman Jonas, an astute trade analyst is the brain behind my success. I've gotten into a plethora of assets with $44k spread across stocks (options and futures) for the short term and Roth IRA, index funds, and ETFs, for the long term. Now I sit back, and just reinvest at intervals while I handle my other businesses.
How can I reach him, please? I'm buoyed by the good recommendations I’ve come across elsewhere. I need help with my trades. I'm ready to pay for his services.
Your assistance was helpful. I was able to have a conversation with him via mail. What's even better is that he's certified with a registered broker. I'm getting started right away!
I'm doing a lot of research right now about selling puts. To tell the truth, this video is the easiest to understand that I have found so far. Thumbs up, Rick.
Excellent education. You are a really really excellent teacher for a 72 year old person like me. You speak slowly and clearly and explain in simple terms. You are definitely the best teacher on this subject. You have made me a few thousand dollars in the last few weeks. God bless you and keep this channel and reaching the lives of other people.
I just started doing covered calls and I love it. My bank was paying me less than twelve dollars a year now I make $1200 a week selling covered calls just the opposite to puts but same principal . Your video explained the put process great!
Insightful video. I just want to know best how people split their pay, how much of it goes into savings, spendings or investments. I'm 27, and earn nothing less $150k per year, but nothing to show for it yet.
When people have money, they spend it. And some people spend more money when they have more of it. If you want to improve your financial management, you should consult with a financial advisor.
@@devereauxjnr Factos!! Since the market became extremely volatile and pressure increased (I should be retiring in 17 months), I took the decision to work closely with a financial advisor. It has already been 9 months and counting, and I have made approximately 600K net from all of my holdings.
This was a great video. This was my first time watching. This presentation was slow and structured. I have seen videos of "buying" put options, where you want the stock or ETF to go down below the strike price. Now your put options are more valuable. But in buying put options, you "purchase" options first and then hoping to sell that option at a higher price. Compared to "buying" put options, I like to "selling" put options, because you already collect money up front. Good tips on purchasing "quality" stocks. I have seen other videos on options. This was the best one. Thanks
Hi Rick, Phenomenal job. My favorite tip was at the very end, the 'buy to close' option to buyback that contract you sold and potentially double dip on that same date with another contract. Please ask users to watch out for brokerage fees. To buy it to close, you might still have to pay a transaction fee which could be up to $10 or so. Something to consider rather than letting it ride out to expiration which will not incur another transaction fee. Please double check your comments at 14:16. I think you meant that you might be forced to buy something "for much more" than what it's worth. Using your Apple example you are buying something for $130 that's only worth $120 (so 130 is much more than what it's worth). I also agree with your opinion to only buy something you want to hold because that Apple stock will (likely) eventually return to 130 so you don't really lose. Thanks again for this really thorough and clear video!
Thanks for the kind words, Dave! You’re right, brokerage fees can eat in to profits; and the statement about “being forced to buy something for much less than its worth” could be clearer. Indeed, if the underlying equity falls below the strike price, the investor will be forced to buy the equity at the strike- and that equity will certainly be worth less than the price paid. Stay tuned for a follow up :-)
@@OfficialCookiesNcreme That's the risk. If the stock moves below the strike, the put will be in the money. You could buy it back, and sell one with a lower strike (known as rolling) to help offset the loss.
I’ve sold puts, it works. Make sure, just like he said, that you sell puts on a stock that you wouldn’t mind owning anyway, and it has to be quality, not some risky junk stock that may never go back up. This way, you’ll sleep well knowing you own quality, even if you paid a little more than what it’s currently worth.
I was confuse about Put Options. Thanks to your video now it totally make sense. I plan to "liquidate" my shares with high cost base and use that money to sell Put Options and possibly sell Covered Calls if assignment of my Sell-Put occurs. It is much better to stare at those shares, wait and hope for the price to go back up. Thank again.
Sir, you are the GOAT. I've been trying to understand options since July, and it took me a month to actually understand selling calls (no giggling please). You're video was simplistically, brilliantly understandable, and I feel secure enough in my understanding of selling puts to actually give it a try! Cheers!
I would say it the perfect video.. It's considered the only video that could teach me exactly what is the mechanism of the put option selling.. Thanks for making the effort to offer us this precious video
Rick, great information, however, isn't a novice options trader prevented from selling put options at the outset? How is this strategy (selling put options) really any different than just owing the underlying stock and selling covered calls? Both require tying up a substantial amount of capital. What am I missing?
It depends on the brokerages. Selling puts is a bullish strategy- so it works well when you believe the underlying moves io. Covered calls, however, is a slightly bearish strategy as you wouldn’t want the stock to rise too much… two different animals! Thanks so much for watching- and for the excellent question!!
Wow! This is undoubtedly hands-down the best video I have seen in explaining and teaching options. Thank you ! ! ! Great job ! . . . Please keep it up. . . You're doing a great job. Thank you sir.
Your cartoon was very helpful and clear. Whether Sally "lost," though depends. Maybe Sally doesn't mind buying coffee beans at $10 even if they're worth $8. After all, they used to be worth $12, and Sally might just be happy to buy them at a lower price than that because she thinks they'll eventually be worth more than $12. Or maybe she just likes coffee. Suppose Sally decided when coffee beans were $12 that they would be a great long term investment, regardless of what it does in the short term. If she buys the coffee beans at $12, she'll be temporarily down more when they go to $8 than she would be if she sold the put and ended up having to buy them for $10. So if Sally considers coffee beans to be a good long term investment, than she's in a win win situation. Either she gets to keep the full amount of the premium when the option expires worthless, or she gets to buy the coffee beans at a lower price than she would have otherwise. So it's not REALLY a loss unless Sally doesn't want coffee beans.
Rick - Great video. But just and FYI @14:16 - as a PUT option seller, you might be forced to buy something for much more (not much less) than what it's worth.
Thank you for education. When security price moves against you and you are forced to buy security, one can start selling out of money call option and repeat the process of generating regular income.
Ok, you earneed the credit, the video is nice to watch, your style is simple and straight forward, I have not sold options yet, I like to buy good quality stocks. I think I am going to watch more of your videos in order to learn more before I sell any put options. The best part of this video is your emphasize to sell put options on good quality stocks or etf, not just any stock. My son is about your age, I think I am going to send him the link to your youtube channel, he is like me, invests only in quality stocks and mutual funds, and selling put options could be a side money maker. Thank you for this video.
Thanks for your kind words. Yes, selling puts should only be done on stocks you’d actually want to own- as you might end up getting assigned at some point! Happy to answer any questions along the way!
coffee example was great! i am even a slow learner and its almost midnight but i understood it mostly after watching it once. Thanks! liked and subbed!
I really liked the Sally and Jimmy scenerio! It helped me "get it!" I'm interested in options trading, specifically selling Puts and this helped tremndously. TY!
Thanks kindly! Considering this was one of my first videos, please also have a look at one of my latest and let me know what you think 🚀 How to Select Put Options to Sell: Expert Guide ua-cam.com/video/PLSIcLhF6zw/v-deo.html
I am glad finding this clip and seeing someone doing exactly the same thing that I am doing. You are hitting the very key point: “pick a underlying quality stock that u really want to own”. A few additional points I would like to add: 1. I also use technical analysis to open the positions when the stock is in RSI overbought region. 2. Use “roll out” strategy when the option is in the money (losing money) to wait for the quality stocks to bounce back up. Using these combination of sell put strategy has increased my winning rate dramatically and making a very profitable weekly income around $8k to $12k. There are others doing sell put but seldom hear others use sell put to get out of trouble. Like to hear feedback from others with respect to that
Thanks for the kind words. Absolutely, 100% missing is something about rolling and using technical analysis to help with decision making. I’ll have to make another video about it!
I am trying to learn options and thanks much for your explanation. You were very clear in your explanation up until Plan B where I lost you. I learn by examples ( for example your coffee bean illustration which was very good) so next time if you could do a video regarding "buying back your identical option at a lower price and repeating the process" with some examples I would appreciate it. Thanks much.
Is it sell to open or sell to close? How do you close or get out of that Trade?I have listened to 3 of these in the last two hours on how to sell put options but not one person has explained that. they, including you explain what happens but not how to buy or close one.Great info on what selling a put option is and how it makes one money but not how to buy one as in all three headlines that advertise it.
I’ve watched endless videos on this subject and still remained confused. Many videos seemed to contradict each other. However, your explanation with the coffee bean cartoon helped me understand finally!! I was lost, but now understand. Thank you!!!!! More examples like this!!
Great explanation. Just to double clarify that if the stock price falls below the strike price - I would not lose money UNLESS I sold the shares (and I'm not forced to sell the shares right?) My only obligation is to buy the shares at the strike price. So while I may suffer a paper loss at expiration date... If the mkt price is below the strike price... I can hold on to the shares and so no realized loss occurs - correct?
Rick I was watching your video on selling naked puts and I heard you mention setting bracket orders for saftey reasons, TP or SL is that possible with naked puts? If so I'm sure like myself others would love to know how to do it. Maybe you could make a video and explain how it's done. Thank you I've certainly learned a lot watching your videos.
Thanks so much for your kind words! Profit taking and stop loss orders are certainly possible on short puts and multi leg strategies. The limitation is the brokerage (many don’t support it). My favorite is Interactive Brokers, and they do!
I dont buy/sell put options yet, I watched the video a few times, now understand everything except the last segment, any ideas of a different presentation I can watch to see if I can understand it better? Thank you.
Excellent vidéo may God help you achieve all your dreams. You appear to be very modest, but very straight to the point, very easy to understand. You are a great teacher, thank you very much.
This video is good one. I watched two videos on Put options before this video and I was confused as before. I was still confused watching this video animation of the coffee Put buyer and seller and I watched animation, twice. The "light" didn't come on for me until further explanation using the Apple stock. I guess I needed both illustrations to get the how and why of Put options.
Thank you for your video, it was fun to watch. To me, the final tip on closing out the option was the most useful especially to someone new to selling options
Sure- Lets say you sell an option, let’s say XYZ with the $100 strike and Oct 15 expiry- if you want to close the position, you’d just buy back the same XYZ/$100/Oct 15 put option! You can do this when you want to “fix” A broken trade by rolling in to another option- or to crystallize profits.
I like the illustration, makes sense. I have a couple questions. 1. How did you build up cash to be able to buy the stock if the buyer decides to sell you the stock? 2. Whites you method of determining which put options to sell (as the put seller?
Selling put options requires that you have enough capital to fund a purchase of 100 shares of the underlying security. You could have cash, or a combination of cash and margin. As for the method- I prefer to use Option Samurai for this rickorford.com/samurai - as there, I can find high probability trades.
Hi Rick, thank you for this video. I have a question because I didnt understand: If I sell 1 Put Option of lets say AMZN at 197,59 and AMZN goes down to 192, I will have to pay 197,59 x 100 ? meaning more than $19,000? Thank you
You’re welcome! Yes, if AMZN stock drops below the strike, you’ll have to buy 100 shares at the strike price. If the strike is $195, that’s $19,500. If the strike is 190 that’s $19,000. Of course, you can always close the trade issuing a buy to close order, however, if the stock is below the strike, it’ll likely cost more to close the trade than the premium you initially received. Bottom line: sell puts only on stocks you’d like to own, and and be happy to pay the strike * 100 if assigned! Hope that helps!
Hi Rick, can you make a video on the last part where you mention "you could always close your trade and buying back the identical option " I don't understand what you mean. Do you mean I buy a put after selling a put ?
I'm not Rick, but have done this. When you sell a put, someone has to buy it. You have "sold to open" a put contract. Later, if you decide to get out of this put contract you would buy a put ( "buy to close"). You sell, then buy back and its all gone. It's just a matter of clicking on the sell or buy button. If you tried this, these choices would be clear on your broker's website.
Great explanation and fantastic use of analogy with coffee. I'm based in Toronto Canada and was introduced last year to generating income from selling naked put options and covered calls on stocks that I would love to own anyways. It's been great in a bull market, although in a bear market with higher premiums due to higher volatility It's been challenging. However it's been a great experience and ride.
@@Bbfanatic You can only sell puts when you have capital to buy stocks if assigned and if you don't have capital on hand and can't sell puts, you can't collect premiums. Collecting premiums selling covered calls is ideal in a bull market or when the market is up.
You've explained it very clearly. I've just sold my first put option and Plan B was the best part for me. Question: When you execute Plan B, (buy the similar put option) what else do you have to do? Is this like stock, where the buy cancels out the sell and there is nothing more to do?
Thanks! Investors who buy back the same option they sold (same expiration date, underlying security, and strike) will cancel out the option the sold. Nothing more!! Good luck with the trading!!
Was listening to it again. So if I wanted to buy a stock but wanted to buy at a cheaper price, I could sell a put option for it at the reduced price and hope it gets put? This way, I get the premium and get to buy the stock at the lower price. The only drawback here would be if the price does not hit the strike price and I do not get to buy the stock. Right?
Yes I have- rarely though. These days I use an options scanner bit.ly/3bfS8p8 to identify options with a high possibility of expiring worthless. Admittedly, I've made some serious mistakes selling put options - for example, when the market goes south, and buying back the option too soon. Today, I know better... rolling the option can be a great way to fix a broken trade!
Hi Rick Thanks for responding to my question and your advice helps. The situation is kind of challenging as the stock do not have any available options for rolling. So what is alternative that I can do instead of waiting for stock to be assigned? Always appreciate your advice. Thanks
Plan B refers this: once you’ve sold your put option, if the underlying moves well above the strike price, the option will be worth a lot less- if that’s the case, you can “buy to close” and close out the trade! Then sell another put or covered call or whatever you like :)
Great video! One thing I dont get, what is Out of the Money? You said it is strike price lower than underlying security. When you sell puts, arent you ALWAYS selling at a lower strike price? So, what exactly is selling OTM puts? Do you have an example? OTM vs ITM? Many thanks.
@RickOrford Thanks for the video and sharing knowledge in simple but effective ways. question: At the end of the video, when you are talking about buying back option at a lower price, do you actually mean "buy to close"?
Hi Rick. Thank you for the explanation. I just wanted to ask you if put options are the same as LONG put options. I am a bit confused with the terminology
Great question! Long puts mean you’re buying them- it means you anticipate a stocks decline. Short means selling them- you’re anticipating the stock to stay above the strike.
@@RickOrford Thank you for the answer Rick. I see in some brokerage accounts that when buying options they use the term "put options" and others don't have the same name and instead it says "long put options", which is the case with Interactive Brokers. They use the term "long puts", so as I understand they are the same thing, right? Thanks again for sharing your knowledge.
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I have been researching all this while for a digital asset to invest in and i found forex trading to be the most profiting of them all, I'm definitely bouncing on
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Nice video with good info on put option, It is really helpful to us traders, but Investing on crypto is the best and fastest way of making money, but only few understood the secret of crypto.
Excellent question! I prefer Interactive Brokers for selling options. It’s cheap, and has the best order execution (fill rate). As for finding options to trade, I use Option Samurai daily- rickorford.com/samurai
Nicely explained - i have been selling covered calls for quiet some time, now i will take some (calculated ) risk as u suggested n sell some put options!!
🔥 Join me on Discord: discord.gg/F2UmNw7W
Can someone outside of the US join you on Discord?
Absolutely!
@@RickOrford I couldn't login Discord on my laptop because I installed Discord app on my mobile as well with the same mobile number. I have to wait for support to remove the mobile number from my app.
The thing to me is, if you invest and have other income outside of dividends then you will be able to live off dividends without selling. Which means you can pass that on to your kids which will give them a leg up in life. $52k dividends received in 2022.
I agree! That's why it is advisable that you have to invest while you still have a regular job or earning a regular income, and do it constantly. You still need to have something that will keep you going even if you're investing. Good financial planning and money allocation is the key.
I had my share of ups and downs when I first started looking for a consistent passive income so I hired an expert advisor for aid, and following her advice, I poured some money in value stocks and digital assets,i accrued over $80K in dividends last year
I’ve been down a ton, I’m only holding on so I can recoup, I really need help, who is this investment-adviser that guides you?
'Catherine Morrison Evans’ is the coach that guides me. She’s a verified coach and she helped me see that returns can be made in both bull and bear markets. She covers things like investing, insurance, making sure retirement is well funded and looking at ways to have a volatility buffer for investment risk, look - her up .
I just Googled her name and her website came up right away. It looks interesting so far. I'm going to book a call with her and let you know how it goes. Thanks
I admire the financial independence of people, But you can live better if you work a little more. After watching this I think there are people out there, on the extreme, who plan to die early just to be able to retire early. To each their own but to me, retirement isn't just about not having to work, it's about having the freedom to do whatever you might reasonably want, such as travel, buying things, enjoying life, etc. I don't think I could retire with less than $3m in income-generating investments, maybe $2m at the very minimum. I plan to work until I'm at least 45
Nobody knows anything, you need to create your own process, manage risk and stick to the plan, through thick or thin while also continuously learning from mistakes and improving
@@BrunoLuke Having an investment adviser is the best way to go about the market right now, especially for near-retirees, I've been in touch with a coach for a while now mostly cause I lack the depth knowledge and mental fortitude to deal with these recurring market conditions, I netted over $220K during this dip, that made it clear there's more to the market that we avg joes don't know
@@DavidAntony-gq7id Who’s the person guiding you
@@BrunoLuke credits to KRISTIN GAIL CUNNINGHAM, one of the best portfolio managers out there. she's well known, you should look her up
@@DavidAntony-gq7id Thank you, I just checked her out and I have sent her an email. I hope she gets back to me soon.
Having a working trading strategy is far the most important step to becoming a successful trader. I have tried multiple unsuccessful methods in the past but so far I’m making progress with professional help.
Herman Jonas, an astute trade analyst is the brain behind my success. I've gotten into a plethora of assets with $44k spread across stocks (options and futures) for the short term and Roth IRA, index funds, and ETFs, for the long term. Now I sit back, and just reinvest at intervals while I handle my other businesses.
That's your view. In my experience, there is no such formula, It is nearly impossible to achieve success with trading. It’s all just gambling.
Best to start by knowing your chances of profit before doing anything!
How can I reach him, please? I'm buoyed by the good recommendations I’ve come across elsewhere. I need help with my trades. I'm ready to pay for his services.
Your assistance was helpful. I was able to have a conversation with him via mail. What's even better is that he's certified with a registered broker. I'm getting started right away!
I'm doing a lot of research right now about selling puts. To tell the truth, this video is the easiest to understand that I have found so far. Thumbs up, Rick.
A high-school drop out with the ability to teach this complex topic. Very logical and coherent approach 👍 with awesome illustrations. Good job Rick.
Make sure you don’t loose your income.
This was the easiest explanation of puts on the web.
Well this is by far the simplest and clearest video explaing PUT options. Thank you !
Excellent education. You are a really really excellent teacher for a 72 year old person like me. You speak slowly and clearly and explain in simple terms. You are definitely the best teacher on this subject. You have made me a few thousand dollars in the last few weeks. God bless you and keep this channel and reaching the lives of other people.
Thanks for the kind words! Appreciate the support 😀
I just started doing covered calls and I love it. My bank was paying me less than twelve dollars a year now I make $1200 a week selling covered calls just the opposite to puts but same principal . Your video explained the put process great!
Thanks for the kind words!
Insightful video. I just want to know best how people split their pay, how much of it goes into savings, spendings or investments. I'm 27, and earn nothing less $150k per year, but nothing to show for it yet.
When people have money, they spend it. And some people spend more money when they have more of it. If you want to improve your financial management, you should consult with a financial advisor.
@@devereauxjnr Factos!! Since the market became extremely volatile and pressure increased (I should be retiring in 17 months), I took the decision to work closely with a financial advisor. It has already been 9 months and counting, and I have made approximately 600K net from all of my holdings.
@@Tsunaniis-j5l That's impressive! I could really use the expertise of this advisor.
@@DreamweaverShade-h9p credits to NICOLE DESIREE SIMON, one of the best portfolio manager;s out there. she;s well known, you should look her up
@@Tsunaniis-j5l Thanks for the info, i found her website and sent a message hopefully she replies soon.
This was a great video. This was my first time watching. This presentation was slow and structured. I have seen videos of "buying" put options, where you want the stock or ETF to go down below the strike price. Now your put options are more valuable. But in buying put options, you "purchase" options first and then hoping to sell that option at a higher price.
Compared to "buying" put options, I like to "selling" put options, because you already collect money up front. Good tips on purchasing "quality" stocks.
I have seen other videos on options. This was the best one.
Thanks
Just before you gave plan B, the question raised in my mind whose answer was plan B!!! Perfect timing. Thanks very well explained.
Glad it was helpful!
Very good teacher. Speaks slowly, relaxed and happy person.
Thanks for the kind words!
Hi Rick, Phenomenal job. My favorite tip was at the very end, the 'buy to close' option to buyback that contract you sold and potentially double dip on that same date with another contract. Please ask users to watch out for brokerage fees. To buy it to close, you might still have to pay a transaction fee which could be up to $10 or so. Something to consider rather than letting it ride out to expiration which will not incur another transaction fee.
Please double check your comments at 14:16. I think you meant that you might be forced to buy something "for much more" than what it's worth. Using your Apple example you are buying something for $130 that's only worth $120 (so 130 is much more than what it's worth). I also agree with your opinion to only buy something you want to hold because that Apple stock will (likely) eventually return to 130 so you don't really lose. Thanks again for this really thorough and clear video!
Thanks for the kind words, Dave! You’re right, brokerage fees can eat in to profits; and the statement about “being forced to buy something for much less than its worth” could be clearer. Indeed, if the underlying equity falls below the strike price, the investor will be forced to buy the equity at the strike- and that equity will certainly be worth less than the price paid. Stay tuned for a follow up :-)
@@RickOrfordwouldn’t the put buy back be more expensive now since it’s in the money
@@OfficialCookiesNcreme That's the risk. If the stock moves below the strike, the put will be in the money. You could buy it back, and sell one with a lower strike (known as rolling) to help offset the loss.
I’ve sold puts, it works. Make sure, just like he said, that you sell puts on a stock that you wouldn’t mind owning anyway, and it has to be quality, not some risky junk stock that may never go back up. This way, you’ll sleep well knowing you own quality, even if you paid a little more than what it’s currently worth.
I’ve watched so many videos explaining selling put options and only now do I get it. Thanks!
Glad it was helpful!
I understood selling puts before watching your video, but I really like the coffee bean example. It just brought everything together for me.
Thanks Craig!
I was confuse about Put Options. Thanks to your video now it totally make sense. I plan to "liquidate" my shares with high cost base and use that money to sell Put Options and possibly sell Covered Calls if assignment of my Sell-Put occurs. It is much better to stare at those shares, wait and hope for the price to go back up. Thank again.
I like the tip about buying back the put options to close out the trade.
Sir, you are the GOAT. I've been trying to understand options since July, and it took me a month to actually understand selling calls (no giggling please). You're video was simplistically, brilliantly understandable, and I feel secure enough in my understanding of selling puts to actually give it a try! Cheers!
Thanks for the kind words 👍🏻
I’m studying on my own and this video is helpful. Thank you
You’re welcome!!
10 delta Iron condors have been my go to strategy on SPY. Averaging 5% per week
Great tutorial... speaking slow enough for us to dig. I look forward for my first put selling.
Thanks! This is an old video but, the information is unchanged!
I would say it the perfect video..
It's considered the only video that could teach me exactly what is the mechanism of the put option selling..
Thanks for making the effort to offer us this precious video
Thanks for the kind words!
Rick, great information, however, isn't a novice options trader prevented from selling put options at the outset?
How is this strategy (selling put options) really any different than just owing the underlying stock and selling covered calls?
Both require tying up a substantial amount of capital. What am I missing?
It depends on the brokerages. Selling puts is a bullish strategy- so it works well when you believe the underlying moves io. Covered calls, however, is a slightly bearish strategy as you wouldn’t want the stock to rise too much… two different animals!
Thanks so much for watching- and for the excellent question!!
That’s the best explanation of this I’ve ever heard. You are an amazing teacher!
Thanks!
Wow! This is undoubtedly hands-down the best video I have seen in explaining and teaching options. Thank you ! ! ! Great job ! . . . Please keep it up. . . You're doing a great job. Thank you sir.
Glad it was helpful!
@@RickOrford i buy a put. So is mean I’m obligate to buy ?
@@sandrychymj7688 It is the opposite... that is why it is confusing! Buy a Put = right to sell; Sell a Put = obligation to buy
This is the best video I have ever watched on options. It is like ABC to me now. Great job!
Wow, thanks!
Your cartoon was very helpful and clear. Whether Sally "lost," though depends. Maybe Sally doesn't mind buying coffee beans at $10 even if they're worth $8. After all, they used to be worth $12, and Sally might just be happy to buy them at a lower price than that because she thinks they'll eventually be worth more than $12. Or maybe she just likes coffee. Suppose Sally decided when coffee beans were $12 that they would be a great long term investment, regardless of what it does in the short term. If she buys the coffee beans at $12, she'll be temporarily down more when they go to $8 than she would be if she sold the put and ended up having to buy them for $10. So if Sally considers coffee beans to be a good long term investment, than she's in a win win situation. Either she gets to keep the full amount of the premium when the option expires worthless, or she gets to buy the coffee beans at a lower price than she would have otherwise. So it's not REALLY a loss unless Sally doesn't want coffee beans.
Thanks for the education - I saw couple of other clips, you explained in a way that is easy to understand, keep it up!!
I just started the journey and can not agreed more the key is picking the stocks you really want to own before the selling of options.
Rick, do you offer online courses to help us?
Not yet. But, you’re welcome to drop me an email.
I'm a visual person and your animated video is so easy easy to comprehend. Thank you.
Thanks for the kind words!
I watched so many videos related to the PUT option. Yours is the best.
Thank you!
Rick - Great video. But just and FYI @14:16 - as a PUT option seller, you might be forced to buy something for much more (not much less) than what it's worth.
Thank you for education. When security price moves against you and you are forced to buy security, one can start selling out of money call option and repeat the process of generating regular income.
Correct!
Ok, you earneed the credit, the video is nice to watch, your style is simple and straight forward, I have not sold options yet, I like to buy good quality stocks. I think I am going to watch more of your videos in order to learn more before I sell any put options. The best part of this video is your emphasize to sell put options on good quality stocks or etf, not just any stock. My son is about your age, I think I am going to send him the link to your youtube channel, he is like me, invests only in quality stocks and mutual funds, and selling put options could be a side money maker.
Thank you for this video.
Thanks for your kind words. Yes, selling puts should only be done on stocks you’d actually want to own- as you might end up getting assigned at some point! Happy to answer any questions along the way!
Thank you so much for sharing your knowledge. I was confuse about Selling a Put Options; now it totally makes sense.
Great explanation! Easiest method of explaining it that I have ever seen.
Thanks!!
This is what they call plain good english, in layman's term. Thank you very much!
Glad you liked it!
coffee example was great! i am even a slow learner and its almost midnight but i understood it mostly after watching it once. Thanks! liked and subbed!
I really liked the Sally and Jimmy scenerio! It helped me "get it!" I'm interested in options trading, specifically selling Puts and this helped tremndously. TY!
Thanks kindly! Considering this was one of my first videos, please also have a look at one of my latest and let me know what you think 🚀 How to Select Put Options to Sell: Expert Guide
ua-cam.com/video/PLSIcLhF6zw/v-deo.html
I am glad finding this clip and seeing someone doing exactly the same thing that I am doing. You are hitting the very key point: “pick a underlying quality stock that u really want to own”.
A few additional points I would like to add:
1. I also use technical analysis to open the positions when the stock is in RSI overbought region.
2. Use “roll out” strategy when the option is in the money (losing money) to wait for the quality stocks to bounce back up.
Using these combination of sell put strategy has increased my winning rate dramatically and making a very profitable weekly income around $8k to $12k.
There are others doing sell put but seldom hear others use sell put to get out of trouble. Like to hear feedback from others with respect to that
I meant to use “roll out” to get out of trouble
Thanks for the kind words. Absolutely, 100% missing is something about rolling and using technical analysis to help with decision making. I’ll have to make another video about it!
I am trying to learn options and thanks much for your explanation. You were very clear in your explanation up until Plan B where I lost you. I learn by examples ( for example your coffee bean illustration which was very good) so next time if you could do a video regarding "buying back your identical option at a lower price and repeating the process" with some examples I would appreciate it. Thanks much.
You are great Rick. Congrats
Is it sell to open or sell to close? How do you close or get out of that Trade?I have listened to 3 of these in the last two hours on how to sell put options but not one person has explained that. they, including you explain what happens but not how to buy or close one.Great info on what selling a put option is and how it makes one money but not how to buy one as in all three headlines that advertise it.
I’ve watched endless videos on this subject and still remained confused. Many videos seemed to contradict each other. However, your explanation with the coffee bean cartoon helped me understand finally!! I was lost, but now understand. Thank you!!!!! More examples like this!!
Thanks for the kind words!
You have a good teaching style.
Great explanation. Just to double clarify that if the stock price falls below the strike price - I would not lose money UNLESS I sold the shares (and I'm not forced to sell the shares right?) My only obligation is to buy the shares at the strike price. So while I may suffer a paper loss at expiration date... If the mkt price is below the strike price... I can hold on to the shares and so no realized loss occurs - correct?
Correct. If you’re assigned, you’ll buy 100 shares of the underlying at the strike price for each contract. You can absolutely keep the shares!
yes I had to watch the video about 3 times. But I think I got it. Very helpful, thanks.
Thanks! Any particular area I can help explain more?
The first options video that I actually understood - thank you!
Very well done explanation! I am going focus on high quality stocks rather than just the highest premium.
Boom!
Thank you!! The cartoon explanation helped alot
Outstanding. Excellent explanation of what selling a put option is. 👍
Thanks! Very kind!!
Hi Rick,
If you could, kindly elaborate on the last point in the video or refer me to another video on your channel
Thanks for your work
Excellent video, Rick! Your explanation of this subject is the best video, in my opinion, that I have come across! You really helped me tremendously!
Thanks for the kind words!
I have to see the video several times to understand, thanks for explanation
You’re very welcome!
Rick I was watching your video on selling naked puts and I heard you mention setting bracket orders for saftey reasons, TP or SL is that possible with naked puts? If so I'm sure like myself others
would love to know how to do it. Maybe you could make a video and explain how it's done. Thank you I've certainly learned a lot watching your videos.
Thanks so much for your kind words! Profit taking and stop loss orders are certainly possible on short puts and multi leg strategies. The limitation is the brokerage (many don’t support it). My favorite is Interactive Brokers, and they do!
Hey! Wow, this is all I needed to understand! Could you make a video explaining the options! Thanks a lot…
Thanks for the request. Can you elaborate on “explaining the options”? What do you mean?
Your explanations are actually better than tasty trades. Thanks for sharing.
Thanks for the kind words, and for watching!
Very good breakdown. Best video I’ve seen yet as a beginner
Yes, this carton was very hopeful, Everybody learns differently. Thanks you
Glad you enjoyed it!
I dont buy/sell put options yet, I watched the video a few times, now understand everything except the last segment, any ideas of a different presentation I can watch to see if I can understand it better? Thank you.
Excellent vidéo may God help you achieve all your dreams. You appear to be very modest, but very straight to the point, very easy to understand. You are a great teacher, thank you very much.
This video is good one. I watched two videos on Put options before this video and I was confused as before. I was still confused watching this video animation of the coffee Put buyer and seller and I watched animation, twice. The "light" didn't come on for me until further explanation using the Apple stock. I guess I needed both illustrations to get the how and why of Put options.
Hi Rick. Your explanation of put option is fantastic. This is the best one can do when it comes to explaining a complex subject like Options. Thanks.
Then best explanation so far. Thanks!
well done and your pictorial and easy to follow examples were great.
this video explains put options really well. the coffee beans example and real life examples were great.
Thank you for your video, it was fun to watch.
To me, the final tip on closing out the option was the most useful especially to someone new to selling options
Thanks! I’ve included the same tip in many of my newer content!
Finally a video that's for me ... thanks for the visual
Can you explain the last part of the video please? The Plan B about buying back the identical option.
Sure- Lets say you sell an option, let’s say XYZ with the $100 strike and Oct 15 expiry- if you want to close the position, you’d just buy back the same XYZ/$100/Oct 15 put option!
You can do this when you want to “fix”
A broken trade by rolling in to another option- or to crystallize profits.
I'm now learning about put options
I like the illustration, makes sense. I have a couple questions.
1. How did you build up cash to be able to buy the stock if the buyer decides to sell you the stock?
2. Whites you method of determining which put options to sell (as the put seller?
Selling put options requires that you have enough capital to fund a purchase of 100 shares of the underlying security. You could have cash, or a combination of cash and margin.
As for the method- I prefer to use Option Samurai for this rickorford.com/samurai - as there, I can find high probability trades.
Thank you - How the way your explanation make me understand
Thanks Dany!
Hi Rick, thank you for this video. I have a question because I didnt understand: If I sell 1 Put Option of lets say AMZN at 197,59 and AMZN goes down to 192, I will have to pay 197,59 x 100 ? meaning more than $19,000? Thank you
You’re welcome! Yes, if AMZN stock drops below the strike, you’ll have to buy 100 shares at the strike price. If the strike is $195, that’s $19,500. If the strike is 190 that’s $19,000. Of course, you can always close the trade issuing a buy to close order, however, if the stock is below the strike, it’ll likely cost more to close the trade than the premium you initially received.
Bottom line: sell puts only on stocks you’d like to own, and and be happy to pay the strike * 100 if assigned!
Hope that helps!
Hi Rick, can you make a video on the last part where you mention "you could always close your trade and buying back the identical option " I don't understand what you mean. Do you mean I buy a put after selling a put ?
I'm not Rick, but have done this. When you sell a put, someone has to buy it. You have "sold to open" a put contract. Later, if you decide to get out of this put contract you would buy a put ( "buy to close"). You sell, then buy back and its all gone. It's just a matter of clicking on the sell or buy button. If you tried this, these choices would be clear on your broker's website.
Great explanation and fantastic use of analogy with coffee. I'm based in Toronto Canada and was introduced last year to generating income from selling naked put options and covered calls on stocks that I would love to own anyways. It's been great in a bull market, although in a bear market with higher premiums due to higher volatility It's been challenging. However it's been a great experience and ride.
what are you talking about tony? You are the one collecting the premiums so why isn't higher better?
@@Bbfanatic You can only sell puts when you have capital to buy stocks if assigned and if you don't have capital on hand and can't sell puts, you can't collect premiums. Collecting premiums selling covered calls is ideal in a bull market or when the market is up.
Very nicely explained, very useful information. Thank you!
Glad it was helpful!
The only options I trade are cash secured puts on stocks i have in my portfolio and I use premium to accumulate more shares
It's often a solid trade!
Love it! For days i have been watching options vids, but this one gets to me the best! Hahaha. Thank you Dear
You’re most welcome!
You've explained it very clearly. I've just sold my first put option and Plan B was the best part for me. Question: When you execute Plan B, (buy the similar put option) what else do you have to do? Is this like stock, where the buy cancels out the sell and there is nothing more to do?
Thanks! Investors who buy back the same option they sold (same expiration date, underlying security, and strike) will cancel out the option the sold. Nothing more!! Good luck with the trading!!
@@RickOrford Thank you. Perfectly clear and easy to execute.
Was listening to it again. So if I wanted to buy a stock but wanted to buy at a cheaper price, I could sell a put option for it at the reduced price and hope it gets put? This way, I get the premium and get to buy the stock at the lower price. The only drawback here would be if the price does not hit the strike price and I do not get to buy the stock. Right?
I just converted my cash account to a margin account to write put options. Good solid video. Have you ever had any of your written options exercised?
Yes I have- rarely though. These days I use an options scanner bit.ly/3bfS8p8 to identify options with a high possibility of expiring worthless. Admittedly, I've made some serious mistakes selling put options - for example, when the market goes south, and buying back the option too soon. Today, I know better... rolling the option can be a great way to fix a broken trade!
Rick talks slowly and has visual aids, both of which makes the content much easier to understand.
Thanks! It's my hope to deliver content thats easy to understand!
Hi Rick Thanks for responding to my question and your advice helps. The situation is kind of challenging as the stock do not have any available options for rolling. So what is alternative that I can do instead of waiting for stock to be assigned? Always appreciate your advice. Thanks
Rick, I'm your new fan. Simple and informative, learned so much already. Thanks a million!!!
Nicly put! Could you explain your Plan B more in details? that just added to confusion.
Plan B refers this: once you’ve sold your put option, if the underlying moves well above the strike price, the option will be worth a lot less- if that’s the case, you can “buy to close” and close out the trade! Then sell another put or covered call or whatever you like :)
Great video! One thing I dont get, what is Out of the Money? You said it is strike price lower than underlying security. When you sell puts, arent you ALWAYS selling at a lower strike price? So, what exactly is selling OTM puts? Do you have an example? OTM vs ITM? Many thanks.
Thanks a lot that a great help but I will keep on watching it till I confidence and fully understand in doing it.
@RickOrford Thanks for the video and sharing knowledge in simple but effective ways. question:
At the end of the video, when you are talking about buying back option at a lower price, do you actually mean "buy to close"?
Yep, you’d issue a buy to close order to close out your short option!
Hi Rick. Thank you for the explanation. I just wanted to ask you if put options are the same as LONG put options. I am a bit confused with the terminology
Great question! Long puts mean you’re buying them- it means you anticipate a stocks decline. Short means selling them- you’re anticipating the stock to stay above the strike.
@@RickOrford Thank you for the answer Rick. I see in some brokerage accounts that when buying options they use the term "put options" and others don't have the same name and instead it says "long put options", which is the case with Interactive Brokers. They use the term "long puts", so as I understand they are the same thing, right? Thanks again for sharing your knowledge.
Good video, thinking to start doing it. Thanks
Thank you Rick for your Video. I find it very helpful for a newbie like myself. Thanks again!
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what platform do you use to operate the options and how much do they charge per order?
Excellent question! I prefer Interactive Brokers for selling options. It’s cheap, and has the best order execution (fill rate). As for finding options to trade, I use Option Samurai daily- rickorford.com/samurai
Your explanation and example are crystal clear. Thanks for the cartoon. It helped me to understand.
You’re welcome!
Nicely explained - i have been selling covered calls for quiet some time, now i will take some (calculated ) risk as u suggested n sell some put options!!
Great 👍
Just started today, thank you found this video extremely helpful 👍
Thanks and good luck!!!
How do you determine the strike price of the option you sell? How far out of the money?
This is really great, first video I can finally understand!!!!
Thank you!!!!