Try This Lucrative Put Selling Strategy

Selling puts enables investors to acquire stocks at a discount while generating immediate premium income.

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A put selling strategy allows you to buy a stock cheaper than its current market value – and make money in the process.

Stock and option traders buy first and then sell later, right? But what if you did the opposite: sell first and buy back later?

Yes, it seems counterintuitive, but this is a winning put selling strategy that big institutions and ETFs regularly use. And they often achieve better returns than the market.

Here’s the catch: If you’re going to sell premium ahead of expiration, you MUST be prepared to take in the stock if the holder decides to put it to you or call it away. In other words, you must have plenty of cash on hand.

Try this lucrative put selling strategy

Investors often use a put selling strategy to buy a stock cheaper than what it’s currently trading for – and earn money in the process.

It is a pretty straightforward strategy. You sell a put, take in the premium from the option buyer, and wait until expiration for the option’s value to hit zero.

Then you’re faced with two scenarios, both of which are in your favor:

1 – If the stock price stays below the strike, you are likely to get the stock put to you for a nice discount. You have met your goal to buy the stock.

But it gets better. Now that you own the stock, you can sell calls against your stock to generate even more income. (This is a covered call strategy.)

2 – If the stock price moves above the strike, the premium disappears, but you already sold the put and banked the difference.

In this scenario, you would not own the stock, but you would walk away with income generated from selling the put. This is also a win-win.

If this strategy seems risky, remember that options fade to zero about 80% of the time. Thus, you have a 4 out of 5 chance of earning the full premium when you sell options.

Selling puts has two potentially favorable outcomes – mentioned above – and only one “bad” one. This “bad” outcome occurs if the stock tanks hard and the put price is now significantly higher than the current price. But this is very rare.

Like I said above, institutions employ this options trading strategy day in and day out to achieve better returns than the market. So why not act like a big institution? Do it, and see how your portfolio blossoms.

Our Spread Trader service uses this strategy

Sam DeMarco, who runs our Spread Trader service, often uses this type of strategy to generate income from selling the put (but not owning the stock). If you’d like to give this strategy a try – but would like some guidance while you do – definitely check out this low-risk, high-probability service.

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