Sold Puts for GOOGL & TSLA
Sold Puts contract yesterday before I head to bed, and the orders got filled while I was asleep.
For those who are not familiar with Options, selling Puts is a slightly bullish move.
But does that mean I am bullish towards the market now? Not quite so. Confusing?
If you think I am beating around the bush, that means you may still not quite understand how the market works. One need not adopt a 100% bullish or 100% bearish stance. One can be 50-70% bullish, or neutral - which sometimes people see this as “flip flopping” or “beating around the bush”.
Anyway, allow me to explain, with an example - by selling a Put option of Tesla at $160 strike price is a slight bullish move, but it does not mean that I think Tesla will moon/rocket up. That is because, Tesla can fall from the current 200 to 170, and I can still profit from my trade. It can also fall to 150 and go back to 165, and I can still profit.
Therefore, to some, they may be confused as to why i say my trade is a slight bullish move, but in reality, Tesla could fall from 200 to 170.
Now read back my post above:
Selling Puts is a slightly bullish move. But does that mean I am very bullish towards the market now? Not quite so
Hope you understand what this sentence means now.
If you have learned something, do check out my Youtube channel and videos ![]()
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
Read more
Comment
Sign in to post a comment
Successful investing is about managing risk, not avoiding it. DYODD
Support my YouTube channel: Jay el
5378Followers
45Following
26KVisitors
Follow
骨神 : I wish to learn option, but don’t know how to do
Cow Moo-neyOP 骨神: You can learn from YouTube. I started off with this:
Options Trading for Beginners (The ULTIMATE In-Depth Guide)
HH1000 Cow Moo-neyOP: dont you need the shares to cover any calls or puts before you sell an option?
Cow Moo-neyOP HH1000: For selling of calls, yes, you will need the shares.
For selling of puts, you will need the cash.
102085387 Cow Moo-neyOP: I sold 2 put contracts last night too. May I have your thots on ITM puts on Tesla with a long expiry date?
102504912 Cow Moo-neyOP: hi. does this mean you need to have an average of just above 20k cash in the account, in order to sell 1 put contract of Tesla ?
Cow Moo-neyOP 102085387: Various factors for consideration - such as whether it is a “cash secured put” i.e. have enough cash if it gets exercised (since it’s ITM), at which point did you sell the ITM (if it’s sold when Tesla is at rock bottom, then the chance of it bouncing is higher, but if you sold it early last year, it will be very deep ITM now), how long is the expiration date, etc etc.
You may also try working out the math on selling multiple short-dated OTM puts vs long-dated ITM put, and who knows, you may reap more benefits from the former considering Tesla is so volatile.
Personally I wouldn’t want to “lock in” my cash for so long to sell ITM put. I prefer shorter dated options so that when it expires, and I have better opportunity on other stocks, I can shift my money to sell Put for other stocks.
Cow Moo-neyOP 102504912: It depends on your strike price. If you sell a Put with 120 strike price, then it will be 12K cash as collateral
ZnWC 骨神: Know your risk before selling options. Selling put options especially expensive stocks like Tesla may earn good money, but you'll need lot of cash in case the stock price fell below the strike price ie ITM (you're obligated to buy 100 shares). It's highly risky if you sold naked put or on leverage.
ZnWC 骨神: For American options like Tesla, buyer may exercise (seller may be assigned) before expiration date.
View more comments...