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⏰Chapters ⏰
0:00 Intro
1:39 Selling puts for cash flow example in WBA Walgreens Boots Alliance
2:24 Why & When is the right time to sell put options
4:16 WBA trade details
4:31 Results of WBA trade
5:49 Bonus: How to use options to legally manipulate your positions (ex: LEAP position DIS)
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Today in a simple, and clear way, I’m going to show you how to sell put options for income. I’m also going to share with you when is the right time to sell a put option and exactly how much cash you can make by selling put options! If you’d like an extra bonus, stay tuned in until the very end, where I’m going to share with you how being an option trader gives you special abilities to not only put awesome cash in your pocket, but to also allow you to legally manipulate the trades you’re currently in. It’s almost like playing a game, in which you’re allowed to change the rules, to make them more advantageous for you, during the middle of the game!
Selling put options is my absolute favorite way to generate income in the stock market. First, when you sell a put option you are selling the person that bought that option from you, the right, but not the obligation to put that stock into your account at any time through expiration day. For that risk or insurance, you are paid, what’s called an option premium.
The trade I want to talk through with you is in Walgreens (WBA). Before I get into how this trade turned out I want to show you why we entered this trade to help you get an idea of when is the right time to sell put options for income. In all, we sold 6 contracts. They sold for $1.27 per share. So we were able to pocket right at $760 total for this trade. Well, how did it turn out?
Let’s fast forward about a week. Here you see that Walgreens did exactly what we expected it to do. It took off and reached a high of right at $50 per share. However as you can see by the candlesticks up top, there was starting to be some selling pressure in Walgreens. So on January 13th we bought to close those put options for $0.24 per share. In all we netted right at $1.03 per share or $618 total. We were in this trade for 7 days. This trade paid us a non leveraged, annualized cash on cash return of 133%! The return on the margin requirement of $2,707 was actually over 1100% annualized!
Next I’m going to give you an awesome bonus use for put options! Selling put options can not only put awesome Cashflow into your pocket every single month but they can also allow you to manipulate the positions you are in. Here you see the DIS LEAP option position we are in. The question is, how can we use selling put options to manipulate this position?
Here is our position that I’ve spoke about many times over the past year. It’s a poor man’s covered call position in Disney. Let me show you how we are using put options to change the rules of the game in this position. This will put the odds back in our favor and position us for continued profits in DIS.
As you have seen, selling put options can not only put awesome cash into your pocket but it can also allow you to change the rules of the game to fit your current situation like we did here with Disney.
Happy investing!
Randy Perez
#OptionTrades #tradingoptions #highnetworth
Disclaimer: I am not a financial planner and am not offering investment advice. This is an opinion channel only and should not be taken as any form of financial advice. I receive a small commission from the purchase of any item from using the links listed above. There are financial risks involved in taking on any monetary transaction that I discuss in my videos.
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