Basic information

By russelltbutler, June 26, 2012

I’m a complete newbie here, so if I missed what I am looking for I apologize.

I am looking for information on selling naked puts. Basic information. Like – is there a minimum size transaction – what on-line brokerage houses allow this – how much money is actually needed? Stuff like that.

Thanks for any info.

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Travis Johnson, Stock Gumshoe
The CBOE has some good basic tutorials on options trading that you might find useful — they describe cash-secured puts here (it would be “naked” if you didn’t have cash backing it up, which would mean you would have margin — or borrowed money — backing it up, so the rules for that will depend on your broker) You can also do put spreads, buying a put below the one you sell at the same time, to limit your exposure a bit (that way, if the stock craters you know how much you’d stand to lose). Of course, that… Read more »
Harold Hensley

You might want to check out They reccommend monthly trades with a very high probability of being successful using options. They talk of returns in the 4 or 5 percent range using a $10,000 acct. Also they have lots of free atricles you can browse. I recently signed up to watch their portfolio and track their success.

I have been selling puts for the past three months and learned some of the ins and outs. It’s a low volatility environment now so I have been choosing rather volatile stocks like CHK and AMRN. Not for the faint of heart. One thing is go with Interactive Brokers for the very low commissions, as low as .31 a contract sometimes. You can adjust these by rolling down and out in time as well. I do this if the stock begins to approach my strike, say within .50-$1. I pick stocks which are in the 5-20 range and only sell… Read more »
Rather than focus exclusively on selling puts, I’d suggest looking at what type of exposure you’re looking to get. For example, if you want to profit if the underlying increases in value, then you want to have an options position with positive delta. This can be done by selling puts, buying calls, buying calls AND selling puts (aka a synthetic long) – not to mention lower delta structures like spreads. Whether selling puts is the proper tactic for you depends on a number of things, such as the implied volatility relative to historical volatility and the margin you’re willing to… Read more »