I subscribe to Altucher’s newsletter which was a modest amount. As with all these services, I now am inundated with new, more expensive services. It is somewhat annoying but also somewhat informative. I was really confused by this promotion when it shows him picking a couple strangers at random and show them how to make Instant Cash in a matter of minutes. Poof, you have money in your account. He is selling naked puts. However, i looked more closely at the first two examples he does and I am really confused. I am familiar with options but not an expert. I have always read that when selling naked puts, you should chose a strike under the current stock price. And of course, be ready to own it if exercises. You hope the stock is range bound or heading up.
However, in his examples he is selling puts higher than the current price. Although at the time of sale, if immediately exercised it would still be slightly profitable due to the intrinsic value. However, here is what happened with one after i went back to my charts and reconstructed what could happen. On 8/15/17, AAPL was at 161.62 when he sold the 9/27/17 165 put for 6.45. Three days later, AAPL hit a low of 155.11. Over the next two weeks or so it went back up to 164.94 but then dropped to a low of 149.99 before expiration. So within 2 days, unless you traded out right away, I see this as a loser trade. Am i missing something?
The second example is the same thing with DIS, which was at 101.82 at time of sale of put. On 8/15/17 he sold the 9/29/17 104 put for 3.20. DIS went to high of 103.45 on 8/30/17, then dropped to a low of 96.26 on 9/9/17 and closed at 98.57 on expiration date. Again, I see this as a loser trade.
Am i missing something? Anyone using this service at $2000/year? Or any other of his services? Any input or correction of my thinking is welcome. Thanks.
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