Assignment is done on a random basis. Your use of the TradeKing Trader Network is conditioned to your acceptance of all TradeKing Disclosures and of the Trader Network Terms of Service. The underlying asset covered by index options is not shares in a company, but rather, an underlying Rupee value equal to the index level multiplied by Lot size. Information on this website is provided strictly for informational and educational purposes only and is not intended as a trading recommendation service. Generalizing it may not be a good idea.

A short put spread obligates you to buy the stock at strike price B if the option is sslling but gives you the right to sell stock at strike price A. A short put spread is an alternative to the short put. One advantage of this strategy is that you want both options to expire worthless. You may wish how to profit from selling put options losses consider ensuring that strike B is around one standard deviation out-of-the-money at initiation.

That will increase your probability of success. However, the further out-of-the-money the strike price is, the lower the net credit pt will be from this spread. As a general rule of thumb, you may wish to consider running this strategy approximately days from expiration to take advantage of accelerating time decay as expiration approaches. Of course, this depends on the underlying stock and market conditions such as implied volatility.

You may also be anticipating neutral activity if strike B is out-of-the-money. You want the stock to be at or above strike B at expiration, so both options will expire worthless. NOTE: The net credit received when establishing the short put spread may be applied to the initial margin requirement. Keep in mind this requirement is on a per-unit basis.

For this strategy, the net effect of time decay is somewhat positive. It will erode the value of the option you sold good but it will also erode the value of the option you bought bad. After the strategy is established, the effect of implied volatility depends on where the stock is relative to your strike prices. Posses your forecast was correct and the stock price is approaching or above strike B, you want implied volatility to decrease.

If your forecast was incorrect and the stock price is approaching or below strike A, ptu want implied volatility to increase for two reasons. First, it will increase the value of the near-the-money option you bought faster than the in-the-money option you sold, thereby decreasing the overall value of the spread. Second, it reflects an increased probability of a price swing which will hopefully be to the sellimg. Options involve risk and are not suitable for all investors. For more information, please review the Characteristics and Risks of Standardized Options brochure before you begin trading options.

Options investors may lose the entire amount of their investment in a relatively short period of time. Multiple leg options strategies involve additional risksand may result in complex tax treatments. Please consult a tax professional prior to implementing profif strategies. Implied volatility represents the consensus of the marketplace as to the future level of stock price volatility or the probability of reaching a specific price point.

The Greeks represent the consensus of the marketplace as to how the option will react to changes in certain variables associated with the pricing of an option contract. There is no guarantee that the forecasts of implied volatility or the Greeks will be correct. System response and access times may vary due to market conditions, system performance, and other factors. TradeKing provides self-directed investors with discount brokerage services, and sellng not make recommendations or offer investment, financial, legal or tax advice.

You alone are responsible for evaluating the merits and risks associated with the use of TradeKing's systems, services or products. Content, research, tools, and stock or option symbols are for educational and illustrative purposes only and do not imply a recommendation or solicitation to buy or sell a particular security or to engage in any particular investment strategy. The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, are sellling guaranteed for accuracy or completeness, do not reflect actual investment results frpm are not guarantees of future results.

All investments involve risk, how to profit from selling put options losses may exceed the principal invested, and the past performance of a security, industry, sector, market, or financial product does not guarantee future results or returns. Your use of the TradeKing Trader Network is conditioned to your acceptance of all TradeKing Disclosures and of the Trader Network Terms of Service.

Anything mentioned is for educational purposes and is not a recommendation or advice. The Options Playbook Radio is brought to you by TradeKing Group, Inc. Securities offered through TradeKing Securities, LLC. Featuring 40 options how to profit from selling put options losses for bulls, bears, rookies, all-stars and everyone in between. Buy a put, strike price A.

Sell a put, strike price B. Generally, the stock will be above strike B. NOTE: Both options have the same expiration month. When to Run It. Strike B minus the net credit received when selling the spread. Potential profit is limited to the net credit you receive when you set up the strategy. Risk is limited to the difference between strike A and strike B, minus the part time income trading forex support credit received. Margin requirement is the difference between the strike prices.

As Time Goes By. Check your strategy with TradeKing tools. Use the Technical Analysis Tool to look for bullish indicators. Use the Probability Calculator to verify that strike B is about one standard deviation out-of-the-money. Stock trading videos TradeKing All-Star Webinar Series and Live Events. All Seasoned Veteran Plays. Download Free Intelligence Reports. Top Ten Option Mistakes.

Five Tips for Successful Covered Calls. Option Plays for Any Market Condition. Who Should Run It. Seasoned Veterans and higher. Videos, webinars and more. TradeKing All-Star Webinar Series and Live Events.

How To Make A Steady Income Selling Put Options - The Basics

A cash-secured put involves selling an out-of-the-money put, with cash on hand to cover the purchase. Trading put options like this is straightforward for any level. What are put options? How to trade them for profits? Learn everything about put options and how put option trading works. What is a ' Put ' A put is an option contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying asset at a set price.