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- เผยแพร่เมื่อ 6 มี.ค. 2019
- Watch how I use Cash Secured Put Options to buy stocks of great companies at huge discounts or even for free. By selling Cash Secured Put Options, I get paid for waiting for the stock to come to my intended purchase price.
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Options are a powerful tool used by both stock investors, stock traders and forex traders.
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In this Options Trading Course, you will learn all about call options, put options, basic as well as advanced options trading strategies used by successful options traders.
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Stock Investing & Trading insights by Adam Khoo will show you profitable trading and investment opportunities in today's stock markets.
These are essential strategies for stock traders and investors who want to improve their investment and trading performance.
Adam Khoo is a professional stock investor and options trader and the best-selling author of 16 books including 'Winning the Game of Stocks" and "Profit from the Panic". Thousands of students have profited from his sharp investment insights into the world of stock market investing and trading.
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Love the way you explained this. Filled in some of my gaps in understanding sell put options. There were a couple "aha!" moments and you got my like and subscription by the middle of the video. Very well done! Thank you!
continue teaching you have a gift of breaking down things into simple terms.
One of my favorite strategies! Love the way you explain things! Well done!
Absolutley have blown my mind with this content! Thank you!!
Thanks for your explanation about Option clearly.
I didn't even think to sell the puts with a limit price to see if I could squeeze a few more dollars out of it. Great tip!
I've watch quite a few videos on this topic and this was the only one that finally made the theory sink in. Thank You!!!
Thank you so much, I have learned so much from your videos. May God continue to bless you and your family.
Good explanation. Thanks for providing it for free.Such information and education cost an "arm & a leg" elsewhere. At 6:34 Calculation on the amount required to buy the shares if exercised should be $41,250 because you intended to buy 5 contracts. Net cost for the price of the exercised shares should have been $40,750/40,751. Your broker required $40,751+Cost of transaction +minimum balance required in the account. Good job AK. Keep it up. God bless you.
Excellent explanation , I know how to sell covered calls but never quite got the concept of cash covered puts until now , thank you sir
hi. Aside the fact that I love listening to you, I have a question. Could you please let me know if Etrade is a good platform for options? They dont display all the charts like you have. thx
Finally, it is clear how to sell put options! Great! Thanks
Excellent description as always adam. Thank you
Well explained. Thank you.
God bless u....finally understood selling put option....saw so many use less videos never understood...but ur video is worth the watch ..keeping doing great videos like this....👌👌👌👌👌 ..thank u so much.....
What's buying/selling calls? What's better? How do they work? I just sold a covered call and a call. When I'm ITM on an option so i did to resale the option to realize profit? Or is it sold automatically for me before it expires? Sorry I'm new to this. I've read alot and watched alot on different ways to buy and sale in the market. Options also. I just have a issue with my memory so i have a hard time with retaining information. Thanks for any help. Also i love the content. Thank you so much for all you do. If i could like this more then once,i would 100% 👍 👍 thank you
What delta you have to sell the cash secured put . Thank you for your videos .
Thank you Adam for great advance stuff! .... non the less, the short term weekly betweeb 1-3 days are my favorite
Yeah, I've noticed you can do a weekly call, every week, and get more premium than tying up the same money with a 30day call - with less risk (there will be less downside risk a week out vs 30 days if the price starts to tank)
So, a 7 day call might be .25 and the 30 day call might be .60. Why not take the .25 four times over the same period?
@@Erikpdx Hey man, please what happens when you sell a put option, then the next day the price goes way up, what happens then?
Of all videos, I watched about trading options. You, Sir, explained it the best! Subscribed
He is 100% the best i've ever seen :)
You are amazing. Thank you so much!!
Thank you!
So let’s say the price dips below the strike price and I have to buy the shares, how long do I have to own (hold) the shares before selling them? I know u said this is for long term investing, just wondering. Thanks
wonderful . amzing. you are the only honest and real trader trainer on the youtube. we thank you for all. you are amazing. Theodore, Europe
Nice explanation sir thanks
Awesome learning. Thanks
Thanks for sharing.
Mr. Adam .... What trade are you on on the trading floor?
You are an amazing trader and trainer. i make money every month from your teachings. thank you so much
Excellent explanation thank you so much 👍🙏👏🌷
Are we about to see the S and P 500 dive? along with major indices like hangseng? sentiment seems horrible at the moment. Whats your thoughts Adam?
Wow!!! Good stuff...
What trading app do you recommend?
If the stock price drops below your strike price, but there is still time until expiration date, do you still have to buy the shares immediately or you can wait until it goes up, and you still keep the premium ?
Question adam , what if you sell put with the price of the current price ,you get more premium , dont you base your purchase on the break even price ?
Great video can you do one on selling in the money covered calls?
How do I choose at what price I can get it?, Since the premium will decrease the lower I go
best teacher
One of best videos on options selling
Hi Adam, when the stock price of CELG is $82.50, can you buy the share right away? or I have to wait until the my sell PUT option is expired? Thanks.
You are too good at teaching Mr. Adam Khoo.
amazing
What's the best way to learn how to use indicators? I have robinhood and a Webull account. I really would like to learn how to use them. Also what ones are the best/worth learning how to use.
Very cool strategy Bro. Nicely explained.God Bless you.
You should talk about this based on the probability of finishing out of the money. Of course at $102 your probability of finishing OTM is about 82%, so you can only collect 75 cents. If JPM drops to your options selling limit price then what is your OTM percentage? It's probably closers to 50% More risk of getting assigned means more reward in the form of premium. Of course if you truly like the stock at that price, then by all means go ahead and sell the put with higher premium. If you want to just collect premium with a lower risk like an insurance company to obtain monthly income, then the put that is close to two standard deviations OTM strike is the way to go.
great mentor..pls come my country INDIA..SIR...ALWAYS WELCOME..AND WAITING..
Is there a way to adjust put option
Ex : buy a single put and put premium is going to loss because markets are going in higher side .
Any advise please
Do you sell ITM LEAP put for premiums to hopefully be assigned???
Nice sir
Cool stuff
The insurance for stocks
what happens if the price drop badly to lets say in your exemple to 70$ BUT it goes back up all this before expiration. Are you in an obligation to buy the shares at your strike price or it will al happen at the expiration ?
Can this be done with a small account?
so whats the best strategy to use in this coronavirus crisis?
This is gold, but i am unable to this yet with the dividend stocks i want to own. My account is not big enough yet. But i am going to do this when my account is bigger. Put around $1000 each month into my broker. So few mote years till i am able to do this.Thank you for the video and your wisdom Adam.
Very good explanation. thanks. What you fail to mention is the loss in having to buy the stock at the higher strike price when the stock actual price has fallen. So not always a win?
But the loss in value the stock itself isn't very important. You're taking a long-term perspective as a value investor.
the single most dangerous part about selling a put options is the strike is hitted and the stocks keep failing in price even when you are buying it with a "discount" already.
Sell otm put on blue chip stocks that you want to own. They will not go down far. Combine Dollar cost average works well in bullish market.
If it's a stock you want to own, you'd probably ride that share price down anyway (and average in lower). At least this way you still got it at a discount compare to if your bought at today's price and then rode it down that much further.
But yes, you're locked in for a period of time
like where we are right now!
@@Erikpdx exactly
But that risk exists even without using a put option?
With a firm understanding of the company, selling put is a really good strategy. But most of people do not want to spend time to understand the fundamental. So this is also a fair game in that the one who is diligent has a higher chance to win.
really good content and well presented.
Very helpful. couple of questions if you don't mind - when stock price = strike price, and you are obligated to buy, can you buy when you want like before stock falls by a lot ? what if buyer doesn't exercise his option ? how does the actual transaction happen ? can you explain that a bit or if possible show it by recording when you actually do it ?
@Adam Khoo - also can you please share risks that one need to be aware of with this strategy ?
very well explained!
Glad it was helpful!
this strategy is it ITM or OTM?
Adam Khoo great Mentor!
Hi Adam, do you have videos of how to set up for trading Options (how to place, close and roll option trades)for Interactive Brokers TWS platform? If not, can you make videos for that? Thanks.
This will all be taught in the Online Professional Options Trading Course . You can find out more from www.piranhaprofits.com
If the put buyer exercised the put option, do you have to buy the shares immediately or within a day or two you must buy? What is the timeframe?
I have the same question also. I believe if they execute it will take the money or shares that equal to 100 shares. (cash secured put option uses cash not stock) I am not sure i hope someone can answer this better.,
ive seen your videos on selling covered calls and selling married puts, but do you have any on buying calls and buying puts?
Learn all my options strategies at www.piranhaprofits.com
Nice content, please do one comparing buying vs selling puts, thanks!
Well I can tell you selling outs is infinitely better than buying them. If the stock goes up you will lose on your long put but you’ll make money on your short put. If the stock goes down you gain on your long put and lose on your short put, HOWEVER, you can roll it to the next week and in most cases make a bit more premium. Just keep rolling it over until the stock comes up to your strike price or you average down enough to either buy at the price you want or get out of the trade. The only downside is you need enough capital.
Thanks for this strategy and very well explained video. One Question : When the stock price goes below your PUT Strike price (In case of JPM below 95 USD - Then, I need to but the shares. which Is ok. But, can I sell those shares immedietely? that means - If I get those shares at 95 USD and the in next 1-2 days - if the stock price is around the same level - then I will not make the extra money - But, I can get the premium without much risk. Is my understanding right?
The stock price may not come back if it is a lousy stock.
If the company is good, why don't you hold for the long run?
i which the video host would answer your question too. I believe you can sell the shares once you have bought them. And as you said if the market price stays around the same price as the strike price of the put. You may have little to no loss and would keep the premium. However, if the market price is below the strike price when you sell the shares, then you would have a capital loss for that difference I believe. What I would like to know is if the premium collected gets tack on to the cost basis or of it is always remains considered ordinary income? or?
I tried doing this- selling a put option but it doesn’t let me do unless I have bought a put option. What do u suggest here?
Can you also trade options as done with stocks? I mean, as keep buying or selling options just to make money from the fluctuation before reaching the expiration date? Also do the same tools apply, as stops, trails, etc? (I see you use IB, so consider IB) - or the fact that you have a "contract" makes it unchangeable after 'signing'?
you can do absolutely... the thing is lot of call/put option buyers are speculators and not really hedging they are buying and selling options just like stocks (penny stocks to be precise because of the options price fluctuations) ex trade: you can sell to open CELG put option 82.5 strike April 16th, get $500 as premium and your broker will collect 8250 as collateral because of your obligation, if stock price goes up tomorrow put option price goes down... so you can buy to close tomorrow itself , say for example you may buy it for $400 and keep $100 as profit (1-2 days) ....
@@CoffeeRoamer interesting... something that did not close out to me in the example: I got a 500 premium for selling a put, but if I close my position (which btw how possible if I have an obligation?), that person who bought it need a different seller to support that contract, who also expects the same 500 premium. Im not understanding the mechanics.
Very good video. Question : 10:49 If stock price crash/drop below 77, you will start losing money. What are you going to do in that scenario?
As an investor who has done fundamental research on wide-moat companies to hold for the long term, you are not concerned about short term corrections because you know that the price will eventually be higher in time. In the short term, you can sell OTM calls and use Put Option Vertical spreads to profit whilst waiting for the price to recover. This is different from Trading with technicals and momentum , where you place a pre defined stop loss and profit target.
@@AdamKhoo Wauw, you've so many ways to handle different kind of scenario with option! Do you have video about that option strategy?
Andi you are correct at that point you're losing money especially if you receive the options at 77 and turn around and sell at 77 or lower if you wait and it keeps going down.
Wow!!! I and shocked!!! and deeply appreciate on how options trading works... but for what bothers me if you put options price as the current price which was below your strike price, you are obligated to buy stocks at a discounted price ( that bothers me a lot) because I don't have that a huge amount of money "and very too expensive to buy it" ( that is very applicable for big investors or big traders like you), on the other hand, if you put your put options bought it above your strike price but not further enough from the previous current price at least you have earned collected premiums generated from options but no stocks being bought but at least you have earned a small profits depending on how many attempts you will put into put options trading... At this process, I am convinced that "You're right too much cost to buy stocks thru options?"
but there is a problem that PUT go down 82.50 then premium go up to 4.99 then we have to pay diffrence to buyers of PUT option
what happens if u buy back the put option that u initially sold?
masterpiece
Hey use this strategy to buy stock !
So, in that scenario let's say JPM stock price drops a bit, your put sell gets filled and then before expiry JPM reaches $90 and the person who bought your option is then entitled to buy then from you for $95 right? It's not like you get to just keep the shares at $95 at expiry if JPM is below that strike. You owe those shares to someone, correct? So if the underlying gets relatively close, what do you do, do you buy to close that put option at a higher price for a loss just to buy the underlying at $95?
My intention is to own JPM shares for the long run. So, if JPM goes to $90, I will end up buying the shares at $95. Although I may have an unrealised loss of $5 per share (less the premium I collected), I am not concerned. Again, this strategy should only be used on fundamentally strong stocks you have confidence in for the long run. If I know that JPM will be worth $150 in 1-3 years, short term corrections won't bother me
Do we calculate the position size in trading option ?
Yes. Your risk per trade is the premium you pay. It should only be a small percentage of your capital
Easy strategy to pay for my Merc on monthly basis.
why are options not suitable for short-term trading?
May I know is there any recommended trading app?
try think or swim
the reverse trend is due to an acquisition isn't it?
Selling of naked options is one of the worse strategies - think about it if the stock comes crashing down, you get stuck with a position that is losing money. While you do earn a small premium, it is a case of limited upside, unlimited downside. You can console yourself that you intended to buy it in the first place and it offers a discount to your original intention but that's basically bluffing yourself. The mark to market on your position is a loss when you are forced to buy it no matter how you slice and dice it. If the stock goes up, you lost the chance of making more money compared to the miserly premium you pick up.
Good point, but you cannot know in advance when a stock is going to crash anyway. Say you buy a stock tomorrow at $50, it could crash overnight 20% without much warning, and it can even blast through your stop loss during the AH session (see PCG or KHC for recent examples). If you sold a CSP for 2.00 on the same stock, your entry point is at $48, reducing your loss by $200, which is not much, but better than 0. The point being, you have to be willing to hold the bag for the long term, otherwise I agree it's not worth it.
But if you r a value investor, you are buying the stock anyways
Your grandpa was texting you @ 16:55 lol :)
If the stock falls below your strike price / Sell Put ....why would you want to buy at the strike price instead of the cheaper price of when it falls below your strike price of $7,750 minus your premium?!?
Can you do this for ETFs?
Hey mate, as long as there is an option chain for the ETF, it should work. Small ETF's, much like stocks of small companies, will not attract enough interest for you to buy and sell derivatives on it.
You didn't mention how much it costs to buy options... on your example that you'd ear $499, how much of it would be deducted for the buy options? Surely there is a fee? Thank you.
That depends on your broker... for example Td ameritrade charges 0.65 cents per contract not including like a 3cent commission fee
But if I buy a put at $82.5 and the shares drop below $82.5 and someone exercise the put, I have to buy the share at $82.5 and sell others at $82.5. So I don't own the share anymore after I sell others at $82.5. So I don't actually own the shares anyway after someone exercises the put even though I desire to buy the shares at $82.5? Am I missing out something here?
I have the same doubt. Unless he sell a little before it hit the strike and buy the stocks in a new operation, he risks having to sell the stocks to the buyer of the put option. Or Im missing out too.
what trading platform you are using ?
His main screen is TOS
Since the option loses value with time.are you losing any money from the premium you collected?
This is a credit spread, meaning that you get paid the premium the moment you open the trade. As the option loses value and expires worthless, you keep the full premium without needing to buy back the option to close the trade
Which Broker who support to invest in US stock from singapore
Saxo Bank bro. Sign up online using Singpass.
Trick is to do it with stocks you would like to own. winning strategy with that mindset
All good if the stock does not keep going below 77.5....and then keeps on losing value....lose - lose.
That's right. It's not a win-win situation like Adam says.
The unlimited risk deters me from selling options.
You only do this on stocks that you think will rise in the long run - firms with excellent fundamental (e.g. Boeing)
How to go broke in today's Coronavirus market... Sell a put.
so, selling put options is probably not a good thing in this coronavirus crisis, right?
selling puts is the only way to consistently make profits in the stock market
What if its hit the strike in first try what about the premium if premium goes minus from strike price rate and its average value is much higher then its a loss.
There are some very erroneous statements in this video and you should retract them since they can be dangerous for your audience which is very inexperienced judging by the comments.
First of all, most of your explanation relates to the expiration time and not to the time in between.
Contrary to your consistent statements here, when the stock price drops to your strike price you are NOT obligated to buy stock as no one would exercise an option with time value in it. Instead, the put option price will rise and you will be at loss, depending on the time value.
The dips can be dramatic and even the CELG chart in your video shows the gap or overnight price change of about 25% (66.00 to 82.50) which means the opposite direction would mean overnight loss of $1650 minus some premium gain.
Even without such huge gaps a 5%-10% price difference in couple of days is very normal, e.g. 1.5% daily is the order of the day.
So lets say your strike of 82.50 was hit three days later: With the IV of around 60% at the time, the price of 82.50 put option would be about 6.00. So you close the position and buy the stock at the price you wanted in the first place, but for $100 loss per contract.
It is far away from free money or any discount.
first!
‘’I win in every scenario”??
No, if CELG drops to $50 you lose $2750. That”s not a win. If you’ve traded through a bear market or just a downtrend you know better than that.
Just keep it real.
As an investor who has done fundamental research on wide-moat companies to hold for the long term, you are not concerned about short term corrections because you know that the price will eventually be higher in time. In the short term, you can sell OTM calls and use Put Option Vertical spreads to profit whilst waiting for the price to recover. This is different from Trading with technicals and momentum , where you place a pre defined stop loss and profit target.
@@AdamKhoo u invested believing the share would go high in long term. If that doesn't happen. Will it be a lose lose scenario? Or is there a win in that too ?
Selling puts is a good strategy at the right times and a horrible strategy at the wrong times. Clearly you weren’t trading in 2001 or 2008 or you would know better than to say “I win in every scenario.” Any seasoned trader knows how silly that statement is . Don’t be glib about the losses beginning traders will have if they think this is a no-lose strategy.
Having a longer term time horizon is fine but if you take years to get back to even on a “fundamentally sound” company, you will have tremendous opportunity costs while you wait. Of course you could sell a call on the assigned stock and it could then be called away from you under water. Or if you are farther out of the money you won’t get much. Or you could buy a put or put spread and watch it wither away.
There is no free lunch. Every trade has a downside and most amateur stock pickers are horrible. Keep it real.
OMG, of course you can lose. There is no such thing as a trade you can't lose with. You can sell the put and have the price of the stock drop to $70 and lose $800 (8300 (what you have to buy the stock for)-500 (premium) -7,000 (what the stock was selling for). And don't think it can't happen lol, it can.
Warren Buffet is not a trader