Is Selling Put Options SAFE? 💰 What are the RISK of Selling PUTS? 💰 Can you Lose Money Selling Puts?

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⏰Chapters ⏰
0:00 Intro
1:34 Is selling put options safe?
5:41 What are the Risk of selling puts?
9:53 Can you Lose money selling Puts?
11:17 Why would you sell a put option?

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In this video I’m going to answer the questions: is it safe to sell put options? What are the risks of selling a put option? And is selling put options a good idea?

Selling put options is my absolute favorite way to generate income in the stock market. However if used improperly, then as warren Buffett has called them in the past, put options can be weapons of mass destruction on your account. I will show you how to use options properly to generate awesome cash flow and return in your account!

First, is selling put options safe? The answer to that question is, it can be. Let me show you what I mean.

Here you see a put option trade we’re in right now. The question is, is the fact that I’ve sold 10 contracts in AT&T stock at $30 a safe trade?

Let me show you when selling these put options would not be a safe trade. As you have seen here, selling put options can be safe if you’re selling it in stock that you’d be happy to own, and you have the cash to buy the stock. However, as you increase the amount of leverage and margin you are using to make option trades, that same stock that I had 10 contracts in, AT&T which was a safe and smart trade in my opinion, can turn into an extremely bad situation if I traded 394 contracts.

That is why Warren Buffett calls options trading, weapons of mass destruction because if they’re not used properly, they can absolutely blow up and annihilate your account. The fact is that Warren Buffett sells put options just like we do on this channel. He just makes sure that he has the cash to buy those stocks if they were put into his account

You see if you sell a put option, you’re taking on someone else’s risk. By selling those 10 contracts of AT&T stock at $30 per share, I’m selling someone else the right to put 10 contracts at 100 shares per contract, or 1,000 shares of AT&T stock into my account at $30 per share. So for example if for some reason AT&T went down to $20. They can still sell me those 1,000 shares at $30 per share at any time before option expiration day, on April 16th, and I would have to buy it from them.

The risk when we sell put options is that the stock declines below the strike price that we sold a put option at and we are forced to buy the stock at a higher price than what it is currently selling for in the market. Don’t get me wrong though. Selling put options is my number one favorite strategy of all time when it comes to trading.

Why would you ever sell a put option? One nice thing about selling put options is that you get paid upfront. So for example if I did that trade for the 394 contracts which would equate to 39,400 shares, I would receive that $43,000 upfront!

Happy investing!
Randy Perez

#optionstrategy #optionstradingcoach #OptionsTradingTutorial

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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Видео Is Selling Put Options SAFE? 💰 What are the RISK of Selling PUTS? 💰 Can you Lose Money Selling Puts? канала My Life of Learning