Daily Report — November 24, 2021

Tom Gentile

Posted in
Daily Report

By: Tom Gentile
November 24th, 2021

3 mins read

How would you like to get paid to buy a stock?

Is that even possible? Yes it, is and here is the kicker you can set yourself to MAYBE not even have to buy the stock and STILL get paid.

What in the world are we even talking about here? Selling a naked put option. No, I am not talking selling naked on a literal basis, put your pants back on!

I am talking about a strategy I use with my publication Rocket Wealth.

Selling Naked Put Options

Selling a put option without owning the underlying security places you in what’s considered an uncovered or naked position. You have sold anyone in the markets the right to ‘Put’ you to stock or make you buy the stock at the sold strike price.

You would only, or at least I would only consider selling a naked put option on a stock I wouldn’t mind owning anyway. If you don’t want the stock a) don’t buy it and / or b) don’t sell naked put options on it.

But, if you would like to own it and would normally just go out and buy it, hold up for a second and consider selling a naked put option at a strike price that if you were ‘put’ to stock is a price you would like to own it at.

And if you are going to sell an option why not get as high a price as you can. This is a strategy where I look to the Expensive IV list. These are options whose options IV are elevated over those that have cheap IV.

This means you have a chance at getting paid more on the sale of the naked put than because the IV is expensive.

Expensive IV List

You can see in this list below HP, Inc. (NYSE: HPQ)  is on the top of the list.

The choice you can make now is which option strike to sell. The options at the money (ATM) will make a bit more than one out of the money (OTM).

The choice is yours. Consider this though, if you sell an OTM option it may not get put to you right away and if options expiration comes and goes it may expire and you keep the full amount of the premium sold and can look to do this again another month.

If you want to get the stock and not try and milk premiums more than once, but just get the stock a bit on sale, then the ATM would probably be where you lean.

Both are sound approaches so I would support whichever one you decide

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