$Alibaba(BABA)$
I am trading in options since year 2021. I find this selling put options strategy allow you to earn premium even if you never buy the share at the strike price. I learnt from the "Oracle of Omaha," Warren Buffett, is not only a stock market expert but also skilled in options trading. He successfully utilized selling put options to lower the buying cost.
A lot of stocks have strong fundamentals, such as Alibaba, Goggle, Amazon, Apple, Tesla, Nvidia, and Microsoft. If you want to "buy the dip" into one of them and you have a target price. Try to set a strike price that you are willing to buy, and sell puts to make extra profits even if you don't buy the shares. Just like Buffett did.
Key takeways of selling put options
1、You need to be willing to buy the underlying stocks Don't sell puts that you don't want to buy. Choose a company with strong fundamentals and long-term value
2、Sell at a strike price that you are comfortable to buy at If you particularly want to buy a stock. Don't set the strike price too low, so that you will never be able to buy it. Selling puts on a downtrend can allow you to earn more premiums.
3、Ensure there is enough margin to exercise options. The margin is based on the purchase margin requirement for the stock. If there is insufficient margin when the options are exercised, it may result in forced liquidation.
4、Don't oversell options. Take note when there is not enough margin to take over when the stock price falls below the strike price, or when you don't want to buy that much shares.
5、Believe in the compound interest effect. Don't be disdainful of earning the premiums. Believe in the effect of long-term compound interest.
The screen shot that I am sharing are those sell put option that I had earned when the market dip. I do not need to own the share but I already making profit from it. I can actually close the sell put option to terminate the contracts.
Please do your own diligent research/study before you start to trade options. No matter what kind of investment, there is still a risk involve. @Fongtf @MalcolmEmily @Ketsara @LMSunshine @Derren_Tan @Fenger1188 @Silver Hammer @BullishKing @Nellz @Julian1380 @WingCheong @Haleystar Give me a like to support my article. Thanks
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BABA breaking higher due to Chinese macro. But if we get back above this massive block trade seller from early August who laid 1.65 million shares down on the 7th, then that juicy upside gap is next...but if we can't clear those blocks, then we get a quick fill of that recent downside gap.
BABA's recent share price decline seems to have flattened out considerably, which means that the market has priced the majority of the risk associated with Chinese exposure at the moment.Secondly, the company's valuation has come in significantly, and management is buying back diluted share count, which could lead to higher EPS and an increasing stock price in the future. Net net, this idea has an 81% chance of earning max profit by expiry, which, combined with the positive price action, solid fundamentals, and recent support level, make us feel comfortable taking risk here.
Amazon has exhibited a consistent upward trajectory over the past few months and has reached resistance.