Nice Google rocks calls!
@Optionspuppy：Earn 1% per month . Time to sell put for baba at $80 as I think china has reached near bottom and in the event if I get the share I will sell call at 25 months at $80 to get$20 of premium or rather $13% interest a year $Alibaba(BABA)$ What is a sell put option Simple question: How do you invest? Are you a straight stock buyer? Do you sell stocks short? What about options – do you mix in some covered call selling or LEAP-buying? Over the past few weeks, I’ve run down the compelling benefits of another excellent options strategy, where you sell put options in order to buy the stocks you want at the price you choose and bank instant income in the process. Many people are reluctant to employ put-selling in their trading, often because they simply misunderstand how to use the strategy most effectively, or they’re not using it properly at all. Here’s how to do sell put options like a pro, ensuring that you get the best stocks at the best prices – and make money doing it, too… How to Sell Put Options… and the Benefits of This Strategy First of all, when you sell a put option, you: Obligate yourself to buy a particular stock at a predetermined price (the strike price). Receive money in your account immediately that is yours to keep, regardless of the outcome. So let’s see how this works in reality with the following example… ~ Select Your Stock… and Make Sure You Like It: Having researched Dell (Nasdaq: DELL), you decide it’s a stock you’d like to own. (This is a crucial element in put-selling: Make sure the company is one you’d actually be fine with owning in case you’re obligated to buy the shares.) ~ Buy Lower: Dell shares are currently trading around $13.50, but instead of buying the stock outright today, you think you can buy it at a lower price in the future. ~ Pick Your Puts: The options chain for Dell shows the February 2011 $13 puts trading for $0.65. That means if you sell those puts, you’ll receive $65 for each contract you sell (there are 100 shares in each options contract). So if you sell 10 contracts (equivalent to 1,000 shares), you’ve: Received $650 in cash in your account. Obligated yourself to buy 1,000 shares of Dell at $13 per share. Reduced your cost in Dell to $12.35 if you end up buying the shares ($13 minus $0.65). But that only happens if – and only if – Dell closes below $13 at expiration. If the shares close above $13, then you only get to keep the original $650 premium that you received from selling the options. So let’s run down the scenarios… Your Options Expiration Scenarios Once you’ve executed the put-sell trade, you just need to keep an eye on the movement of the shares, as you would do with any holding. If Dell Closes at $13 or Above by Options Expiration: This is the easiest scenario because in this case, you do nothing. The $650 you received is pure profit, with no further obligation. Your account will show confirmation that the put option has expired. If Dell Closes at $12 by Options Expiration: In this case, the stock has closed a full $1 below your strike price. It means the shares have been “put” to you. However, if you no longer wish to own the shares, you can get yourself out of the position before options expiration. You simply buy the put options back at whatever price they’re trading for at the time – known as a “buy to close” transaction. For example… If Dell is trading at $12.10 the day before options expiration, the puts will be trading at $0.90 ($13 minus $12.10 – there’s no premium for time or risk since there’s only one day left.)
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