To The Moon

A Short Put can be a steady way to earn premium—as long as the stock doesn’t crash. But where are the risks? And when’s the best time to close the trade?

📘 The Options Handbook sums up the key points you need to know about the Short Put strategy—

▶ Review: What Is a Short Put? 🤔

A "Short Put" means selling a put option—also called a "Sell Put" strategy. It's a way of getting paid to potentially buy a stock at your preferred price.

▶ When This Works Best? 📈

This approach makes sense when you're happy to buy the stock, but only at your price. And you're fine owning it or earning a yield while waiting.

It's beneficial if you're holding cash and want to boost returns without jumping in too early.

▶ What Could Go Wrong? ⚠️

• Assignment risk: If the stock falls hard, you still buy at the strike price. You'll end up owning a falling stock, no premium can erase that.

• Margin risk: E Make sure you have enough funds to cover assignment. You don’t want to be assigned without cash in your account.”

▶ When to Close a Sell Put? ⏳

• If the option loses value before expiration—due to falling volatility or time decay—you can close early and keep most of the profit.

• If the stock hovers near the strike and you've changed your mind, repurchase it or roll it, no need to wait until expiration.

▶ Takeaway 🎯

The Short Put is great for earning yield and positioning to buy stocks you like at lower prices. Compared to buying shares outright, it’s often the smarter play. But in a severe downturn, the risks are real—so manage it wisely.

🎁 The Options Handbook features 5 beginner-friendly and 4 advanced strategies—now available in the Tiger Coin Center! 🐯

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>> Click here for the Simplified Chinese version <<