Selling naked puts isn't as dangerous as it is made out to be, if you do it in moderation.† It can be a good strategy to pull out money from the stock market.
Naked Puts are supposed to be one of the riskiest strategies out there.† But if done right selling naked puts can be even safer, and more profitable than buying stocks.
When you sell a naked put you take on the obligation to buy a stock at a certain price on or before a given date.† For this you bank a premium up front.
Selling puts can be a good strategy as long as you donít go overboard.† So if you sell naked puts on $50,000 worth of stocks, make sure you could buy $50,000 worth of stocks because you might have to follow through.
If you do it in moderation selling naked puts has the following advantages.
1.†††††† Stocks Donít Need to Go Up
When you sell naked puts on stocks you do not necessarily need them to go up for you to be profitable.† You only need the stock not to go down below your strike price.
This allows you to make money when you are having trouble finding stocks that are about to move up.† Instead of having to worry about it you could always sell puts.
2.†††††† You Can Get Paid to buy a stock
If the stock does fall down below your strike price, you will have to buy it. But considering that you got the premium up front it means you got paid to get into a strong stock, which is much better than buying and holding the old fashion way.
3.†††††† Premium Adds Up
Collecting premium eventually adds up and can be very profitable in the long term. †Many times you can make more by selling puts then you can by holding the stock.
For more on Naked Puts visit http://www.stocks-simplified.com/naked_put.htmlFor some stock tips visit http://www.stocks-simplified.com/stock_tips.html
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ABOUT THE AUTHOR
When I was young I wanted to learn how to trade the stock market.† So I traveled around the country listening to professional traders talk about how they are making money in the market.† Now I understand how easy it is to make money in the stock market and started a site http://www.stocks-simplified.com †to help others learn.