I introduced the topic with this article and will launch "watchlist trades" for paid subs still in June.
The money required to enter into the transaction depends on various factors.
Assuming you have cash account and use uncovered puts (you don't have short position of the underlying stocks) then usually the amount covering the purchase of the underlying stocks (if assigned) needs to be available.
E.g. you sell put at strike price $50, then you should have $5000 available (as 1 contract is 100 stocks). So, could be quite sizeable amount required. Margin account has more complex calculation.
So generally, yes you'd need to set aside relatively significant amount of money until the expiration date.
You should make clearer that Options Trading is not for Beginners, especially WRITING (SELLING) Options can destroy your account if things go wrong (unlike buying options). Also you should point out that 1 Option contract controlls 100 Shares of the underlying. For example you sell a Put with Strikeprice of $1200 on NFLX and collect $500 premium. Things run bad, gap down to $1100 and you got assigned. Then you are obliged to buy 100 Shares at a Strike of $1200. So you need $120,000 in your account to make it a CASH SECURED Put + you are sitting on a $9500 dollar loss. Be cautious when selling Options
That is the best but most simple strategy out there, keep it up
Interesting.
Do you share these option trades with your paid subs?
What about the minimum quantity of stocks purchase?
Don't It requires a significant amount of money?
I introduced the topic with this article and will launch "watchlist trades" for paid subs still in June.
The money required to enter into the transaction depends on various factors.
Assuming you have cash account and use uncovered puts (you don't have short position of the underlying stocks) then usually the amount covering the purchase of the underlying stocks (if assigned) needs to be available.
E.g. you sell put at strike price $50, then you should have $5000 available (as 1 contract is 100 stocks). So, could be quite sizeable amount required. Margin account has more complex calculation.
So generally, yes you'd need to set aside relatively significant amount of money until the expiration date.
You should make clearer that Options Trading is not for Beginners, especially WRITING (SELLING) Options can destroy your account if things go wrong (unlike buying options). Also you should point out that 1 Option contract controlls 100 Shares of the underlying. For example you sell a Put with Strikeprice of $1200 on NFLX and collect $500 premium. Things run bad, gap down to $1100 and you got assigned. Then you are obliged to buy 100 Shares at a Strike of $1200. So you need $120,000 in your account to make it a CASH SECURED Put + you are sitting on a $9500 dollar loss. Be cautious when selling Options