The Options Millionaire Trading Put Options
7 snips
Dec 4, 2024 Clear definitions of put option rights and obligations are explained. Liquidity, open interest, and bid-ask spread risks are explored with real option chain examples. Practical execution tips cover brokers, paper trading, and auto-exercise mechanics. Strategies include protective LEAP puts for hedging and selling cash-secured puts to generate income or buy stocks at a discount.
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Check Open Interest And Bid Ask Before Trading
- Open interest and bid-ask spreads determine options liquidity and execution quality.
- Peter compares Apple and SPY chains: similar OI but SPY bid-ask cents are larger in dollar terms, impacting trade slippage and risk.
Prefer Owning Options To Limit Risk
- Buy options to limit downside because owning an option gives rights not obligations.
- Peter explains owning options caps your maximum loss to the premium paid and prevents unexpected assignments that sellers face.
Broker Auto Exercise Turned A Call Into A $12k Gain
- Peter recounts owning an in-the-money call at expiration that a broker auto-exercised, turning the option into 100 shares.
- He shows how assigned shares sold immediately at market produced a net profit of $12,200 in the SPY example.
