Hey Traders! This week's video is about how selling naked puts is risky, and can sometimes blow up your account if you are not careful about trade management.
There are a ton of videos that talk about how to sell naked puts for income, how to sell naked puts and make thousands of dollars, how to become a millionaire selling naked puts! What none of those videos discuss is the margin maintenance requirement for holding naked puts in your account. This video touches on the dangers of selling naked puts, and how you can protect yourself if the market or your stock take a nose dive past your naked put position.
In this video, I talk about initial margin requirements to open a naked put, the margin maintenance requirements to hold the put option open in an out-of-the-money position and an in-the-money-position, what happens when you get a margin call, and stocks you should not sell naked puts on if you have a smaller sized brokerage account.
Don't get me wrong, selling naked puts is a lot of fun, and you can make money selling naked puts, but the point of this video is to stress and emphasize trade management so you don't get burned in the market.
Here is a link to the CBOE Margin Manual: https://www.cboe.com/learncenter/pdf/margin2-00.pdf
Make sure to check your broker's margin requirements before opening a trade, and make sure you keep enough capital reserves for buying power in case a trade or the market turn against you.
*** At 13:07 I referenced selling naked calls twice. This was a mistake. I should have said naked puts.
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How to open a call debit spread: https://youtu.be/OlKerQtsD0c
How to sell puts in BAC: https://youtu.be/vkZ_IpbfIKw
How to sell puts in SPY: https://youtu.be/_k1A7YXdCpU
How to sell puts in TWTR: https://youtu.be/4BHh5WpnvKI
What are stock options?: https://youtu.be/CLXhACEPR80
What is volatility crush?: https://youtu.be/_wHSJaxNJng
How to get started with options trading: https://youtu.be/LTdDhXIlhsU
This video is for educational and entertainment purposes only, and nothing I say in this video should be construed as financial advice or a recommendation by me to buy or sell any sort of security of investment, or open an account with any specific brokerage firm.
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