Maximizing Profits: Mastering the Sell Puts Option Strategy for Successful Investing. Detail breakdown of Ray kor kor's strategy. Let's learn together!

Introduction:

Investing in the stock market can be a daunting task, but fear not! We have a strategy that can help you generate income. Now, let's dive into the sell puts option strategy and explore how to select the perfect strike price for maximum profit potential.

Understanding the Sell Puts Option Strategy:

The sell puts option strategy involves selling put options on stocks that you wouldn't mind owning. By doing so, you are essentially betting that the stock price will remain above a specific price (known as the strike price) until the option expires.

Step 1: Select Promising Stocks:

Begin by choosing stocks that align with your investment goals and risk tolerance. Conduct thorough research, analyze the company's fundamentals, and identify stocks with long-term potential. Make informed decisions based on your investment objectives.

Step 2: Set the Strike Price:

Setting the strike price is a critical aspect of the sell puts option strategy. The strike price determines the level at which you are willing to buy the stock if the option is exercised. When selecting the strike price, consider the following factors:

a) Desired Entry Point: Determine the price at which you would be comfortable owning the stock. This should align with your evaluation of the stock's value and potential for future growth. For example, if you believe Nvidia is going to worth $500 per share and would be a good investment, you might set the strike price below the current share price at $400, giving you a discount on the potential purchase. The current strike price of $400 for options expiring in month of July 21st is currently trading at around $10.50 x 100 = $1050 premium received upfront. (This is just illustration not actual advice)

b) Premium vs. Risk: A higher strike price will yield a larger premium upfront, but it also increases the likelihood of the option being exercised. Balancing the premium received and the risk of buying the stock is essential. For instance, if you set the strike price further from the current market price, you might receive a smaller premium, but the chances of the option being exercised are lower. Example, Nvidia is now trading at $426, setting the strike price at $350 will earn less premium compared to a stike price at $400, but it is less likely for the current stock price to fall to $350 than say $400. Which is also why you receive more premium.

Step 3: Execute the Strategy:

Once you have identified your target stock and set the strike price, it's time to execute the sell puts option strategy. Sell the put options and collect the premium upfront, which serves as your immediate profit. By doing so, you are not only generating income but also positioning yourself to potentially acquire the stock at a desirable price.

Step 4: Expiration Date:

Each put option has an expiration date, which is the date by which the stock price should ideally remain above the strike price. If the stock price stays above the strike price, you keep the premium received initially. However, if the stock price falls below the strike price, you may be obligated to buy the stock at the strike price. Be prepared for this potential outcome.

Step 5: Evaluate and Repeat:

After the options expire, evaluate your performance. If the stock price remained above the strike price. Congrats! You just pocketted the $1050 premium. (see our illustration mentioned above) You can repeat the strategy by selling more put options to generate additional income. If you ended up acquiring the stock, reassess whether it aligns with your long-term investment objectives.

Conclusion:

The sell puts option strategy can be a powerful tool for generating income and acquiring stocks at favorable prices. By carefully selecting the strike price based on desired entry points, balancing premium and risk, and considering technical analysis, you can increase your chances of success. However, remember that investing in the stock market involves risks. Do your own research carefully before carrying out any of these strategies.