GTCAPITALWEALTH

     Cash Secured Puts can be placed on stocks with options spreads. This basically means that you can use any company that sells options for its stock for this strategy. The strategy is simple. However, this guide assumes that you have basic knowledge of stock and options transactions. If you would like to learn about stocks, you can read our quick guide to stocks here. If you would like to learn about options, you can read our quick guide to options here.

-Pick a company you think has a good long-term outlook.

-Determine what price you think the stock will not hit by the expiration (in this case one week)

-Sell Cash Backed Put

-Close put if desired or let expire

-Calculate Earnings 

-Repeat with same or another worth-while company

     Cash secured puts can be sold by selecting the put at the strike price you would like to sell. Instead of selecting BUY, select SELL. 

     Don't worry if it sounds strange if you don't have anything to sell. That actually is not the truth. You are initially selling your buying power. Since you have this buying power, you can sell this as a promise to buy something at a particular price in exchange for a premium to secure that price. Herein lies the value of holding assets. If you hold cash and have cash for a specific stock, you can make a promise to buy the stock at a specific price. The market creates the option order and someone else on the market purchases the contract.

  After it is sold to the market you can check your cash balance again in your balances tab. We will have an increased cash balance and the amount of the account will have gone up by the amount of the sale for the cash backed put.

When the week is over and the stock option is about to expire and The option is out of the money, the entire premium will post to your account and the out of the money options position will be closed by the broker.

there you have it you have made money on the time value of options and the fact that your stock won’t ever hit the price you sold the option at caused you to keep The entire options premium.

now if you chose an option that was essentially closer to the current price and your option expires in the money, this is where the specific company you picked comes into play. This is why we recommend choosing a company listed as a part of a major market index. The S&P 500, NASDAQ, and DOW JONES would be the main major indexes we refer to for company selection. 

Using all three of these indexes we can select a company to invest in that is from a pool of many companies selected by the index to represent a major market player in the American economy

Usually, companies with real revenue fair better in bad market conditions as well as make it to major market indices. These indexes are full of companies that have many years of data and revenues, making investments significantly clearer and less risky.