Selling (Writing) Naked Puts for Cash Flow and/or Discount Stock Buying!

Most people think selling naked puts is risky.....

Yet there is a way to do it that is safer than buying the stock outright. 

Don't use margin, and only do this with stocks you would have bought anyway and held for awhile, even if they went down.

Only use out of the money puts, or puts very slightly in the money.

This way, you either have the stock "put" to you at a net discount -- or the put expires worthless and you keep the money you received when you sold the put.

NB: Most brokers will not allow naked put selling in an IRA account, but it never hurts to ask.  Some may allow it, as long as you do not use margin.

I agree whoheartedly.  Selling naked puts has always been a "cash machine".  It's only recently that players with less than $1 mill in equity were allowed to do it.  

It seems to me that you can roll down the put almost to forever, and, let the stock be put to you at a tremendous discount.

For example aapl, getting it put to you at 120 is a lot better than buying it at 150, because you can always put a collar on it if you want, or just trade it b/c it's so cheap

"they" would have you believe that naked put selling is risky, when, in fact, it's probably the safest, most profitable thing you can do; especially compared to being long the stock, or covered call writing.  It's 1000 times better than covered call writing ...

 

 

I believe someone said that it wasn't permitted due to the theoretically unlimited downside risk.  Your best bet is to open up a regular account and fund it for your more riskier trades.

I posted in the blogs section but here is an interesting article evaluating the performance of CBOE Put Write index (PUT) - writing cash secured ATM puts on SPX. PUT beat the market with less volatility - http://www.cboe.com/micro/put/PUTIndexEnnisKnupp.pdf