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  • How to Make Short Puts Worth Your While - Hypothetically  [View article]
    An extension of selling puts would be to leg into a bear put spread.

    Using the example in the article:

    Sell naked 75 puts at a point where you think AAPL is likely to rally.

    After AAPL rallies, you can the buy 85 puts for a price equal or less than what you collected on the 75 put sale. This establishes a bear put spread between 80 and 75 for a small profit (or zero cost).

    If AAPL plunges below 75 you make money on the spread, if it stays above 80 you keep the differential (or lose nothing).

    It's not a trade you can count on making, but if the situation presents itself you can lock in a profit with possibility for more if the price moves back down again.
    Nov 25 16:03 pm |Rating: 0 0
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