Welcome to the page that discusses Put Options

I want to start this blog by telling you that I have no 1-800 number, I am not trying to sell you any newsletter with the next great stock idea. I am not inviting you to come to my house and view a cleaning agent. I will not try to sell you plastic bowls or any other ‘can’t miss’ ideas. I do not have any life changing secrets and I cannot promise you a flat stomach.

I am going to share with you my daily option moves and the reasons behind them. My way of trading options are of course not the only way to utilize Put Options. This is a way that I have found to be simple and easy and not as complicated as some make this business. My hope is that you can develop a steady stream of income and continue to enjoy your life.

Sunday, October 2, 2011

October is here

Hi all, Well Sept is normally worst month of the year. Most fear Oct but it is September over the years that bites the hardest.
I have lots of AAPL, some puts and a lot of calendar spreads with calls. Assuming the world does not collapse, I am expecting good things as AAPL approaches earnings. Lots of news coming from different companies during the next few weeks, so watch your step. I am not as comfortable as some or you are with the index positions. I want to find a one-off item I can look up and feel good about. To many iffy ones in the spx etc.
What are you guys playing out there? Any good puts or spreads?


jamesaliano said...

Glad your back Jerry. I also have AAPL spreads, I had an AAPL 370/360 put spread for sep/30 but only 4 contracts. I also like CAT diag spreads I have 2 JAN12 80 calls I have been selling weeklys on them , I am hoping for an up market to sell calls this week but I just checked the Asia futures they were down so we may see more selling tomorrow. I have a couple of Oct puts that I am underwater on so I am hoping for a pop in the market,as for trading SPX or other indexes i think the risk reward is way out of whack presently,the big boys are moving them too much for little guys like me. Hopefully Oct will be kinder to us than Sept. was.

DMK said...

Jerry - do you see any weekly's lower that $350's for AAPL? Seems a little too risky.

Pascal said...

Hello All,

A good company to sell puts on is Linde AG. Take a look!

Fulgore said...

@Jerry , James , AAPL People,

AAPL to release Iphone 5 on Thursday this week. The hype will happen early week, but the release won't move it much on Thursday I assume.

Look out for the reports of this and that wrong about the phone as this does happen on new releases all the time. They will come out with an update and fix all the issues, but the stock is affected sometimes.
I would assume it will not move AAPL down much, if anything it will be steady or go up, depending on what the market does this week.

I will look to open something WED or THURS again this week. I may open up WED on AAPL if the pickings look good.

If I go with SPX I will wait till THURS, as the movment is 20-30 points over night sometimes.


ihaveoptions said...

Can't get away from the AAPL. 350/355 put spread looks very attractive this am expiring Fri. Also have a couple of naked calls Jan 12 just for fun should the stock take off after tomorrows product announcement. Am I crazy or what? Most AAPL in calendars with calls.

Selling Put Options said...

DMK, no, 350 is the lowest offered at this time.
Fulgore, I agree regarding aapl. I will wait until Wednesday to open the final ones for this week. For those in a hurry, the 350/355 look quite safe but all you need to get is .06 between them for a net of 1%in just days so I would recommend waiting for a day or two.

rhmoptions said...

Well lets try for 16 weeks in a row this week. I picked up 975/950 SPX weekly for 0.20. (High premium so i will watch very closely). almost 14% cushion so that "should" be ok.

Good luck everyone


DMK said...

What about Bidu 85/80 puts (weeklies)?

DMK said...

@Fulgore, the announcement is actually tomorrow but the actual phone release is not known yet. There is some speculation it can be mid october to early Nov.

rg said...

Just want to make sure I'm really understanding the concept here for weekly spreads

AAPL 355 has a $2.67 bid and 350 has a $2.00 ask. This trade would net $67 per contract minus fees assuming AAPL does not drop below 355 by Friday. Maintenance would be $500 per contract so this is a 13.4% return but we're only looking for a 1% return because higher indicates danger so the smarter / safer play is to wait a couple of days when the premium profit drops to say $5 per contract because at this point the chances of you losing are tiny.

Am I missing anything? Are we still expected to take the worse end of each trade (Bid on sell and Ask on buy) like the naked puts?



Pascal said...

Apple wil announce the iPhone 5 on 5 october.

Fulgore said...

@All, ok my information must have been incorrect for the I5. There is some information that has been released today.

The market is down big time yesterday and today. This is why I am waiting until WED or THURS to open anything. I am looking at the call side possibly, but won't know for sure until later.

The market will have a big kick up soon. Not sure when but soon. And then after that huge bear move I suspect. We will see how it goes

Keep safe all.

Pascal said...

@Fulgore yep no iphone 5 just a 4s (updated version). Thats not good for the apple stock.Everybody around me is going short on apple. The whole market wil go down some more i think. Will see............ Good luck all..........

DMK said...

WOW, AAPL options went crazy today. The $355 went from $.71 to $6.20 within a few hours! And then back down within an hour!! I got pretty hurt on the trade, closed it out with a nice loss. I guess I could have come back at the end of the day and be up! WTF! Being new to this, was I trying to do the spread to early?

ihaveoptions said...

Yes DMK, we went too early. Jerry warned us but live. trade and learn. I got out at about the bottom, just couldn't stand the risk of a total wipeout so lost some of my 3 month gains and down to about plus 15%. The new phone itself is awesome, voice recognition is almost sci fi stuff and I think it will generate sales. Hopefully, my other AAPL positions will recover and prosper on earnings. I'm pretty new too but see the possibilities,

rg said...

This one breaks many of the rules so much so that it shouldn't even be in the radar if you are following Jerry's concepts but am I understanding this correctly?

Citigroup is trading at $24.39 at close

You could sell a $23 weekly put for $1.07 and buy a $22 for $0.22. So you make $85 per contract with $100 maintenance so an 85% ROI in 3 days. If this trade turns south 100% of the time you only lose $15/option, right?

I guess I'm missing something because this is basically free money otherwise


Phil said...

The $23 put is $.40 bid.

rg said...

I was using finance.yahoo.com and it was showing a $1.07 bid up until about an hour ago - now it is at $0.41. Maybe it was showing the previous days closing bid/ask.

Hannah said...
This comment has been removed by the author.
DMK said...

Jerry, et al.,

Given my "foobar" with AAPL today, I was thinking. Do you set stops on spreads? I know Jerry has rules on doubling for naked puts. For spreads, how can you cover/sell both legs?

Selling Put Options said...

Hi DMK, regarding setting stops on spreads. For me, not usually. the bought lower strike is sort of a 'stop'. that strike prevents the stock from ever just running away from you. But i do still put in mental stops that is just 'gut' feeling. I am getting that now with my AAPL spread at the 360/365 AAPL disappointed some by not calling the new phone I-5. They also did this with the I-3 phone. But earns are keeping me hanging around and the new PAD coming? But i am watching it close and wondering...Hmm.

DMK said...

@Jerry, thanks for the help. I think the 4S was a huge disappointment.

What do you think of AMZN 190/185 spread? Weekly.

rhmoptions said...

So far so good on my 975/950 spx spread this week. Did 20 contracts this time for $400 (50k maintenance ). I doubt the market will hit my sold put. Just keep picking up crumbs.


Selling Put Options said...

Hi DMK, I would feel ok to go out to the 195/200. Today there is 2% ROI, but on the open tomorrow the ROI should drop unless AMZN is down in the AM. If up or sideways I would feel good with 15 pt of cush with two days left.
For you other AAPL fans, finally a little relief today. I have been holding on to the 360/365 put spread and it was underwater for a while. Again referring to the 'stops' question. I am comfty holding as the new weekly’s come on tomorrow if I have to roll down some.
For those thinking of getting their feet wet in calendar spreads. You might look at MSFT.
The stock is pretty slow moving so no big ups and downs.
You can buy the Jan 2013 for 3.70
You can sell this week’s calls at the 26 strike with two days left for .20 This makes 5% ROI in two days. And you can do that sort of thing for the next 60+ weeks. Week after week. Or you could go out to the 10/22 calls and get 19% for 2 1/2 weeks. Pretty hard to beat. Heck, go out to the Nov and get over 30% in a month and a half?
Many ways to skin an option.

Selling Put Options said...

Hmm, Steve Jobs just died. Interesting tomorrow. MSFT looks better and better.

KauaiTrader said...

Jerry, regarding your AAPL 360/365 position. I am wondering about your rule to close the position when the premium doubles.

I've been playing your strategy for a couple of months, and in almost every case the premium has more than doubled while I held it. I did not close the position, as in most cases the actual stock price never got close to my strike price. I have also not gotten burned (yet) by doing this.

It sounds like you do the same thing, at least in this crazy up and down market, and I am just wondering if there is another rule of thumb you use or if you just go with your gut?



AndyB said...


In your post re: MSFT
I don't understand what you mean by "Or you could go out to the 10/22 calls and get 19% for 2 1/2 weeks. "

Andy B

Selling Put Options said...

Mike, correct, with spreads I don't use the 'double' rule, As I have some protection with the lower 'bought' strike. But as I said above, it for me is more of a gut and when I do I get the most uncomfortable feeling. As i mentioned in the book, with a naked put you need rules to know when to pull the trigger or your losses can get bigger and bigger and then you end up holding on hoping it come back. Before you knowit you have lost a million or more...I know! But with aspread your losses are limited to the bottom strik you have bought. Tha tis the reason for no 'stop' rules.
Andy, I was referring to which expiration date you chose. If you bought a call in the future, such as the Jan 2013, 25strike for 3.70. You can then sell what is basically a covered call against those calls. You can sell this weeks, next weeks or the Oct 22 expiration or Nov or Dec or ?? The bought call acts just like owning the stock with the exception that at some point they will expire and you make money on them also or they just expire.
But the actual numbers at the close today are as follows..
Buy the Jan 2013, 25 strike for 3.70
Sell the calls for this week at the 26 strike for .20 -- .20 div by 3.70 = 5.4% ROI for week after week for around 66 weeks. For fun numbers but not unreasonable.. Starting with 10,000. By Jan of 2013 your account could be worth over 80,000. You have to make a plan and not jump around to much unless necessary.
but it is possible and many are doing it..
Good trading, Jerry

DMK said...

Jerry - What will happen if the stock goes above the strike price? Will you go short the stock? Also - why do this with calls and not puts?

Selling Put Options said...

DMK, The perfect ending for each option period you choose, would be for the stock to end up just below the strike you have sold. Ex; you sold the Oct 7th 26- in a perfect world the stock would end up 25.95 But if the stock goes up above the strike you have sold, then on Friday (usually) near the close (so that most of the time factor has evaporated) you buy these back and sell the next period 26 again. You would normally do this with a spread trade; EX;
Buy to close 50 of the 10/7/2011 26 for a debit of .10
Sell to open 50 of the 10/14/2011 26 for a credit of .30 - Net credit of .20
That is one reason a stock that doesn’t move much is ideal. Just let it expire and then sell the next period on Monday or whenever.
You can do this with puts also.

ihaveoptions said...

So with AAPL jumping all over the place, the cal spread doesn't work so well?

Fulgore said...

@All, Took an SPX put spread - 1070/1065 for .10 today.

80 points for 1.5 days

DMK said...

@Jerry - Thanks for the explanation... That makes perfect sense. Just curious, any reason to go with puts vs. calls? Is it just your bias? So if you think MSFT will go down you do calls, if you think it will go up you do puts?

Selling Put Options said...

fulgore, that looks might tempting and tasty..
DMK, my bias is towards calls for the longer plays. I find it easier to pick a stock that should be good in 15 months, than trying to guess how bad a stock might be in 15 months. Take RIMM, Jeeze, who knows. A takeover canidate? has it hit bottom? Then look at AAPL, where will it be in 15 months? probably up.
Ihaveoptions; I try to not pay to much attention to the daily swings of AAPL; as stated above, i think that in 15 months it will probably be up. So i am looking at the monthly imcome, as there is always plenty of 'time' in the aapl options.

rhmoptions said...

Well heading into a long weekend here in Canada, I will declare victory this week with my 975/950 spx weekly spread I sold for 0.20 Monday. I doubt a drop of 190 pts in one day will happen :). 16 weeks in a row. Look to do it again Monday.


ihaveoptions said...

Jerry....any other stocks you like for the calendar spreads besides the two ie AAPL and MSFT? Just rolled my first week on the MSFT Oct 7, Jan 13 position. Got .26 for the second week so far so good. Like the less volatile nature of MSFT and it sure did better than my AAPL this week. Still holding out great hope for AAPL earnings. Bad week with the blotched iPhone announcement and then Steve Jobs death.

jbl said...

Question about your MSFT calendar spread. The short call was in the money. Did you roll to next week at the same strike price? Or would it have been better to roll to November monthly at the 27 strike? If stock had dropped instead to $24 what strike would you sell for next week. A January 2013 25 long call with an October weekly short call at 25 or would you go to November monthly at 26 to get adequate premium?

ihaveoptions said...

I bot the Jan 19 '13 25.00 call and sold the Oct 7 26.00. On Fri I rolled the short leg to the Oct 14 '11 using the same strike. You can go to the monthly and it might work out more net, not sure. I just wanted to see it work on the weeklys first. If you sell below the strike of the long, you incur maintenance. If the stock drops too far I suspect that you can't find an attractive premium at a strike above the long. In that case, I guess you wait., tho I did sell below my long strike once on my AAPL cal spread and it worked out. Definitely a work in progress for me, trying to figure it out. I think Jerry says that the monthly often works out to more premium that 4 weeklys.

Nicky said...

Can someone post their real numbers on the MSFT spread, I'm interested in this, It would be a nice way to supplement my income, how many contracts are you trading? whats your weekly income from this? Thanks.

Raging Bull Winkle said...
This comment has been removed by the author.
Raging Bull Winkle said...
This comment has been removed by the author.
Raging Bull Winkle said...

Hi all doing my part to spread the word trying to help grow a great product.
If any of you use any of the brokers listed below E-Mail me
there is a new modal you can use to cut your commissions in half it's a new financial show that’s FREE but if you join it’s 45 bucks a year and you can then buy vouchers for 350.00 that you can use for 700.00 in brokerage fees! Membership also gets you some pretty good trade ideas. You also get 25 bucks for a referral so get two a year and you have your 45 bucks back. Like I said it's FREE so you can check it out before you join.
So help me out e-mail me so I can get a couple referrals I know you will join this it is a total no brainier. I just need to give them your name and E-mail and IF you become a member I get 25 Bucks.
Then you go out and sell the program to a few others and the program grows we all become better traders riches and happiness soon follows.
I love a good plan :+)

Trade Monster
Options Xpress
Think or Swim
Trade king
Option House
3t Futures

Raging Bull Winkle said...

From the shows trade Idea's last week was sell Nov. 8 puts on AA .75 I think it closed .22 Friday.

Also there was lot of talk about shorting bonds. I did a back ratio on TLT

my take from the show in modest size positions is about 500 for the week.

If you a trading junkie your going to love this show. It runs in HD 7AM-11AM CST with replays available as soon as the show is over.

ihaveoptions said...
This comment has been removed by the author.
ihaveoptions said...
This comment has been removed by the author.
ihaveoptions said...

10/06/11 STO -25MSFT 10/07/11 26 Call .20 $496
10/06/11 BTO 25MSFT 1/19/13 25 Call 3.75 -9263
10/07/11 BTC 25MSFT 10/07/11 26 Call .48 -1213
10/07/11 STO -25MSFT 10/14/11 26 Call .73 1821
1st week .20 X 2500= 496 (reduced for comish
2nd week .25 X 2500=$607
average approx 5.5% per week
Nibbling away at the basis, we'll see if this can continue.

Nicky said...

Thanks a lot, I think I'll give this a try, since you own the long options, the calls sold are not considered naked, right? I don't have approval for selling naked calls.

Selling Put Options said...

Nicky, I also somewhat mimic I- have-options, trades. I am rotating more and more into MSFT

As I mentioned before i like buying the jan 2013 25 for around 4 and selling the Oct 22 @ the 27 strike. A nine day trade that pays .52 so that is around 12 % for the 9 day trade. Someone asked what I do if the trade is in-the-money. I just roll into the next week at the same strike. If the stock keeps going up, eventually I will roll up one strike and I might have to jump up to a two week advance. One beauty of MSFT is the slow moving part. With aapl the dang stock jumps so much that it can fly by your sold strike a lot. (Both up and down) I am still with around 100 options on AAPL so today was big. With MSFT i am trading around 100 of them also. At this time it is the only two positions I have. With AAPL it is at several different strikes.
There is plenty of money to be made out there with these two positions.
Good luck all

Nicky said...

Hey Jer, $5,000 for a two week trade? Wow, I wish I could pull off trades like that, I could quit my miserable job.

Selling Put Options said...

Nicky, you will. It just takes a little time and then it starts growing faster and faster. I opened 50 more of the MSFT Jan 2013 at the 25 strike and sold the 10-22 27 strike. I used the 10/22 as it paid a little over double of what the 10/15 sold for. That is a tad over 12% for the nine day trade.
Someone asked is a spread considered naked. No. That is another benefit of spreads. A trader just starting out can trade spreads with a lower clearance for options. Not sure if they can be done in an IRA. Anyone know about that? Also the maintenance doesn’t change as the stock moves around.

Hannah said...

Gary, hmm that is some program to look into. I have to take a look at how many trades approx I take a year, may be not that many. I paid $8 per transaction with TDA. It sucks but TOS plateform and services make it up.

How is everybody doing?

I have been exploring how debit spread did with AAPL, PCLN..A $30 increase in aapl increases the debit spread by 80 cents 385/390. A call will earn you at least $16+ or 20X more.

Sold bidu naked put 95, 100 last week and yesterday. Today 365/360 credit spread aapl for 10 cents. Almost 4 days left.

Best to you all in irrational markets.

Nicky said...

Hey Jer, how would you do the MSFT spread using puts instead? I think MSFT is headed higher, The new Nokia Windows phone is coming out, Windows 8 is coming, Facebook IPO is coming, MSFT owns 3%, earnings due on the 20th.

Raging Bull Winkle said...

Hannan, you can do any amount you want UP TO 700.00 on TOS - E-mail me today was a good show you will enjoy it.

Nicky said...

I guess you benefit if MSFT goes up anyway since you own the calls, as far as the initial order goes did you do it as a spread order, or two separate transactions? buy the long calls first, then sell then calls.


rhmoptions said...


Well 16 weeks in a row on SPX put spreads with an averegae 0.75% per week. So far so good and thru some rough markets to say the least. I am now experimenting with ICs with again huge cushion.This does increase the probability somewhat of a bad trade but allows to squeak out some more premium (at a large cushion) with the same maintenance.

This week:
1055/1030 PUTS
1265/1275 CALLs

Assumes market will no swing 9% either way in 4.5 days (afternoon Monday).

Lets see


DMK said...

@RH - what platform do you use to trade the SPX? is it futures? On IB it seems like you can't trade them (or at least I don't know how)

Raging Bull Winkle said...

TLT selling a call spread Oct. 120/123 .35 credit

I'm Long Jan 105 puts so this helps cover the cost.

No one interested in the show? They announced today that starting in Dec. there will be a PM market wrap up show 45Min. before the close every day, this one will be members only with the AM show remaining free.

Ed said...

Hey RBW,
I've been crazy busy recently but I'm interested in a look see. What are the details?


Raging Bull Winkle said...

Hey Ed
Send me an e-mail and I will give you the link.

Jerry did you look yet? What do you think


Pascal said...

Hello all,

Just opent the following:

BTO MSFT +25 call 25 jan 2013
STO MSFT -25 call 27 oct 22 2011

Here we go!!!!!!!

Nicky said...

Good luck, did you do it as one transaction or two separate ones?
I had my order to buy the 2013s for $4.05, did not go through.

rhmoptions said...


I use Option Express, these are SPX options not futures


ihaveoptions said...

I'm doing cal spreads in an IRA account at TK, no problem. Overall, have 6 AAPLs and 50 MSFTs, so hope it keeps working!

Pascal said...


i did it in two separate ones, first BTO then STO.

i got the 2013 call for $4.10

DMK said...

For the MSFT call spread idea, what happens *if* MSFT gets bought out at say $50 while you're holding short the $27 puts while being long the $25 2013 calls?

Selling Put Options said...

Hi all, it is getting to be a long thread. Later tonight I will start a new one. Never to
change the direction but just to shorten.
Pascal; I have lots of the same MSFT. But i always open them in a spread. Usually on the high side of the middle. One advantage is it allows you to do more positions. EX; If you bought the 2013 25 strike for 4.10 and you had an account of 10,000. You could only do 24 of them. But in a spread assuming you received .25 you would have a debit of 3.85 You can now do 25 of them. That alone pays your commission. To do them separate is called ‘legging’ in. sometimes it works and sometimes it hurts. Same with legging out.
I received an email from a fiewer that is going to do naked put with NFLX. With NFLX trading around 108 you can sell the 85 for a 2+% ROI. probably a good trade. NFLX is a spooky stock but 3 days and 25 pts?
Good comments all.

Garrett said...

Hi Jerry!

Garrett here! Just wanted to introduce myself to the community and let them know that I was the one who emailed you regarding the NFLX trade. It went well and I wanted to thank you for taking the time to answer my questions as a newbie to the Options Market.

On my quest to find my next trade!

To Your Wealth!


Garrett said...


I've been getting a better grip on your rule for open interest and the "100 Open Interest Rule"

Do you have a general rule regarding how many positions you would take if the "Open Interest" is only 100?

For example, if the "Open Interest" is 100, would you keep your positions to just 10% or 10 Contracts at that Strike Price?

What's a good % to go Open a position based upon the amount of Open Interest?

Do you ever consider volume when looking at Open Interest?

Thanks Jerry!