How options trading pays
Early part of the year 2024 made a calculated risk to Sell Put (Short Put aka naked short) $Tesla(TSLA.US$ $Apple(AAPL.US$ .
As its LEAP (a long duration), there were some ups and downs which even have margin calls scare.
Time for an important message.
Disclaimer Options are not for everyone. If you are new and want to learn, read up more and understand the risks 1st. Stay to the buy side of Calls and Puts. Selling options especially naked are High in risk and losses are substantial.
⏩ Fast Forward a few months…
Tesla Shorts is still earning good 73% around USD7,600 of happy profits ![]()
.
As this post is to share my most exciting trade. Whats exciting for me is the ![]()
cold hard cash thats sexy. % are not as exciting for me. ![]()
Apple shorts. have not ended the position but the money is set aside for my 1st 💻 . Titled Buy Apple Free MacBook ![]()
Sounds exciting when strategy works out but always plan an exit strategy if things go south.
Recently On 7/24: Sold Put $NVIDIA(NVDA.US$ to take the premium to Buy Call $Tesla(TSLA.US$ . One example of how you don’t need to pay for your options when you buy options. But you take on a risk of selling the option to take the initial premiums. (What do you think of this method?)
I wish all causal investors like me an existing journey to making their money work harder. ![]()
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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2024H1 Moomoo Alchemist
Investing casually and learning as I go.
My journey to double my 💰at the min.
While sharing journey w kindred souls.
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151334572 : Turns out you're the short guy they talk about every day
CasualInvestor OP 151334572 : You need to understand what does shorting a stock means. As I did the opposite.
Technically it’s borrowing a security whose price you think is going to fall and then selling it on the open market.
I did the opposite as I’m hopping for the price to rise so that I can earn from the premium. Meaning I sold a put and kept the premium from the contract and plan to hold it till it expires.
CasualInvestor OP 151334572 : ChatGPT response to make it clearer for you.
When you sell a naked put, you are not shorting a stock directly. Instead, you are selling the right to someone else to sell you a stock at a predetermined price (the strike price) by a certain date (the expiration date). Here's how it works:
1. **Selling a Naked Put:** When you sell a naked put option, you collect a premium from the buyer. You are obligating yourself to buy the underlying stock at the strike price if the buyer chooses to exercise the option.
2. **Potential Obligation:** If the stock price falls below the strike price, the buyer of the put option will likely exercise their right to sell the stock to you at the strike price. This means you would have to buy the stock at the strike price, potentially at a higher price than the current market price, leading to a loss.
3. **No Initial Stock Position:** When you sell a naked put, you do not own the underlying stock initially, nor are you borrowing it to sell (as in short selling). You are simply selling the option, not the stock itself.
In summary, selling a naked put involves taking on the obligation to buy the stock if the option is exercised, whereas shorting a stock involves borrowing shares to sell them with the expectation of buying them back at a lower price.
ZnWC : Wish you good luck. Hope that it won't go down below 150 before
CasualInvestor OP 151334572 : Hope it explains so you won’t anyhow push your unhappiness to others.
Thy GoD : nice Tesla shorts
CasualInvestor OP ZnWC : I can either profit take before that or buy the stock as it’s so cheap to me then.![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
Key2Largesses : impressive! very interested but tend to feel confused about adding more layers, selling naked put is like 3 more layers than just buying the stock directly…is it more lucrative if price goes up?
CasualInvestor OP Key2Largesses : I’ve shared on a previous post (link below) how taking premium and reinvesting it can work while the options expire OTM. You can have a look but the short answer is yes.![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
2024 Good or can be Better?
CasualInvestor OP Key2Largesses : A simple example:![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
Typically if you don’t mind owning the stock or are going to buy a stock now at xxx. Use the xxx as your strike price and buy the stock cheaper when it expires. (Option ITM). If the put option is OTM, you gain the whole premium as your profits.
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