Put Selling does not have to be a strategy of “hit and miss”, but actually a strategy based on sound investment fundamentals and technicals. Those technicals often assist me when Put Selling, in establishing put strikes that not only provide excellent put premiums but can also be used to determine the best put strikes for Put Selling to avoid assignment or the best put strike to sell to eventually be assigned shares but at a prime price which will afford an excellent return when covered calls are used to be exercised from assigned shares.
Put Selling Stocks Successfully Means…
Put Selling stocks successfully means deciding the type of investor you are. Either you are Put Selling with the goal of being assigned shares or with the goal of never owning shares.
Being assigned shares through Put Selling can entail further objectives such as selling covered calls to be exercised out, or building a position in a stock through continuing to sell more naked puts while also using covered calls to augment the total profit, but these are objectives. The goal is distinct. You either want shares or you don’t. Once you decide which side of the fence you are on, you can put together strategies to profit from while meeting your goal.
In my case I almost always engage in Put Selling against stocks I would own at the strikes I sell. I find that this gives me a lot of flexibility to manage the trade once it is established, whether by adjusting the put contracts if the stock falls too low, rolling the naked puts, buying them back and selling more or loss contracts and using all kinds of different rescue strategies while profiting throughout the trade. I find Put Selling against stocks I would own, easier than Put Selling against stocks I never want to own.
Put Selling Microsoft Stock – Jan 8 2013
I have watched Microsoft Stock over the past several trading days. It has had a hard time recapturing the momentum it had a couple of months earlier. Instead Microsoft Stock is now back pushing the range of the Lower Bollinger Band and looking like it wants to fall further. Let’s review the key aspects I have marked in the chart below.
Put Selling Microsoft Stock Technical Analysis Charts Jan 8 2013
Put Selling Microsoft Stock Chart – Key Aspects
A. Momentum is not bottoming out but continuing to decline signaling Microsoft Stock may fall further.
B. The Slow Stochastic is signaling a strong downward pressure exists on Microsoft Stock.
C. MACD has issued a sell signal just 1 trading session earlier.
D. The Ultimate Oscillator is negative and signaling more downside pressure is building.
E. The Fast Stochastic is nearing extremely oversold and may be set to bounce. However the signal is for more downside in the stock.
Interpretation Of Microsoft Stock Technical Indicators
The technical indicators are signaling that Microsoft stock could fall further this time than it did in the most recent pullback. There is growing pressure to the downside. If your goal is to never own shares you would watch for the signals to show a bottom is in place before entering the stock. Put Selling just now is not the prudent thing to do since the stock is continuing to slide.
If on the other hand you are like me and want shares eventually or certainly will accept them, then by all means engage in Put Selling for exceptional premiums since Microsoft stock is falling rapidly lower.
Put Selling strategies and Outlook
I always have strategies in place to cover every type of outcome in the trade. Therefore no matter what is thrown at me I know how I will react to it.
Today I sold the $26 puts for Feb and the $25 for March. I would be pleased to own shares at those prices and then sell covered calls to be exercised out of those shares. My Put Selling strategy may be different from yours. I have a longer-term plan in place which includes ………..
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