The Stock Market Crash 2020 - Day 42 | April 22, 2020 During today's video, I'm going to review a few naked put options I currently have in SPCE & NCLH.
Both of these are examples of positions using the strategy I've been trading as of late, selling put options.
I started a small account with around $25k and in around a month's time, I've grown it by over $10k. Since the beginning of the stock market crash, that kicked off at the end of February, the VIX has been consistently above 30 making the conditions ideal for this strategy.
For those who may not be sure what I'm referring to, the S&P Volatility Index or VIX is used by traders to gauge the amount of fear or uncertainty in the markets.
And as I noted above, with it still above 30 I've found that selling put options is working best in these market conditions.
Now it's important to understand that selling naked puts can be incredibly risky if you don't know what you're doing. To sell naked puts you need access to margin and most brokers require you have at least $25k in your account.
So if you're brand new to options, start with my on-demand beginner class "Options 101: A Beginners Guide To Options" available here on YouTube:
To keep myself out of trouble I've put together a 15 point checklist to enter one of these trades. There are a lot of things to consider. For example here's just a few things on my checklist:
- Does the stock/company have earnings coming up?
- Has the stock been in a sustained downtrend (fear of bankruptcy)?
- Am I willing to own the stock if I get assigned?
Anytime I'm selling puts, the trade must meet my very strict criteria or the trade is never placed.
Also in during this video we'll discuss a CRAZY trade my head trading coach, Mark placed today in LV (Limited Brands), that played out quite nicely.
Limited Brands was trying to sell Victoria's Secret and the deal fell through...this morning the stock was down nearly 20% and Mark spotted the opportunity to sell puts.
As the stock was crashing down this morning, the IV (and premium) spiked and Mark was able to sell the 6.00 put (strike) for .30 with the stock trading around 9.57.
For me the trade was a little too risky, but Mark is now the one laughing all the way to the bank. Right now, those puts he sold are trading at around only .05. Not bad for just one day
So to hear the full story and more on selling put options today, check out the video now.
Don't forget to subscribe to my channel, so you'll never miss a market update or one of my live "Coffee With Markus" sessions.
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