Naked Puts

[Crazy ayzo]

I have a newbie question...

My goal is to continually populate my LONG positions by waiting for dips in highly traded stocks like google, Facebook, Tesla, HSBC, etc.

Since I'm willing/waiting for a price drop to get into a volatile stock... rather than just placing a simple limit order and getting the stock at the price I want if it goes down;

* Would it be more profitable to either

  ** Sell a Naked Put at my desired strike price (that way I get the sale price of the put in addition to getting the stock at the price I wanted)j

  ** Sell a naked put at my desired strike price + the value of the put; thereby increasing my chances of getting the stock I want at the same net cost.

 

Edited September 14, 2018 by Crazy ayzo

[Kim]

It definitely could be a good strategy, but the key is position sizing. In other words, don't write more puts than the amount of stock you are willing to own. More reading:

• Selling Naked Put Options
• The Naked Put, A Low-Risk Strategy