Sales Exponential

Article by Shaun

There are many different option selling techniques which you can use in order to make a decent return off of your investments. These techniques are.

1. Selling Naked Puts

When you sell a naked put you receive money up front but are risking buying the stock. For instance say you sell a $ 30 put, the stock drops to $ 28 you are obligated to buy the stock at $ 30. This means that you must have money in your account to buy the stock and be willing to hold onto the equity for a little while.

Needless to say not everyone likes this strategy but it can bring in some extra cash flow.

2. Bull Put Spread

Like I said earlier selling naked puts is not for everyone. Many traders prefer the bull put spread over the last strategy. In this spread you not only sell a put, but you also buy another put at a lower strike price.

For instance say you not only sold the $ 30 put, but you also bought the $ 25 put. You use some of your profits on buying the second put, but the most you can lose now is $ 5, rather than $ 30. You also do not need as much cash to place a bull put spread as you would to sell a put.

3. Covered Calls

Another strategy you can do is to sell a covered call. This involves you owning a stock and selling someone else the right to buy it from you. For instance if you own 100 shares of XYZ stock and it is trading at $ 50 you can sell the $ 50 call, but in doing so you are obligated to sell your stock at $ 50 in the near future should the buyer of that option choose to exercise their right.

For more on selling puts and covered calls visit http://www.stocks-simplified.com/selling_puts.html

For more on pull put spreads visit http://www.stocks-simplified.com/bull_put_spread_stocks.html