Make Money without owning a stock | Cash Covered Put | Beginner #Options #robinhood

Broker I use to trade (Get 1 free stock): https://join.robinhood.com/samuelk1695

Charts I use: https://www.tdameritrade.com/tools-and-platforms/thinkorswim.page

Other brokers I use & recommend:

M1Finance (get $10 free): https://m1.finance/eHlo6xrwxuDS

Webull (get 1 free stock): https://act.webull.com/e/2n3Y46ZpiHt7/h65/

In this video I will describe an options #trading strategy that will allow a #stock #market #investor to make money without owning a #stock called the #Cash #Covered #Put.

Welcome back to the SK investing show. My name is Sam and today I am going to be talking about put options. 

Disclaimer I am not a financial advisor and this video should not be taken as financial advice. Everything in this video if for entertainment purposes only. 

Before we get into #CashCoveredPuts lets start out with some #put #option #basics:

If you already understand Put options and would like to skip ahead to cash covered puts then you can skip ahead to this time here:

#Put #Options

If you remember in the last video talking about #Call #options and #Covered #Calls, #put #options are in simple terms the opposite of call options. 

Put options are a bearish strategy for when you think the stock or the market is going to go down. Kind of like a bet against a stock. 

There are 3 parts to an #options #contract:

#Strike #Price

#Premium

Expiration date

More or less complicated than Call Options? Thats for you to decide. Let me know in the comments. 

Let’s say for example we think #Apple’s stock price is going to go down this week. So we can look at #Apple’s option chain and select to BUY 1 Put option expiring this friday. By Purchasing this put option we are given the right to sell 100 shares of #Apple #stock at the strike price we selected, on or before this friday...IF #Apple’s price falls below the strike price. If #Apple’s price closes on Friday above the strike price then our contract expires worthless because it makes more sense for us to sell shares at market price since we would get more for each share.

In walks #Theta #Gang:

#ThetaGang is a group of options trading techniques in which the trader sells premium and profits off of #THETA Decay aka time decay of the options contract

The options strategy I want to talk about in this video is called the “Cash Covered Put” also known as the “Cash Secured Put”

Cash Covered Put:

Just like a typical Put option you have 3 parts to it: Strike Price, Premium, and Expiration Date. The key part of a Cash Covered Put is having enough money to buy 100 shares. Because by selling a put you are agreeing to a contract to buy the shares at the strike price and in return you get paid premium for this obligation. Having Cash available is key here because the whole idea behind this is if the price falls below the agreed upon strike price then you will be “assigned” shares aka forced to buy the shares at the agreed upon strike price. If you don’t have the full cash amount available then you will be taking on those shares in margin, which I don’t recommend unless you are an advanced investor. Just like margin can amplify gains it can amplify losses.