ok so dumb question… but why cant i sell naked puts on lets say TESLA at $185 with a .04 Delta and collect an easy $42 premium? if you could hypothetically pick big priced stocks and tell puts that will virtually never be filled and collect roughly $40-$45 a week/ if it were this simple and almost risk free wouldn’t everybody be doing this or am I missing something?
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No one will chime in…
And the reason why is because everyone who did what you’re thinking is still picking up shattered pieces of their life. Tesla could easily and I mean easily hit $150 per share in a single day. So you’re get next to no premium to lose everything. NVDA was at 330 a year ago. How’s that looking now.
You got $18,500 to buy the underlying if assigned?
I’m sure that would work very well 51 out of 52 weeks.
*”if it were this simple and almost risk free wouldn’t everybody be doing this”*
Yes they would. So if you ever think, “How come nobody else is doing this,” there’s probably a good reason why. The premium is a pittance compared to the potential losses.
There is no such thing as “low-risk options.”
You aren’t missing anything, this strategy is called running the wheel. If you keep the put far enough out of the money you never risk being assigned, your payout is just a lower percentage.
Just a strategy that requires a large amount of capital for decent returns. This is my plan for retirement. So that even if the market is flat, I can still grow my account.
consider yourself lucky…. there’s no “sure” money in Wall Street. Any naked options can potentially wipe you out.
do 5 dollar wide put spreads every week for a year and come back to report your P/L. for all of us
Just know that anything you think of someone else has thought of it 1,000+ times and the market will resolve it correctly.
In this case, you won’t actually be able to sell. You see that price but if you create a sell order it’ll never go through if truly nobody thinks it can be hit.