This is a very simple options trading technique that all options traders will learn when they first get started on options and it is “Cash Secured PUT“. In this article, I will share with you how I use Cash Secured PUT (CSP) to generate almost USD$10,000 in 3 trading days.
On 26 Nov 21 (Fri), when the market was selling down due to the fears of Omicron variant, I sold a Out(of)-The-Money (OTM) CSP on Tesla (Strike Price $1000, Expiration 31 Dec 21) and collected a premium of $5,250.
The following Monday, 29 Nov 21, the stock market rallied and Tesla gained about 5% in share price. I saw that the premium value for my CSP contract has dropped and so I closed the contract by buying the CSP contract for a premium of $3,650. Therefore, I earned a profit of $1,500 on one trading day. On the same day, I sold another Tesla PUT contract (Strike Price $1100, Expiration 31 Dec 21) and collected a premium of $7,200.
On the next day, 30 Nov 21 (Tues), Tesla’s share price increased by another 3% in the opening hours. I saw that the premium had dropped again and thus, I closed the contract yet again by buying the CSP contract for a premium of $5,723. By closing the contract, I earned a profit of $1,477 within a day.
Lastly, I sold another Tesla PUT contract (Strike Price $1100, Expiration 7 Jan 21) and collected a premium of $6,850.
So, in 3 trading days (26 Nov, 29 Nov and 30 Nov), I have earned a total of $9,827 by using the simplest options technique of selling Cash Secured PUT on a single stock (Tesla). This goes to show that you do not need to learn complicated options trading techniques like iron condor, iron butterfly or other complex credit/ debit spreads to earn money in options trading. All you need is to know the basics and pick the right stocks that can help to grow your wealth exponentially.
Trading Activity On 26 Nov 21: Profits, Loss & A Tesla PUT
Trading Activity On 29 Nov 21: Closing TSLA PUT For 1.5k Profits
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10 thoughts on “How I Made USD$9,827 In 3 Trading Days Using The Easiest Option Strategy”
Am I correct that you would need either $100K buying power in your account, or already hold 100 TSLA shares, before you can execute these trades?
Hi Maurice, yes you are right, to sell a Cash Secured PUT, you will need to have the cash available, just in case the contract gets exercised. Thus, you need to have 100k as collateral to execute the trade. If you are holding 100 TSLA shares, you can sell covered call against it. This article will give a more thorough explanation:
You are most welcome, Maurice 😉
or you could setup a put calendar spread which does not require large sums
Thanks for the suggestion. The reason of selling OTM PUT is because I am hedging against Tesla going sideways or even going lower. So if Tesla goes up, I keep my premium and collateral, if Tesla stay stagnated or go down by a little, I still have some leeway. Otherwise, I probably be selling Tesla LEAPS instead.
Hi Jason, I’d I’m not wrong by selling a put at $1100, you are agreeing to buy the shares at that strike. Does the contract get assigned (provided you don’t do anything) only if the stock price goes over the strike or is the other way ?
Hi Navin, yup, in a PUT contract, strike price is the price you agreed to pay if the share price do not go higher than that on expiry date. So if my strike price is 1.1k and Tesla closes at 1k. I will buy 100 shares of Tesla at $1.1k upon expiry of contract. U can read further here:
Hi Jason, how you close a sell put contract ?
Hi Tina, you can do so by buying the same PUT contract (same strike price and expiry date) to close it. This article may be useful to you: