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Market Measures

Being Put Stock

| Apr 3, 2018
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Market Measures

Being Put Stock

Apr 3, 2018

Buying stock can be boring. Are we supposed to just buy some shares of McDonald’s (MCD) or Disney (DIS) or Apple (AAPL), check it every once in a while, and hope it goes up?! No way! tastylive brings you the short put today in all its glory. Selling puts is a dynamic equivalent to buying shares of stock, with the amount of the trader’s long bias depending on the positioning of the strike and amount of deltas.

Tom and Tony take a deep dive into this concept and examine a study that looks at the historical success of selling puts. The main theory here lies in the short put’s higher probability attributes as well as its flexible defensive applications.

Tom shows how selling the 30 delta put in the broad stock market S&P 500 (SPY) has performed since 2005. After posting the merits of managing profits in this strategy, he goes on to show how taking stock on a losing short put while selling a call against it further improved historical profits.

This technique is the epitome of active investing: not only did we choose the higher probability short put over the long stock, but we also added a covered call component to those instances where the short put lost. For more granular information on this strategy view the video above.

This video and its content are provided solely by tastylive, Inc. (“tastylive”) and are for informational and educational purposes only. tastylive was previously known as tastytrade, Inc. (“tastytrade”). This video and its content were created prior to the legal name change of tastylive. As a result, this video may reference tastytrade, its prior legal name.

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