The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to be talking about when to sell a put option. A put option is a very simple, very basic option strategy whereby you’re just selling a put option usually at the money or slightly out of the money compared to where the underlying stock is trading. Now, this is a good strategy that actually works as a stock replacement strategy. And I tell people this a lot, but if you actually have a very bullish long-term outlook on an individual stock that you’re trading, it’s actually better for you to consistently sell just a regular put option, again, either at the money or slightly out of the money than it would be to actually go out and purchase the shares of the underlying stock. Now, we’ve shown this in our research, as well as other outside third-party sources like CBOE and AQR, that when you sell a put option, you actually end up seeing better returns, lower volatility and a lot less capital required to ent