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, our question is – “Should you take profits early when selling naked puts?” Again, this question came out of an email that somebody sent me and they said, “Kirk. When we’re selling puts on a quality stock, is it more advantageous to go ahead and take the 50% profit like we would on a spread or should we let it go to expiration for the full credit being that the worst-case scenario is you put the stock and you wouldn’t mind owning it anyway? The idea is that to turn right around and sell covered calls on it should we get assigned.” We’re basically talking about a concept called “the wheel strategy” which is you sell a put, if you get assigned, you end up doing the covered call and then you go back and forth through this cycle or this wheel of selling puts and selling covered calls, etcetera. The sticking point on this question I think that’s really interesting is what they said when they set a quality stock or bas