NAKED PUT (Short Put) | bull strategy

Example: Sell put
Market Outlook: Neutral to slightly bullish
Risk: Limited, but substantial
Reward: Limited
Increase in Volatility: Hurts position
Time Erosion: Helps position
Break-Even Point (BEP): Minimum strike price minus premium received

When a put option is assigned, the seller (i.e., option writer) is obligated to buy shares at a fixed price, regardless of where the underlying market is.

Selling the put obligates you to buy stock at strike price A if the option is assigned.

When selling puts with no intention of buying the stock, you want the puts you sell to expire worthless. This strategy has a low profit potential if the stock remains above strike A at expiration, but substantial potential risk if the stock goes down. The reason some traders run this strategy is that there is a high probability for success when selling very out-of-the-money puts. If the market moves against you, then you must have a stop-loss plan in place. Keep a watchful eye on this strategy as it unfolds.

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