Friday Q&A Hello Smart Option Sellers! Not many questions this week, so we'll keep it short. Q: Lee- How many contracts do people typically write on these deals???? With 10 contracts the profit only looks to be $250...... A: Our sweet spot when selling out-of-the-money (OTM) put options is typically $.25 to $.30 per contract. So yes, that equates to $250 if selling 10 contracts. We have members who only trade one contract and some who trade 100 contracts. Our goal is to get paid upfront cash in exchange for the opportunity to buy stocks for a really cheap price. Since Smart Option Seller's inception, we have structured the service to keep the actual buying of shares (assigned) to a minimum. This is how most of the members want it. In order to do that, we must choose strike prices that are very far OTM. Choosing those kind of strike prices also helps during extreme sell-offs like we've recently witnessed. Had I chosen strike prices that were closer to the stock's price, we'd most likely be shareholders by now, and probably underwater, too. There's nothing wrong with collecting $.25 to $.30 per contract. That formula has worked great for us since inception. You are more than welcome to choose any strike you'd like. Use the stock I pick and then formulate your own strategy. Many of our members write to me all the time about doing just that. The higher the strike price, the more money you'll get. The only caveat is that you're more at risk to assignment. Plus, I will only follow and give guidance on official trades, not ones that you choose for yourself. Q: Re: HACK,
Nice play, interesting in that the environment that is best suited to sell PUTS is the same environment when most people are afraid to sell them, me included. A: Yes, agreed. But that's the mantra used by some of the richest people in the world - "buy when everyone else is fearful". As long as we're smart about it, we will come out ahead. Q: Hi Lee- Quick question: Let's say we have sold puts in a stock and luckily for us the stock continues to go up. Why not double down and sell more of the same puts? Although they would fetch less dollars per contract, if the cushion keeps increasing and the general market feeling is bullish, would this approach be prudent? (Obviously staying within an investor's comfort zone.) A: We don't want to overdo it with one position. Once we sell the puts, I move on to the next trade. Now, we can certainly use the same stock over the course of the year, but it will only be if we don't currently have a position on it. I'm not saying that you can't do what you're asking. We just don't do it in this service. Well, that's all for this week. Continue to hold all other open positions as-is. Contact me here with fills, comments, questions or concerns. Have a great weekend! Regards,
Lee Let's Grab That Cash!
Current Portfolio Continue to work all other trades as instructed and continue to hold all other open positions as-is. See the Current Portfolio below for current prices & instructions. Note on the Current Portfolio - if you are a new subscriber and don't have a position yet on any of our trades, make sure you enter your order at the original recommended prices. If you are unsure or have any questions, please ask us!