Should I buy a call or sell a put?

The title question was submitted by a TradeKing customer and the video reply is posted at their web site.

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2 Responses to Should I buy a call or sell a put?

  1. Robert D. 05/21/2011 at 11:20 AM #

    Mark,

    I think it’s also worth mentioning that, if a trader likes the idea of selling puts on a stock, he can reduce the chances of an undesirable outcome by choosing a stock that he would like to own.

    • Mark D Wolfinger 05/21/2011 at 11:43 AM #

      Robert D,

      I not only agree, but I mention it about every time I write about put selling or speak to a rookie audience.

      If you do not want to own the underlying stock, then it is not a good strategy to sell puts.

      Traders and more sophisticated investors can still make the put sale becasue I trust them to exit at a loss when necessary. That means never having to worry about being assigned an exercise notice. However, beginners often don’t understand the concept of taking losses, and can run into real trouble when selling puts.