Hey, if you're a total beginner and

you're looking to sell put options, this

will be a quick option tutorial on how

to sell put options properly. From how

to open a sell put position to managing

it and closing it all in the Robin Hood

app. So, let's go into my portfolio

right now. I have been using sell put

options for the past 10 plus years. I

used to work at Goldman Sachs and I love

using put options as a way to generate

income. Most new investors look at

selling put options in two different

ways. One is by selling a put option and

collect the income. Two is by selling a

put option as a way to get assigned into

the stock that you want to own. Either

way, selling put options is a great way

that an investor can collect income,

whether you do it on a weekly basis or a

monthly basis. Let me show you step by

step. So, first of all, if you wanted to

sell a put option, you would just pick a

stock that you would want to sell a put

option on. I'm going to be using IN. So,

I'm going to go to IN stock. Currently,

I ran is trading for $52 per share. So,

the first thing that you want to look

for is a stock that you want to own

because whenever you sell a put option,

you are essentially agreeing to buy 100

shares at the strike price that you

select. So, let's go to trade options.

Now, what I'm going to do is I'm going

to pick an expiration date. An

expiration date is essentially when an

option expires. You can go for a shorter

expiration date or you can go for a

longer expiration date. In this example,

let's go for July 17. If you're watching

this in the future, no problem. This is

just a simple step-by-step tutorial for

the best process that I personally

follow when I sell put options. So, when

I look at a put option, go to sell put.

And now, this is an option chain. An

option chain gives you information on

strike prices, premium, and other

metrics regarding to the option itself.

So, let's go for selling a put option.

And if you want to sell a put option,

typically I sell an outofthe-oney put.

An outofthe-oney option is something is

a strike price below the current value

of the stock. So, for example, if I go

down here, 45, this is a 45 strike

price. This is lower than what currently

I ren is trading at, which is $52 per

share. This would be an out ofthe- money

option. Now, an in the money option

would be, for example, 55 strike price.

This would be higher than the current

price of IN stock currently. So, let's

first go over an example of selling a

put option that's out of the money. And

then I'll show you an example of an in

the money put option. So, an

out-of-the-oney option will be this 45

put. So, if I select this option right

now, you will see the statistics come

up. There is a bid and an ask. What you

want to do whenever you're trading a

sellput position is you want to get

filled for the best price possible,

right? The best possible price here

would most likely be the middle mark

because if you try to sell this for

$345, which is the ask price, that's

towards the high end of the range and

you're most likely not to get filled.

Your likelihood of fill will be very

low. Now, if you go for 305, yes, you'll

get filled like immediately right away.

However, that is a much lower price than

that you can collect by going for a

higher price. So, what you would want to

do is go for the middle or the mark

price, which is 325. So, I'm going to go

to sell here, and I'm going to enter one

position here. You can go for as many

contracts as you want. Typically,

whenever I'm selling puts, I like to

have at least 10 different put positions

in my personal portfolio. So, I don't

want any put position to be more than 5%

value. If I go for one contract here and

I enter a limit price of $325,

then I can collect a credit of $325. And

the estimated credit is $324.96 because

Robin Hood does charge fees even though

they're almost free. Right now, if you

wanted to enter a limit order, you can

also set a limit price. So, if I go up

top again, I'm going to show you one

more time the limit order here in the

top right and I click limit. Okay, I can

actually set a price that I would want

to execute for within the entire day.

So, right now it's pre-market. Let's say

that I want to get at least $3.50,

right? Which would be higher than the

ask. That's okay, too. You can enter a

limit price of $3.50. And this option

trade would not execute if you're going

to get less than 350. So during the day,

if I does not become attractive enough

to have $3.50 worth of premium, this

option won't get executed. However, if

during the day it does go up to $3.50 in

terms of this put option being worth

350, then you will get filled and this

will be the price that you will get. So

oftent times I do like to set limit

orders because then I can basically get

the price that I want in terms of

selling a put option. If that's not that

important to you and you just want to

sell a put option as an entry strategy,

as I mentioned earlier in this video,

then it's completely okay just to go for

a market order as well. Now, let's go

back and go for an in the money option.

So, an out-of-the-oney option here was

worth $3. And essentially, if I does not

go to $45 per share, you won't get

assigned and $3 is yours to keep in

terms of premium. So, that cash enters

your account and is officially yours in

its realized profit once the option

expires. However, if we go for an in the

money trade, for example, a 55 strike,

you can see the premium here is so much

higher. It's $8 in total premium. Well,

the bid is $805 and the ask is 8.45. So,

the middle mark here would be$8.25. Now,

why is it so high? The reason why it's

so high is this option is already in the

money. It already has intrinsic value.

So, if an investor wanted to exercise

this option today, you are the option

seller. You sold this option. They could

technically put these shares to you

today. they can early assign. Now, in

practice, that rarely happens because

it's almost always more profitable to

just sell the option rather than

exercising this option. This option is

worth $8, but the in the value amount

that it's worth right now is only three

because the stock is trading at 52. This

put options at 55. So, it's worth $3 in

the money value, but the premium is

eight. So, that's why the option itself

is more valuable than exercising this

option. Now, the $8 in value that you

get here is premium that you collect,

but your assignment risk is very

different. So for an out-of-the-oney

option, if we go back down to this 45,

the delta here is your assignment risk.

The delta here is 29. That means there's

a 29% chance of this option expiring in

the money, which also means that there's

a 70% chance that it won't expire in the

money. So 70% of the time you will

likely win on this trade and 30% of the

time it will go into the money and you

will be assigned. It's not always a bad

thing, especially if you want the stock.

Now going back to $55. If you have a

option that's at 55 here and the stock

is already at 52, this is an in the

money option. That's why the delta here

is 57%. It is a 57% chance that this

option will stay below 55. There's only

a 43% chance of you winning. Now, just

because there's a 43% chance of you

winning does not make this a bad option

to sell. So, if you sell a put option

that's already in the money, your total

average cost is the most important

figure that you should look at. So, I

ran trading for $52 per share. This is a

55 strike, but because you're collecting

$8 worth of premium, you can actually

subtract that from your total overall

cost. So, $55 per share is the price

that you will get assigned that if this

option stays below 55. But because you

collected $8 worth of premium, that

makes your break even price around 47.

So, even if I does absolutely nothing,

the stock stays at $52 per share, your

average cost is $47 per share. Selling

puts is a great strategy that I

personally use in the options retirement

academy. If you want more information

about the retirement academy, you can

schedule a free call in the description,

or you can check out this video to learn

more about selling put options.