Introduce a method of sell put 100% successful stop loss

This set of operation steps that can successfully stop loss is: sell put, covered put, neckline strategy.

Yesterday "Duan Yongping is going to take over when selling Pinduoduo put. What if I don't want to take over?"After I sent it, I also made an order and found many problems. Then I had a brainwave before the order today and thought of a method that can stop the loss almost 100%. Let's taste it together.

100% successful stop loss operation

Namely:

  • When the stock price breaks through the exercise price, judge to short-100 stocks. At the same time or later, when you think the stock price falls to a low point, buy a call with the same maturity date and the same exercise price as put, and you can safely put it to the maturity date, and don't worry about anything else.

For example, if you hold Pinduoduo put with an exercise price of 50 due on January 21, your share price falls below 50, and you short 100 shares. At this time, your share price continues to fall, so you can buy Pinduoduo call with an exercise price of 50 due on January 21.

Let's explain the principle and details below.

We know that selling 100 shares at the sell put exercise price can be combined with sell putCovered put.

  • The position at this time is:-100 strands, sell put.

The advantage of the covered put strategy is that the maturity stock price is below the exercise price, and the-100 shares and put in the position are exercised at the exercise price at the same time, so we get the premium.

The disadvantage is that if the due stock price is above the exercise price, although we can get the royalty, we will lose money if we hold-100 shares, which is not worth the loss. Therefore, it is necessary to pay attention to the rebound of the market and close the position in time after shorting the positive stocks.

So when it comes to volatile markets, such as Pinduoduo last night,$Pinduoduo Inc.(PDD)$, it will be very tangled.

However, if we buy a call with the same exercise price and the same maturity date as put at a low price when the market falls sharply, we will change the covered put intoNeckline strategy.

  • The position at this time is:Call,-100 strands, sell put.

The advantage of neckline strategy is that the due stock price is below the exercise price,-100 shares are exercised with sell put, and the call price is zero.Net profit = put royalty-call royalty.

If the due stock price is above the exercise price, then sell put gets the premium, call becomes in-price, and in-price options will be actively exercised, that is, buy 100 shares, then your original position-100 shares will be directly bought and closed, net profit=Put royalty-call royalty.

So have you noticed this point? As long as we can buy a call, we can lock in the transaction with peace of mind, but whether we can make a profit depends on whether your call can be bought cheaper than put. Of course, if you don't buy it cheaply, your biggest loss is only: call royalty-put royalty.

Operational focus

The difficulty in switching from sell put to covered put is that if the stock price breaks through the exercise price and continues to fall, we can safely turn from long to short. For example, AMD, which I did on Tuesday, never stopped after breaking through 146. But Pinduoduo is different. It is very uncomfortable to fluctuate back and forth, and it is difficult to judge the stock price trend.

That's why in the first place@多算胜When recommending, it is recommended to use positive stocks. Sometimes we need to buy and sell positive stocks back and forth at the exercise price to adapt to the market. If we change to put, we will lose a lot in the process of buying and selling when we are tortured by the rebound of the market.

Another reason for using positive stocks is that short positive stocks can be exercised together with sell put.

Considering the loss of time, we can also buy forward put to obtain falling income to balance the loss of sell put. This is not a hedging strategy, but this strategy combination should be calendar spread. Need to close positions in time when making profits.

And when you buy a call and change the hedging strategy into a neckline strategy, you don't need to do marking anymore. Although the extra call premium is deducted from the income, this investment is very cost-effective compared with worrying about the process.

# 期权大军集中营

Disclaimer: The above content represents only the personal views of the poster and does not constitute investment advice on this platform.

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