MTM Options Trader Newsletter - A Warning About Selling Naked Puts

[image](=) [image] This Week in the Market After kicking off last week in bullish fashion, the major indexes rolled over and closed weak with the Dow doing its best to keep its head above water. Heading into this week, the major indexes will look to move higher off their 50-day or 200-day moving averages. The four major indexes (including the Russell 2000) are trading around one or both of their moving averages. Clearly, potential support and resistance from those moving averages could set the tone for this week. Implied volatility levels continue to surge but then quickly succumb as levels, at least for now, remain relatively low. It is a short week for traders and investors as the market will be closed on the 15th in observance of Good Friday. Keep in mind that generally IV levels are lower during short weeks of trading. It seems like the bulk of quarterly earnings just ended and here we are again starting another round. Most earnings announcements will come later, but several financial institutions are expected to announce later in the week. In addition, a few economic reports are due to be released, even on Friday. Have a great week and a Happy Easter, and enjoy some time off Apr 11: Consumer Price Index Apr 11: Federal Budget Apr 13: Producer Price Index Apr 14: Jobless Claims Apr 14: Retail Sales Apr 14: Import Price Index Apr 14: Business Inventories Apr 15: Industrial Production [Read Our Blog](=) A Warning About Selling Naked Puts With another wave of earnings right around the corner, I feel the need to caution option traders and investors about selling “naked” or cash-secured puts over an earnings announcement. Whether you refer to it as writing or selling naked options, many option traders do not understand the risk. Selling a put option without having a position in the underlying stock or being long any options on the stock is considered a naked position. For example, if a trader is writing naked calls, he is selling calls without owning the stock. If the trader did own the stock, the position would be considered covered. [Continue Reading ...]() MTM Watchlist Here are several trade ideas we may discuss in group coaching class this holiday-shortened week: SPY – The ETF has its 50-day and 200-day moving averages in the vicinity of where it closed. More bull puts and bear calls around those levels will surely be explored. ZM – The stock keeps grinding lower, and bear put spreads will be considered if it can break below a pivot level at $110. DIS – With the stock forming a potential triple-bottom right around the $130 level, bull put and bull call spreads will be examined with a positive day on Monday. [image] We're honored to have Dan's Book Trading Option Greeks listed as one of the [Best Options Trading Books]() by New Trader U. [Buy Now on Amazon]( The strategies in this newsletter are for educational and informative purposes only. All information disclosed in this newsletter should not be considered complete in its entirety. Market Taker Mentoring, Inc. will not be held responsible for changes, oversights, errors or omissions. Dates, prices, news and other information may not be accurate. Please verify all information before trading. You alone are responsible for your own investment decisions. Options involve risk and are not suitable for all investors. Before trading options, please read Characteristics and Risks of Standardized Option (ODD), which can be obtained from your broker; by calling (888) OPTIONS; or from The Options Clearing Corp., 125 S. Franklin St., Suite 1200, Chicago, IL 60606. No statement in this newsletter is intended to be a recommendation or solicitation to buy or sell any security or to provide investment or trading advice. Traders and investors considering options should consult a professional tax advisor as to how taxes may affect the outcome of contemplated options transactions. Copyright Market Taker Mentoring, Inc. 2008 - 2022. All rights reserved. Reproducing or redistributing this content is a violation of federal law. [image] If you do not wish to be contacted via email, you can unsubscribe using this link: [Unsubscribe]( Unsubscribing from email notifications DOES NOT cancel your class, subscription or recurring payments. We recommend that current students do not unsubscribe from email notifications. If you unsubscribe from email notifications, you will not be notified on how to access the classes or subscriptions in which you are enrolled. Market Taker Mentoring, Inc. PO Box 117 Frankfort, Illinois 60423 United States