Is selling puts safe?
Short version: it wins often, and when it loses, it can lose a lot. Both are true at once.
Why it feels safe
Most puts expire with the stock above the strike, so the seller keeps the premium. A high win rate is normal.
Why a win rate isn't enough
The real risk
If the stock falls far below the strike, you buy 100 shares at a price well above the market. If it goes to zero, you lose the strike times 100, minus the premium you kept. Earnings reports and big news are when this happens most.
Three questions before you sell a put
- Would I be happy to own these 100 shares at the strike?
- Is there an earnings report before expiry?
- Is this cash I won't need for a month or two?
Every trade we publish, and how it ended, is on our record, losses included.
DipBell is a publication, the same for every reader. It is not advice on your own account.
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