trade stock, stock trading investing

[Naked Put Position in Northfield (NFLD)] Dear Member: One of my favorite plays is selling naked puts and I like what I see at the moment on Northfield (NFLD) which is trading around $15.20 as I write this note. The Dec $10 puts that are 15 days from expiration are quoted at $0.80 x $0.85. They are 3 strikes out of the money. I like selling the Dec 10 puts (DHQXB) naked at an 80 cent limit. Of course, if the stock drops, there is the risk that it could be put to me at $10 a share which would mean my net cost before commission would be $9.20 (the $10 I would have to pay less the premium received - 80 cents - for selling the puts). Though I do trade a fair number of naked puts, I rarely write about them for a couple of reasons: 1)brokers consider them to be quite risky and 2) many traders are not permitted to trade naked options by their brokers because they either do not have sufficient experience or do not have sufficient money in their accounts. I am writing about this one so that you can see how I try to bring in income without actually investing anything. The risk is that the stock price would fall below $10 and the stock would be put to me. If I owned the stock at $9.20 a share, my risk would then become the price of the stock if it fell farther. DISCLOSURE: I do have a naked put position in NFLD. Sincerely, Bill Kraft
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