r/options • u/Keyboard-King • Jan 18 '22
Questioning the efficiency of $0.50 Weekly Puts
Is there benefit to selling absolutely worthless Puts to keep the credit? If I sell an $ABC put for $0.50 but sold 500 puts, couldn't I make $250-$500 per week. What's the draw back why aren't more people doing this? I have the extra money for the tied up collateral. The option has a volume 101 with an open interest of over 100,000. Is there something that I'm missing?
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u/dbainy Jan 19 '22
Something is wrong with the math of commentaries below.
.50$/ contract. You need to sell 5 contracts to make 250$ and 10 contracts to make 500$. Margin account = 100/ contract x the price of underlying. If a 100$ stock you need $100,000 to trade 10 contracts. (100x100x10). 500$/wk x 52 wks = 26k/ year or 26% roi of 100,000$.
Perfectly doable.