UNG stock is at $7 per share.
Sell 1 $9 strike PUT contract (100 shares) and collect $200 premium ($2 per share).
Total maintenance margin used is $840 as stock price is $7 x 100 shares +20% of $7 stock price.
If stock expires at $9 option will NOT execute and I keep the $200 premium (which I can apply to buy the stock purchase if I desire)
If stock expires at $8 option will execute and I have to pay $9 per share keeping the $100 difference
If stock expires at $7 option will execute and I have to pay $9 per share giving back the $200 and breaking even
If stock expires at $6 option will execute and I have to pay $9 per share losing $100 + premium collected
If stock expires at $5 option will execute and I have to pay $9 per share losing $200 + premium collected
Of course the commish is a given and par for the course.
In theory the price of course can go lower than $5 and you could lose your ass. But before that point you would sell a put further out and apply the premium collected to closing the current put.
Am I understanding this properly?
With TOS's platform what greeks if any should I focus on?
Would covered calls be a better choice?
I've read 2 books on options and while I grasped many concepts I'm still lacking some aspects of trading these things.
Anybody have teamviewer or a screen sharing tool where they are willing to tutor me some?
