I make money from the contracts I sell. The contract premium....

I make money from the contracts I sell. The contract premium.

example:

sold 100 6.50 19/12 Puts on WHC @ $0.30

1 contract = 100 shares = $30 per contract
therefore 100 contracts = 10 000 shares = $3000 total

so I collect $3000. But if the price dips below $6.50 the person that bought my puts will exercise early or they get exercised on expiry so I have to buy 10,000 shares at 6.50. However I’ve already collected $3000 so my cost basis on the shares that got assigned to me is $6.20.

if the price stayed above $6.50, the contracts expire worthless and I’ve made $3k

Since I’ve been assigned I’ll probably sell 6.25 or 6.50 calls expiring next month now and put a ‘collar’ on them and protect any tail risk by buying $6 or $6.25 puts

sorry haven’t emailed…been crazy busy with a 1 month old haha. I usually do a strategy called ‘the wheel’ which is making money off ‘theta decay’ (Google the wheel / theta) but mostly on US stocks as the liquidity is better. I’ll get around to sending you some links.