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# Tastylive: Example of a Short Naked Put
- URL: https://www.smartinvestingsociety.com/tastylive-example-of-a-short-naked-put/
- Published: 2024-10-25T12:17:57.000Z
- Updated: 2024-10-25T12:17:57.000Z
- Author: Smart Investing
- Tags: Income investing, Trading Strategies, #wp, #wp-post, #Import 2026-09-30 15:32

Investors have plenty of ways to use options trades. Most investors use options for a directional bet. Why? If a stock moves higher, a call option can soar. Traders put up far less capital than buying a stock, and see bigger percentage gains.

However, there’s a flip side to options trading. Traders can sell options instead of buy. Doing so can create income. Often, it’s better income than can be earned from simply buying shares of a stock and collecting dividends.

Many investors use covered calls to generate income on top of a stock position. But investors can also sell naked put options. This puts investors on the hook to buy shares of a company if they fall to the strike price of the option.

This strategy can be risky, and may involve holding substantial cash. But it can offer attractive income opportunities.

With a naked put strategy, traders should wait until a stock has fallen and become oversold. A stock that’s fallen heavily should have seen a big jump in put premium.

If the stock rebounds, the put option can decline in value quickly. That allows investors who sold the put to buy back at a lower price, pocketing the difference as profits. If shares languish, it may take more time for the option to play out.

[To look at an example of a naked put trade in action, click here.](https://www.youtube.com/watch?v=GynODfNg9%5Fw&ref=smartinvestingsociety.com)