Use the ROI Calculator to Decide if the risk is acceptable for a Naked Put Trade
Use the Return on Investment (ROI) Naked Put Risk Calculator to decide if the risk is acceptable and you can make higher returns than 50%. I prefer to enter the trade when I can make more than 100% ROI selling put options for stocks that are required to be on the WatchList. Only members know which stocks are on the WatchList.
If you trade a stock that is not on the WatchList, then you could get into a trade that leads to high losses. Avoid high losses and trading issues by becoming a member of the Secret Edge.
You can use the WatchList with the ROI Calculator to achieve low risk, high return trades. The advantage of using both the WatchList with the ROI Naked Put Calculator is a method that results in more than 90% of the trades ending with wins, in contrast with losing often.
How to Turn a Losing Naked Put Trade into a Winning Trade
If we are losing at the end of the Naked Put trade, we roll for more credit until we win. The only issue is that when we roll for more credit, the ROI decreases as time passes. That is why we want to start with the ROI Calculator giving returns above 100%. I have rolled naked puts up to five time and ended the trade with positive returns. The five times roll for more credit is the worst trade I have dealt with. Nevertheless, it is possible to have a losing trade on some occasions.
How to Use the ROI Calculator
You will need to enter three factors and two risk assessments as follows:
Factor One: The Option Expiration Date.
Factor Two: The Credit You receive. I suggest that you enter the Bid value into the spreadsheet as you will definitely get filled.
Factor Three: The Put Strike Level.
After you have entered the correct value, look at the Maximum ROI value to ensure it is above 50%. Also, you can look to the right for the “Decision to Trade the Naked Put” information. If that field shows “Poor ROI” then do not do that trade. In contrast, if you see the field shows either “Good ROI” or “Excellent ROI” the proceed to the Risk Assessment requirements.
You will see the question:
“Is the Stock on the WatchList?”
The ROI Calculator is hidden from non-members. To get daily updates, please join as a trial member with a 90% discount for 30 days, which is fully refundable.
Only members have the WatchList for this check. If the stock is not on the Watchlist, even if it shows the trade is Good or Excellent, “DO NOT ENTER THAT TRADE.” Why?
The stocks may be good but it is in a position that it could fall in price, resulting in a poor trade situation. If you do this trade, then you are not following directions. For example, it there was an early exit signal, then you are taking on unacceptable risk without knowing the reason for not trading a specific stock.
On the other hand, if the stock is on the WatchList, then continue with the risk assessment based on the win probability. All trading platforms have the probability of winning on the trade. You will need to learn how to use the probability software to put in a yes or no answer. Ideally, you want to have a win probability greater than 60% at the beginning of the trade.