Short Put Strategy - Is Selling OTM or ITM Put Options Better?

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We all know that selling Put Options can be very lucrative and profitable if done correctly.

But is it better to sell In-The-Money Put Options, where the Premium is bigger and you can get a higher ROI, but have a lower win rate?

Or is it better to sell Out-of-The-Money Put Options, where the probability of winning is higher, but the Premium is small and the ROI is lower?

In this video, I will break down both the OTM and ITM Put Options so you have a better understanding of which is better for you.

Timestamps:
00:00 - Start
00:10 - Defining OTM & ITM
01:03 - The Main Difference Between OTM & ITM Put Options
08:53 - Tradeoff between OTM & ITM Put Options
13:20 - When to sell OTM & ITM Put Options

If you liked this video, please give a thumbs up, and also feel free to leave a comment if you have any questions, or just want to say hello.

#optionstradingforbeginners #optiontradingstrategies #stockinvestingforbeginners

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[optionswithdavis]

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[KBBAKTHA]

Excellent video. I also sell ITM Puts, at around 0.50 delta but atleast 150 days for expiration and i also buy a call at the same strike to make the upside open for full profit. i found that buying call at the same strike same expiry will also protect you, in case of early assignment of put sold and normally costs just around 10% of premium received on your short put

[avs_smart_systems]

Underrated video. Thanks for your time brother ✌️

[joellim]

You mentioned to sell OTM puts if the current stock price is still far from where we want to long but in this situation wouldn't the premium collected be too little since the OTM put is too out of the money already.

[shumapau]

Thanks Davis. Love your explanations. The best!

[gussta]

Very well explained. New subscriber ! Thanks

[KT-zxjr]

Good clip Davis. Ive done lots of these, sellg ITM puts. It works well if the stock moves up nicely and b4 n above the short strike. If not, you get assigned and then sell the stock. I have been assigned many times. The same trade is buying OTM call spreads vs selling ITM put sprds, but no assignment if youre wrong. Both good strategies IF the stock moves above your short strikes n in your time frame. This strategy needs big delta movement.... The key is selecting the right underlying that will behave as you

[franzhingerl]

what about compromise: Selling ATM put option. more easier to roll

[coconuttcp]

Thanks Davis!
I’m not very sure I did the right thing so please comment; I sold itm puts instead of buy the stock and do a covered call. Is there a different? I don’t mind being assigned. In fact with no stocks to begin with, I did both itm and otm puts at the same time of the same stocks at the same expiration date!

[coconuttcp]

Today did another put ratio spread on XLE for practices 🤣
Bot 1x73.5 put and sold 2x70 puts, expiration 19/August
Question do I need to inform my broker (IBKR) to exercise my long put if it’s ITM on expiration? Or the exercise is done automatically?

[cesaresp]

Is an itm option a bet on the market going up or a bet on it going up FASTER or HIGHER than the options market expects? Because if it's just a bet on the options market being wrong about the intensity of the increase, i don't want to do it