sold (to open) 1 April 2014 $114 put for $1.66 (credit)
(cash received = $166)
rolled April 2014 $114 put to June 2014 $114 put for $1.97 (new credit)
(cash received = $197)
bought (to close) June 2014 $114 put for $1.28 (debit)
(cash spent = $128)
TOTAL NET PROFIT: $210.85
On 3/26/2014, IWM was trading between $114.65 and $117.68.
Let's suppose you had bought 100 shares of IWM at $116.16 (average price) instead of selling a put option like I did.
On 6/5/2014, when I closed my PUT OPTION for a PROFIT, IWM was trading between $112.09 and $114.88. If you had sold your IWM shares on 6/5, you would have locked in a LOSS of $128 - $407, depending on what price you actually received.
This is a perfect example of why SELLING PUT OPTIONS is BETTER than just buying (long) a stock (or ETF). When you SELL PUT OPTIONS, you're selling "time," so you will make money even if the stock/ETF goes down.
Check out my FREE lessons on YouTube (www.youtube.com/user/moneyandlilia) and learn to SELL PUT OPTIONS!
It's easy, fun and most importantly, PROFITABLE!