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selipso t1_jaah3ul wrote

Reply to comment by Kenobi3371 in and I wouldn't change this system for the world. by moonyou22

How does a covered put work? Do you sell the shares first and then buy them back later?

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jonnyohman1 t1_jab1zbd wrote

called a cash-secured put. Selling a put means you'll have an obligation to buy those shares at the strike price if it expires and you get assigned. If you want to get fancy you can then take those shares you were assigned and sell covered calls on them. That's called the wheel.

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AnonymousLoner1 t1_jab5a9x wrote

He's talking about a short sale-covered put.

Just like long shares cover a short call, short shares cover a short put.

That's why you can't do it on Robinhood, since they don't allow short selling.

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OTD303 t1_jabmqmh wrote

The fact they don’t allow That means they know the kind of power that is the retail trader Lmfaoo

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needspantsu t1_jabtx7r wrote

I assume, given shorts have limitless* loss potential, and hood is aimed towards teens and low income peeps, it's a bad mix.

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Kenobi3371 t1_jaah9z1 wrote

No, same as selling a regular put but you have shares instead of cash as collateral

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