Make Money with Covered Puts on DHI: My $4K Weekly Strategy

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Covered Put on DHI pays me $4k this week

Generating consistent income in a volatile market is possible with the right trading strategy. One method that has been working for me is using covered puts. In this blog, I’ll walk you through my covered put strategy on DR Horton (DHI) and how it earned me $4,000 this week alone.

What Is a Covered Put Strategy?

A covered put strategy involves selling put options while holding a corresponding short position. Unlike covered calls, covered puts are designed to generate income in a declining or bearish market. This strategy benefits from a drop in stock prices, making it a powerful tool when markets are trending downwards.

Why I Chose DR Horton (DHI)

DR Horton is one of the largest homebuilders in the U.S. Due to economic uncertainty and a weakening housing market, I anticipated a downtrend in DHI’s stock price. This made it an ideal candidate for a covered put strategy.

By analyzing DHI’s chart, I identified consistent bearish signals and saw a high likelihood of further declines. Selling covered puts allowed me to take advantage of this market behavior.

Step-By-Step: How I Earned $4K with Covered Puts

Establishing the Position

I bought 40 put contracts at a strike price of $125.
Each put contract gave me the right to sell shares of DHI at $125, ensuring I could profit if the stock price fell.

Selling Puts for Income

I sold 40 put contracts at the $124 strike price, collecting $114 per contract. This resulted in $4,560 of initial income.
Selling puts is like collecting rent – I receive the premium upfront.

Monitoring the Trade

Over the past few weeks, I’ve continued to roll these contracts by buying them back at a lower price and selling new puts.
This week, I closed the current put contracts for just $5 per contract, which allowed me to pocket the remaining premium.

Rolling to Maximize Income

After closing the old contracts, I sold new ones with a $124 strike price for a $1 per contract premium.
With 40 contracts, that’s an additional $4,000 in income for the upcoming week.

Key Benefits of the Covered Put Strategy

Consistent Income: Generate weekly income by selling puts.
Downside Protection: Profits from falling stock prices.
Flexibility: Ability to roll positions for continuous earnings.
Control: Manage risk with pre-set exit points.

Life Improving Tips

Leverage Market Trends: Identify bearish market conditions to apply the covered put strategy effectively.
Stay Disciplined: Follow your trading plan without letting emotions influence decisions.
Use Rolling Techniques: Regularly evaluate your positions and roll them to maximize income.
Track Your Progress: Maintain detailed records to measure your success and identify areas for improvement.

FAQs

Can I use covered puts on any stock?

Covered puts work best with stocks showing clear signs of a downtrend or in sectors facing economic challenges.

What are the risks of covered puts?

Losses can occur if the stock unexpectedly rises in value. Proper analysis and risk management are essential.

How often should I roll my puts?

Rolling depends on market conditions. Weekly rolls are common to capture frequent premiums.

Can beginners use this strategy?

While covered puts are more advanced than covered calls, they can be learned with practice and proper guidance.

How do I know when to exit a covered put trade?

Exit if the trade reaches your target profit, the stock’s trend reverses, or a predefined loss limit is hit.

Call to Action

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Conclusion

Covered puts are a powerful strategy to generate income in a declining market. By using DR Horton as an example, I demonstrated how I earned $4,000 in one week through this method. Consistent application of this strategy can provide reliable returns and improve your financial stability.

Ready to explore covered puts and other smart trading strategies? Start learning today and turn market volatility into opportunity.

Make Money with Covered Puts on DHI: My $4K Weekly Strategy

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