Writing "naked" options can be highly profitable, but it also can be very risky, since losses can easily exceed the margin that you originally posted. In this report, we show you how, in many cases, you can substitute a credit spread for an uncovered (or "naked") write. Because credit spreads have limited losses, their margins are often a lot lower than the margins on naked writes. At the same time, these spreads can still offer very substantial returns on capital.

This report is part of an ongoing series on option spreads. Spreads are combinations of different option positions on the same stock. Spreads are really not that complicated once you understand a few basic principals. The spreads that we will cover in this series will all have limited risk. Some of them can offer investors very efficient use of their capital.

This report is part of an ongoing series on option spreads. Spreads are combinations of different option positions on the same stock. Spreads are really not that complicated once you understand a few basic principals. The spreads that we will cover in this series will all have limited risk. Some of them can offer investors very efficient use of their capital.

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This report is part of an ongoing series on option spreads. Spreads are combinations of different option positions on the same stock. Spreads are really not that complicated once you understand a few basic principals. The spreads that we will cover in this series will all have limited risk. Some of them can offer investors very efficient use of their capital.

Because the net time premiums of calls and puts with the same stock, strike and expiration can be very close, it often happens that if we are recommending a particular call for covered writing, we are also recommending the corresponding put for "naked" put writing as well…

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When you write a put on a particular stock with a certain strike and expiration, you have a position that has very similar gain and loss potential as a covered call on that same stock with the same strike and expiration.

Buying at-the-money and out-of-the-money puts…

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No matter how bullish the stock market may look at a particular time, you should always diversify your portfolio with a few uncovered (or "naked") put purchases. This week, we offer advice on how to pick the puts that are right for you.

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