Covered Put Writing for Equity Options

What this video covers

• How a covered put combines short 100 shares with one short put, and why the position is considered covered
• How to calculate break-even by adding the premium received to the short sale price
• How to calculate maximum gain using the short sale price, strike price, and premium
• Why a covered put’s maximum loss is unlimited when the shorted stock can rise without limit
• How the $60 short sale, $55 strike, and $2 premium produce a $62 break-even and $7 maximum gain
• How covered puts and covered calls differ in stock position, market outlook, break-even direction, and maximum loss
• Why covered puts suit neutral-to-slightly-bearish markets and provide only a partial hedge