Take a penny & buy protection

Traders,

The naked put strategy is a favorite for many traders. It carries a high probability of profit and adds positive theta to your portfolio. Check out the video on it in the Tackle Trading Playbook if you’re in need of a refresher.

If there’s a drawback, it’s the cost. If you’re using a margin account, it may not matter much, but the margin required for those wielding retirement accounts is equal to the max loss. And that can be a lot. As a result, your return on investment is tiny.

Here’s a trick you can use to juice the return. I use this anytime I need to free up capital in my IRA accounts. Turn the naked put into a bull put spread by purchasing a further OTM put.

But instead of buying one or two strikes below your short put, buy way OTM. Find a put that’s maybe only a penny or two. You won’t be sacrificing hardly any of your potential profit, but you’ll drastically reduce the cost.

Let’s say you want to sell the Aug $51 put on EEM for 50 cents. In a retirement account, you’d have to put up $5,050 as collateral for the trade.

But, if you went far OTM and purchased the Aug $36 put for a penny, it would turn the trade into an Aug $51/$36 bull put spread for 49 cents credit. The potential reward is virtually identical ($49 vs. $50), but the cost shrinks from $5,050 to $1,451.

#TeamTackle

---

Chart of the Day

Bitcoin Go Boom

Bitcoin prices were rocketing higher Sunday night, taking the digital currency back above all major moving averages for the first time since May’s plunge. Significantly, it also breached critical short-term resistance at $36,000. Is this the awakening bitcoin bulls have been hoping for?

---

Video of the day

Coach Frank’s Charts

---

When Coach Frank starts talking Chart Patterns #TeamTackle always leans in and this week is no different, watch this clip from Friday’s Halftime Report where the coaches analyze Frank’s charts and discuss their potential trading setups.

Today’s line up

Traders Lounge 11 AM EST

Join the coaches in this live lounge, ask questions, discuss ideas or just sit back and listen to veteran traders discuss market conditions.

Halftime Report 12:30 PM EST

The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day and fun in a way that only Matt and Tim can deliver.

Weekend Reports

Watch the Stock, Options, Commodity and Forex Reports to help you prepare for the week.

---

Financial freedom is a journey

The Tackle Today series is brought to you by Tackle Trading.

Sign up now and gain unfettered access to all of the quality content and powerful Scouting Reports that our Pro Members enjoy for 15-days absolutely free with no strings attached and let us show you what your trading has been missing.

# Sign up now for a 15-DAY FREE TRIAL #

---

Legal Disclaimer

Tackle Trading LLC (“Tackle Trading”) is providing this website and any related materials, including newsletters, blog posts, videos, social media postings and any other communications (collectively, the “Materials”) on an “as-is” basis. This means that although Tackle Trading strives to make the information accurate, thorough and current, neither Tackle Trading nor the author(s) of the Materials or the moderators guarantee or warrant the Materials or accept liability for any damage, loss or expense arising from the use of the Materials, whether based in tort, contract, or otherwise. Tackle Trading is providing the Materials for educational purposes only. We are not providing legal, accounting, or financial advisory services, and this is not a solicitation or recommendation to buy or sell any stocks, options, or other financial instruments or investments. Examples that address specific assets, stocks, options or other financial instrument transactions are for illustrative purposes only and are not intended to represent specific trades or transactions that we have conducted. In fact, for the purpose of illustration, we may use examples that are different from or contrary to transactions we have conducted or positions we hold. Furthermore, this website and any information or training herein are not intended as a solicitation for any future relationship, business or otherwise, between the users and the moderators. No express or implied warranties are being made with respect to these services and products. By using the Materials, each user agrees to indemnify and hold Tackle Trading harmless from all losses, expenses, and costs, including reasonable attorneys’ fees, arising out of or resulting from user’s use of the Materials. In no event shall Tackle Trading or the author(s) or moderators be liable for any direct, special, consequential or incidental damages arising out of or related to the Materials. If this limitation on damages is not enforceable in some states, the total amount of Tackle Trading’s liability to the user or others shall not exceed the amount paid by the user for such Materials.

All investing and trading in the securities market involve a high degree of risk. Any decisions to place trades in the financial markets, including trading in stocks, options or other financial instruments, is a personal decision that should only be made after conducting thorough independent research, including a personal risk and financial assessment, and prior consultation with the user’s investment, legal, tax, and accounting advisors, to determine whether such trading or investment is appropriate for that user.