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Selling Put Options When Underlying is Bull or Bear

I sell cash covered put options for income with the intent not to own the stock.  Taking into consideration that it is no the only determinant, do u decide to sell a put option when the underlying stock is moving higher (bull) or lower (bear)?  There are pros and cons about each and not just price variance considerations.  I have watched, and particpated, when stocks have been strongly recommended with excellent balance sheets and then have severe price declines - such as Facebook at last earnings.  I have watched, and participated, when stocks have had extremely negative recommendations and awful balance sheets and have declined and then skyrocketed higher - Tesla and Netflix.  I have bull and bear put option participated, and eventually covered call participated, as well as the positive and negative side of these 3 stocks and many others.  i usually look for Deltas around -20, giving me an approximate 80% probablity of success, about 30 +/- days out.
Bull reasoning - underlying stock ESS is very bullish or bullish, analysts positiive, earnings look like they will be positive or are positive, price moving higher whether gradual or spike, news positive.  Everything looks like the price will continue to climb so it would make sense to sell puts.  I have noticed that many stocks hit then stop climbing higher and start to move lower and often to and below my strike price.  This is not necessarily the technical resistence level.
Bear erasoning - underlying stock ESS is very bearish or bearish, analysts negative, earnings poor, price declines and sometimes significantly, news negative, etc.  I have often found that after a stock crashes it hit a price level and begins to climb sometimes all the way up to and beyond the original price.  This is not necessarily the technical support level.
You should sell Puts when a stock is oversold, using RSI.  You should sell calls on a stock when it is overbought, again using RSI.  In general you should do the opposite of the direction of the stock.  As Warren Buffet said, be greedy when others are fearful and fearful when others are greedy.  Right now just about everything is overbought, so it's a good time to sell calls if you own the stock, or call credit spreads if you don't.
I think since you are using a fixed probability for determining your strike price, your trade is in some sense neutral to the bullish/bearish nature of the stock. For a given probability, a bearish stock will likely be more out of the money than a bullish stock - so you have more margin of safety for bearish stocks if the downward momentum continues before reversing.
The conventional wisdom is that, put sell is more appropriate option strategy for bullish stocks (for bearish stocks other strategies maybe more profitable).
Betting against the market should generate more return (high "expected" return with a lower probability of success). I'd use a spread instead single-leg. This reduces the potential profit but at least puts a floor to the loss.
Disclaimer: I do not have any personal experience of selling puts based on market sentiment. I sell put only when I want to own the stock at my strike price without any remorse. So please take my input with a large grain of salt .
Here's the confusing and contradictory thing.

- I think Systems101 is saying to use RSI (which I have and does and doesn't work) to determine overbought (sell calls)/oversold (sell puts).
- I think onlykelsey is saying conventional wisdom is to sell puts on bullish stocks and to sell calls on bearish stocks.

RSI is a nice idea but it has as many pitfalls as every other system. Often I find a stock moving below 30 and continues down, down, down and sometimes to 1-5 and sometimes the reverse. The slide or move up can take a few days, weeks,or even months. The stock could remain at that lee for a short period of time or remain at the extreme overbought/overbought or extreme oversold/oversold level for quite a while. Most stocks are neutral between 30-70 yet their price can vary wildly moving up/down between these two numbers. If relying on neutral RSI indicator trades would rarely occur. I tried some other momentum and technical indicators and none seem consistent. So far I haven't found a system or indicator that has any reasonable consistency. I expect there probably aren't any indicators or systems that are consistent for just as with all phases of existence there are just too many variables. I don't find technical or fundamental indicators to be any more reliable an indicator of short or long term status. Analyst recommendations are the absolute worst

My problem is that I agree with and have tried all three scenarios above. Yet I have been unable to be consistent in trading. I don't expect gains on 100% of my trades. Or that all my trades will expire worthless. I expect assignment. I would like some consistency and a system I can rely on. All this seems to reinforce what I have always believed that the markets are random, unpredictable, event based, and just another Las Vegas. From news reports, TV programs, etc. it appears professional traders lose as often as I do. If analysts followed their own recommendations they would lose even more often than professional traders. All this being said, I think I have had more gains than losses for my accounts are higher now than 6 months or a year ago. But maybe could have been higher.
You make a good point about RSI. RSI is not perfect, and stocks can continue in that direction for some time. What I like to do is look for extreme overbought or oversold conditions and then sell way out of the money in that direction 3-4 months out. That way you have a much greater buffer to be wrong and you also get a better premium.
i only like selling puts on red days ,calls green days.seem to get better premium of coarse this is best on capitulation.
MoonLiteNite- Yup, I've made the mistake of trying to chase a stock higher selling puts under it, only to have it reverse and plunge through my strike price.  I've had much better success looking for extreme oversold or overbought conditions and then doing the opposite, selling calls on overbought and puts on oversold.
I sell puts under two different scenarios.
1). I'm bullish and want to buy the stock.
In this case I sell a very near dated, ATM option.  I view this basically as an alternative to entering a limit order to buy the stock.  I'm hoping the stock gets put to me, and the addition of the premium from selling the put will mean a good entry price.
2). To generate income (which is aligned with the spirit of your question)
In this case, I look for stocks where implied volatility (IV)  is high by historical standards (i.e. the option is expensive).  IV is usually high because there is some reason for holders of the stock to be nervous about it and they are willing to pay more for the protection the put provides the buyer. I tend to think human nature makes people fearful and tends to make them overpay for this insurance, hence increasing the sellers chance of success.

I apply this logic to most any stock, but probably use it most on what I consider "cult" stocks.  For example TSLA, FB, AMZN where valuations are high so it is hard to buy here.  However,  even if the company misses an earnings report or something and the stock plummets there might be enough people who love the companies product so much or are so emotionally tied to the stock that they will consider any pull back a buying opportunity.  Hence keeping the stock in a range for a long time.

In this case, I sell options out 45-60 days in time, and OTM. (usually with a delta of around 25 and/or near a support level on a chart).  My preference is to sell the options on a day when the stock is down and hence pessimism/fear is up. I'll probably take the position off for 80% of max gain or when the price falls under $.10 and there are no commissions.  If the stock goes down, I'll look to roll the option out and down for a credit,  but ultimately be forced to take the loss if things continue to go against the position.
Net/net, when selling options for income,  I think much more about if the option is expensive/cheap vs if the stock is bull/bear.  If you have a strong bull/bear thesis, you might consider different options strategies.
You make a good point about IV. When a stock is oversold, it will have very high IV relative to historical IV and that presents an opportunity to sell an overpriced put option. You never want to sell a put option when IV is low.
You have pinged a related question.  How do u go about finding high IV options.  I have tried using screeners but haven't found then helpful  Most often screener high IV are low quality and decliners.  i sell puts so these are not choices.  I tried using ATP option chain but then I had to look at every stock on multiple expire dates and it's excessively time consuming.  then to compare Implied to Historical IV.   By the time i get this analysis done the options are no longer viable.
I have been mainly optioning FB, Nvda, Tsla, Lea, Nflx, PNRA, HD, DPZ, etc. and some smaller like X, Grub, WTW, Feye, MS, Twitter and BABA.  Amzn and many others are way to expensive for me.  I don't go much above $200 per share in one account and much above $100 per share in my other 2 accounts and my daughter's account.
Maybe I'm just not using these tools correctly.

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