I'm just trying to get into options trading but I want to have s pretty strong grasp of it before i make any trades. I was watching some video tutorials on trading options and a thought occured to me on a strategy which seems good but I'm guessing doesn't really work for some reason I don't understand.
If i own a stock that's trading at $50 dollars, why can't I just sell puts on it for $50 dollars (or calls? Im still a little confused on the terminology). So if the stock goes down then I just make money on the premium I've made, and if the stock goes up then I won't actually lose money, I'll still make the premium, i just won't get as much benefit. So is this a valid way to make money or is there some reason this doesn't work? Thanks.
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