Cash-secured puts: get paid to wait for your entry.
Stock at $100, you want it at $90. Sell the $90 put, 30 days out. You collect $200 premium upfront and park $9,000 in cash.
Two outcomes:
1. Stock stays above $90 → put expires worthless, you keep the $200. That's 2.2% on your cash in a month.
2. Stock drops below $90 → you buy 100 shares at $90. Net cost after premium: $88/share, 12% below where it started.
Downside: if the stock craters to $70, you're down $1,800 on paper. Still better than buying at $100 and being down $3,000, but you're stuck holding a loser.
Only sell puts on names you actually want to own at that strike. This isn't a trade, it's a patient entry with income attached.
Hypothetical example, not advice. Just showing the structure.
Stock at $100, you want it at $90. Sell the $90 put, 30 days out. You collect $200 premium upfront and park $9,000 in cash.
Two outcomes:
1. Stock stays above $90 → put expires worthless, you keep the $200. That's 2.2% on your cash in a month.
2. Stock drops below $90 → you buy 100 shares at $90. Net cost after premium: $88/share, 12% below where it started.
Downside: if the stock craters to $70, you're down $1,800 on paper. Still better than buying at $100 and being down $3,000, but you're stuck holding a loser.
Only sell puts on names you actually want to own at that strike. This isn't a trade, it's a patient entry with income attached.
Hypothetical example, not advice. Just showing the structure.