Thread by @RosannaInvests

Planning to BUY 100 shares of your favorite stock?

Before you do, read this thread on Writing Options. 👇

For educational purposes, I will use $SNOW as an example and
@Barchart
for the options data which is an excellent website for options!
#Optionselling #Options

Selling OTM (Out of The Money) Puts (Bullish)

• Receive Premium Today
• If you are "put" the shares your cost basis will be much LOWER
• Expiration depends on your strategy, for me, I generally prefer selling 2-5 wks out for higher premiums so we will look at Dec 16 monthly

On choosing the "strike" price

• Choose a "strike" price you don't mind buying shares at
AND/OR
• Use delta as a gauge - the delta tells you the % that strike will be ITM at exp
• The lower the delta, the lower the probability

$SNOW

1. BUY 100 shares $SNOW at $146.20 for $14,200

OR

1. SELL 1 $SNOW $125 Dec16 PUT for $5.80 (Receive $580 now) .23 delta

If on Dec16 (maybe sooner) $SNOW is <$125 you are "put" 100 shares at $125 - $5.80 = $119.20 cost basis

$14,200 vs $11,920

Which cost do you prefer?

If you are NOT "put" the shares then keep the premium and REPEAT if you prefer.

If utilizing this strategy I sell "naked" cash secured puts as I already have the cash earmarked for the purchase. Hence, an "alternative to buying today."

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