{"id":80311,"date":"2015-10-30T04:29:08","date_gmt":"2015-10-30T08:29:08","guid":{"rendered":"http:\/\/countingpips.com\/?p=80311"},"modified":"2015-10-30T06:27:43","modified_gmt":"2015-10-30T10:27:43","slug":"put-selling-get-paid-to-buy-stocks-you-want","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2015\/10\/put-selling-get-paid-to-buy-stocks-you-want\/","title":{"rendered":"Put-Selling: Get Paid to Buy Stocks You Want"},"content":{"rendered":"<div id=\"inves-3457217561\" class=\"inves-below-title-posts inves-entity-placement\"><div id =\"posts_date_custom\"><div align=\"left\">October 30, 2015<\/div><hr style=\"border: none; border-bottom: 3px solid black;\">\r\n<\/div><\/div><p>By <a href=\"http:\/\/WallStreetDaily.com\/\"><u>WallStreetDaily.com<\/u><\/a> <img loading=\"lazy\" decoding=\"async\" class=\"attachment-home-th wp-post-image\" style=\"display: block; margin-bottom: 5px; clear: both;\" src=\"http:\/\/www.wallstreetdaily.com\/wp-content\/uploads\/2015\/10\/10-30-put-selling-options-trading.jpg\" alt=\"Put-Selling: How to Buy Stocks You Want at Discounts\" width=\"510\" height=\"300\" \/><\/p>\n<p>By <a href=\"http:\/\/www.wallstreetdaily.com\/author\/shelley-goldberg\/\">Shelley Goldberg<\/a>, <em>Senior Correspondent<\/em><\/p>\n<p>Forget everything you think you know about buying stocks.<\/p>\n<p>If you\u2019re like most investors, you probably research a stock then go to your brokerage account and buy it.<\/p>\n<p>That\u2019s fine\u2026 but there\u2019s a better way. In fact, this method will <em>give you cash<\/em> to buy whatever stock you want at the price you choose \u2013 and at a hefty discount to its current price.<\/p>\n<p>Yes, you read that right. The market will give you cash to buy stocks.<\/p><div id=\"inves-4167847403\" class=\"inves-in-content inves-entity-placement\"><hr style=\"border: 1px solid #ddd;\">\r\n<div id=\"inpost_ads_header\">\r\n<p style=\"font-size:10px; float:left; color:#666;\">Free Reports:<\/p><\/div>\r\n<div id=\"inpost_ads\"> \r\n<p style=\"font-size:15px; float:left;\"><a href=\"https:\/\/goo.gl\/1ApBOV\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/investmacro.com\/wp-content\/uploads\/2018\/06\/graph_techs_PD.png\" align=\"left\" width=\"80\"  height=\"55\"\/><\/a>\r\n\t     <a href=\"https:\/\/goo.gl\/1ApBOV\"><b><u>Get Our Free Metatrader 4 Indicators<\/u><\/b><\/a> - Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter<\/p><br><br>\r\n<br>\r\n<br>\r\n<p style=\"font-size:15px; float:left;\"><a href=\"https:\/\/goo.gl\/f3RrHX\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/investmacro.com\/wp-content\/uploads\/2019\/01\/cot_pie_80.png\" align=\"left\" width=\"80\"  height=\"55\"\/><\/a>\r\n\t    <a href=\"https:\/\/goo.gl\/f3RrHX\"><b><u>Get our Weekly Commitment of Traders Reports<\/u><\/b><\/a> - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.<\/p><br><br>\r\n<\/div>\r\n<hr style=\"border: 1px solid #ddd;\">\r\n<br><\/div>\n<h2>How to Make Money the Second You Buy a Stock<\/h2>\n<p>You use a strategy known as put-selling \u2013 selling <a href=\"http:\/\/www.wallstreetdaily.com\/2015\/01\/14\/live-cattle-futures-options-trading\/\">put options<\/a> against stocks you want to buy.<\/p>\n<p>And in doing so, you pocket cash in your trading account \u2013 immediately \u2013 without even having to own the underlying stock.<\/p>\n<p>When you execute this strategy, you\u2019re obligating yourself to buy the stock you select for the \u201cstrike price\u201d you\u2019ve chosen at a specific point in the future.<\/p>\n<p>For that obligation, option buyers will give you cash while you wait. So you\u2019ll either make money, or own great stocks at bargain-basement prices.<\/p>\n<p>And given that most option buyers lose on their trades while sellers make money, it\u2019s a compelling reason to sell puts.<\/p>\n<p>You just need to find a stock that boasts the following characteristics:<\/p>\n<ul>\n<li>It\u2019s a solid, blue-chip stock.<\/li>\n<\/ul>\n<ul>\n<li>It\u2019s a stock that you\u2019d be comfortable owning at the price you select.<\/li>\n<\/ul>\n<p>So let\u2019s take tobacco firm <strong>Philip Morris International Inc.<\/strong> (<a href=\"http:\/\/finance.yahoo.com\/q?s=pm&amp;ql=1\" target=\"_blank\">PM<\/a>) as an example \u2013 which certainly fits the bill as a well-established, blue-chip company.<\/p>\n<h2>Grab $425 Just for Making a Trade<\/h2>\n<p>With Philip Morris currently trading at about $90 per share, the first job is to decide on a price and time frame for the puts you\u2019re going to sell.<\/p>\n<p>This is precisely why you should always pick a stock that you\u2019d be comfortable owning in case you\u2019re obligated to buy the shares at options expiration.<\/p>\n<p>With Philip Morris, you know you\u2019d be buying a stable company that also has the bonus of paying a dividend ($4.08 per share annually).<\/p>\n<p>In this example, we\u2019ll select the January 2016 $82.50 put options. From a technical standpoint, there\u2019s some support here if the price drops from current levels. And January expiration gives sufficient time to make the sale worthwhile.<\/p>\n<p>With one options contract equivalent to 100 shares and the $82.50 puts currently trading for around $0.85 per contract, let\u2019s say we sell five contracts worth 500 shares. That would instantly put $425 in your account ($0.85 x 100 x 5 = $425).<\/p>\n<p>With the $425 pocketed, you just let the position play out to options expiration.<\/p>\n<p>Then what?<\/p>\n<h2>Your Need-to-Know Scenarios<\/h2>\n<p>If Philip Morris remains above the $82.50 strike price at that point, the options will simply expire.<\/p>\n<p>You\u2019d keep the $425, you won\u2019t be obligated to buy Philip Morris, and the trade is closed. But you can repeat the process with a different strike price or expiration date.<\/p>\n<p>If Philip Morris is trading below the $82.50 strike price by expiration, the scenario is different. You\u2019ll then be obligated to buy those 500 PM shares at the predetermined price of $82.50 per share.<\/p>\n<p>You\u2019ll then simply own Philip Morris as if you\u2019d bought it directly. And you keep the $425.<\/p>\n<p>Do you see now why it\u2019s important to select a stock that you\u2019d be comfortable owning at a lower price that you pre-selected in advance?<\/p>\n<p>Don\u2019t simply sell puts on random stocks in order to pocket cash. Make sure they\u2019re quality companies that you like.<\/p>\n<p>It\u2019s also critical that you don\u2019t sell more options contracts than you can afford. (Remember, one contract is worth 100 shares.)<\/p>\n<p>Also, keep in mind that your broker will need you to set aside a portion of the total share cost \u2013 a \u201cmargin requirement\u201d \u2013 while the trade is active in case the stock is assigned to you. The amount varies from broker to broker.<\/p>\n<p>However, if you change your mind or don\u2019t want to be locked into owning the stock, you can buy back the put options at any point before expiration.<\/p>\n<p>You\u2019d also do this if the options are trading below the price you sold them for \u2013 thus grabbing a profit.<\/p>\n<p>Ultimately, put-selling is a terrific way to buy stocks for less than their current prices, while earning money from the trades at the same time.<\/p>\n<p>Pretty compelling, right?<\/p>\n<p>Even better\u2026 there\u2019s a failsafe way for you to do it.<\/p>\n<p>Our resident options king, Lee Lowell, spends all week, every week, showing investors exactly which trades to execute and when.<\/p>\n<p>Not only that, he provides precise, step-by-step instructions on how to enter the trades in your account and manage them all the way to their profitable conclusion.<\/p>\n<p>In fact, of Lee\u2019s 139 total recommendations so far, 132 of them have proved profitable, with a total of $80,952 pocketed, based on 10-contract trades each time.<\/p>\n<p><a href=\"http:\/\/pro1.wallstreetdaily.com\/428374\/\" target=\"_blank\" rel=\"nofollow\">Go here to find out how you can start grabbing some cash for yourself<\/a>.<\/p>\n<p>Good investing,<\/p>\n<p>Shelley Goldberg<\/p>\n<p>The post <a href=\"http:\/\/www.wallstreetdaily.com\/2015\/10\/30\/put-selling-options-trading\/\" rel=\"nofollow\">Put-Selling: Get Paid to Buy Stocks You Want<\/a> appeared first on <a href=\"http:\/\/www.wallstreetdaily.com\" rel=\"nofollow\">Wall Street Daily<\/a>.<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>By WallStreetDaily.com By Shelley Goldberg, Senior Correspondent Forget everything you think you know about buying stocks. If you\u2019re like most investors, you probably research a stock then go to your brokerage account and buy it. That\u2019s fine\u2026 but there\u2019s a better way. In fact, this method will give you cash to buy whatever stock you [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-80311","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/80311","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=80311"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/80311\/revisions"}],"predecessor-version":[{"id":80324,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/80311\/revisions\/80324"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=80311"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=80311"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=80311"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}