I feel like I'm missing something, but say there's a stock XYZ that I want to buy because I like the company and believe in it. I think that $1 is a fair price, but it is sitting at $1.10. Say there's a put option available to buy/sell with a strike price of $1, and a premium of $0.05.
If I still think $1 is a fair price for it, is there any reason I shouldn't sell the put option for the stock?
If it says or goes up, it didn't get exercised, and I keep the premium. If it goes down to $1, I basically get the stock at $0.95.
And if it goes even further down, again, I still get the stock, in a company, for less than it would cost me to buy it today.
I still know very little about what I'm talking about, so please tell me what I'm missing.
Submitted December 21, 2019 at 06:12PM by KnightofNoone https://ift.tt/2QcGLn5
