- Puts - I like to sell puts on stocks that I'm willing to own, but wouldn't mind owning at a lower price. If the stock goes up, I get the premium for selling the put. If the stock falls below the put strike price, I end up buying the stock, but at a lower price. Occasionally, I will buy a put on a stock that I think will decline significantly.
I'm selling puts on a couple energy stocks that I feel have been beaten down, but have a chance to rebound.
- Calls - I like to sell calls on stocks that I own when I feel the market is near a top. That way if the stock declines, I keep the call premium. If the stock rises above the call strike price, I end up selling the stock but at a slightly higher price. Occasionally, I will buy a call to speculate on a stock price spiking upward.
I'm selling calls on my company stock, which I hope will go up and let me sell at a higher price. But if it doesn't, I will make a small profit on the call. I purchased calls on couple energy stocks, in case they rise significantly but it appears unlikely now.
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This is not financial advice. Please consult a professional advisor.
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