This week's question:
I follow good, quality stocks. When the market has a big down day, I buy these stocks because I think I?m getting a good price. Can options be used to complement my strategy of buying low?
Many investors use options to complement the way they buy and sell stocks. Options can be used to complement your strategy of trying to get, from your perspective, a low purchase price for a stock you want to buy. For example, by implementing a cash-secured put option strategy, you can sell a put option and create an obligation to buy 100 shares of the underlying stock at the strike price of the put. To learn more about implementing a cash-secured put option strategy with an example selling 1 XYZ March 50 Put, view this segment of "Ask the Institute."