With TSLA currently around $190, how can I buy the stock anywhere near $175? The answer could be the sale of a cash secured put.
With the stock at $191 the April 180 put is trading at around $3.00. I will sell 1 April 180 put at $3. If the stock finishes under the strike price of 180 at April Expiration (April 17th), I would be obligated to buy the stock at $177 ( strike price minus the premium received). If the stock doesn’t fall below $180 at April Expiration, I collect the entire $300 premium. The current delta of the 185 strike put is .25, which means there is only a 25% probability the stock will be under $180 by April expiration. Remember that if TSLA falls below $180 in the next three weeks and then rallies above my short strike, there is no guarantee I will be assigned.
This strategy would be done in the retirement part of my portfolio. In a retirement account the short put position would be 100% cash secured, meaning $17,700 (180 strike put less $3) would be segregated by my broker in the event the short put was assigned. I have a slight bullish bias over time and am looking for monthly income. I would repeat this trade every month as long as I still had a bullish bias on the stock over the next 1-2 years. The 12 month low in the stock is $180. Dan Sheridan email@example.com
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