What are you buying today?

[Marco Van Basten]

1 hour ago, Eng12345 said:

Are you just speaking on the nature of selling uncovered puts? 

 

Just curious because I've been contemplating starting to sell cash covered puts on some stocks that I want to own more of with my sometimes larger than needed cash pile. 

 

As a general rule I try to stay away from options as I have found them to be my own personal version of a money incinerator. But I'm fairly unsophisticated. 

Yes, precisely.  There is nothing wrong with options if you know what you are doing and either don't have leverage, or can handle it.  

[73 Reds]

57 minutes ago, Mephistopheles said:

 

Same as if you own the stock yes, but on margin, unless you're doing cash secured puts.

Right, and that was what prompted my comments.  Most options (with the exception of naked short calls) are as, or less risky than outright ownership.  They allow you to manage risk, they don't add risk, which should not be confused with the time element of options.  The discussion should really focus on the risks of margin.  Though one needs a margin account to trade options, you need not incur margin costs or added risks trading most options.  The beauty of short puts of course is you can earn interest and option premiums on the same cash which can make cash a worthwhile holding.

Edited December 27, 2025 by 73 Reds
word

[Mephistopheles]

31 minutes ago, 73 Reds said:

Right, and that was what prompted my comments.  Most options (with the exception of naked short calls) are as, or less risky than outright ownership.  They allow you to manage risk, they don't add risk, which should not be confused with the time element of options.  The discussion should really focus on the risks of margin.  Though one needs a margin account to trade options, you need not incur margin costs or added risks trading most options.  The beauty of short puts of course is you can earn interest and option premiums on the same cash which can make cash a worthwhile holding.

 

Well it's all factored into the pricing though. Selling cash covered puts vs. owning the stock and selling covered calls should theoretically give you the same result. The interest you earn on the cash evens out with the lower yield from the put. I guess what I'm saying is there is no free lunch in this case.

 

But I've never looked into this in detail, so maybe someone can correct me if I'm wrong.

Edited December 27, 2025 by Mephistopheles

[RichardGibbons]

1 hour ago, Mephistopheles said:

 

Well it's all factored into the pricing though. Selling cash covered puts vs. owning the stock and selling covered calls should theoretically give you the same result. The interest you earn on the cash evens out with the lower yield from the put. I guess what I'm saying is there is no free lunch in this case.

 

But I've never looked into this in detail, so maybe someone can correct me if I'm wrong.

 

You are correct. I think the only time this might not be true is when the stock is hard/expensive to borrow. Then the put/call parity breaks. I remember this happening with Fairfax back in 2006.

[dwy000]

3 hours ago, 73 Reds said:

Isn't it the same as if you owned the stock?  At least you have the put premium with short puts.  I think sometimes people misconstrue short puts with "naked" options.  Its just another way to buy a stock with the same risk profile.

Its the same as buying the stock on the downside but you give up all the upside of buying the stock in exchange for a guaranteed premium amount. 

[dwy000]

1 hour ago, 73 Reds said:

Right, and that was what prompted my comments.  Most options (with the exception of naked short calls) are as, or less risky than outright ownership.  They allow you to manage risk, they don't add risk, which should not be confused with the time element of options.  The discussion should really focus on the risks of margin.  Though one needs a margin account to trade options, you need not incur margin costs or added risks trading most options.  The beauty of short puts of course is you can earn interest and option premiums on the same cash which can make cash a worthwhile holding.

In this case it is as risky as owning the stock (you are taking all the downside risk less the option premium) but you've given up the upside.  So you could argue its riskier because you have unlimited downside (unlimited until zero) but limited upside.

[73 Reds]

4 minutes ago, dwy000 said:

Its the same as buying the stock on the downside but you give up all the upside of buying the stock in exchange for a guaranteed premium amount. 

Sure, was only referring to downside risk.  But if you're not willing to buy the stock at the current market price and instead sell a put at a lower price, there is no upside risk b/c you wouldn't buy the stock now anyway.  Every bet and investment decision has trade-offs.   

[DooDiligence]

On 12/27/2025 at 11:41 AM, dipod said:

I certainly am not in the camp of selling uncovered anything relating to options. Risk is too great. Or using margin. But if one sells puts as a way to enter a stock purchase at a discount, I don't really see why that is so bad.

 

You and I look at this strategy the same way. Sell a put on something I already own and would be happy either getting assigned more shares or keeping the premium. I recognize when I'm doing this my logic may be flawed, but I don't go to casinos so I have to get my thrills where I can.

[lnofeisone]

On 12/27/2025 at 4:13 PM, dwy000 said:

Its the same as buying the stock on the downside but you give up all the upside of buying the stock in exchange for a guaranteed premium amount. 

This is only true for OTM puts. My take for value investors OTM isn't really as profitable as ITM trades are but to each his/her own. 

[Gregmal]

I view it as writing insurance to people whom are scared or something…I learned this because early on I always wondered why it was so hard making money buying OTM puts. Eventually I just inverted that and its become a hugely profitable aspect of my investment approach. Was reviewing ytd trades last week and even now going back a few years, it’s money in the bank 90-95% of the time and even when you get assigned, it’s fairly common to be able to flip the position profitably shortly there after. 
 

I wouldnt get too caught up in all the technical bullshit or nitpicking on everything that can go wrong. Worst case you’re committing to buy an exact amount of stock a at specific price. If you’re not comfortable doing that, don’t do it lol. Simple enough. 

[dwy000]

2 hours ago, lnofeisone said:

This is only true for OTM puts. My take for value investors OTM isn't really as profitable as ITM trades are but to each his/her own. 

I think its equally true for both OTM and ITM its just a question of premium amount.  If youre selling ITM puts youre getting more premium but still exposed to unlimited downside and are much more likely to get it put to you at a higher price. 

[lnofeisone]

16 minutes ago, dwy000 said:

I think its equally true for both OTM and ITM its just a question of premium amount.  If youre selling ITM puts youre getting more premium but still exposed to unlimited downside and are much more likely to get it put to you at a higher price. 

Unlimited downside down to 0. With ITM you are getting participation in the upside. Everything has a trade off. 

[Gregmal]

Yea this seems wildly over complicated, unnecessarily. Mainly because it’s “theory” vs “reality” in terms of a lot of the nuances. 

[dwy000]

22 minutes ago, lnofeisone said:

Unlimited downside down to 0. With ITM you are getting participation in the upside. Everything has a trade off. 

Yeah, sort of.  You participate in the upside between stock price and strike price in the premium received upfront but you also take a lot more downside risk in that you are much more likely to be put the stock (or pay to close it).  Either way, youre playing to keep the premium. 

[Sweet]

12 hours ago, Gregmal said:

I view it as writing insurance to people whom are scared or something…I learned this because early on I always wondered why it was so hard making money buying OTM puts. Eventually I just inverted that and its become a hugely profitable aspect of my investment approach. Was reviewing ytd trades last week and even now going back a few years, it’s money in the bank 90-95% of the time and even when you get assigned, it’s fairly common to be able to flip the position profitably shortly there after. 
 

I wouldnt get too caught up in all the technical bullshit or nitpicking on everything that can go wrong. Worst case you’re committing to buy an exact amount of stock a at specific price. If you’re not comfortable doing that, don’t do it lol. Simple enough. 

I’ve done ok buying deep OTM puts on stocks, I think the reason why it worked for me is that I was never too greedy - I’d get a double or triple in options premium and close it.  Never, to my recollection, did any of those deep OTM puts ever become ITM, so I can see how you are making this work for you so consistently.  I stopped though because it wasn’t worth it, using 1% or my port to get a 2-3% just meh returns and if you don’t exit perfectly you can get a zero.

 

I looked at selling puts before, I don’t really want to hold these positions for years so I didn’t bother on LEAPs, and the monthly or weekly had too little premium.  I figured that I needed a bigger capital base to make this work for me, I’d imagine you are playing with significantly more than I am.  But if you like a stock, i don’t think selling puts is that risky.

 

Edited December 29, 2025 by Sweet

[73 Reds]

2 hours ago, Sweet said:

I’ve done ok buying deep OTM puts on stocks, I think the reason why it worked for me is that I was never too greedy - I’d get a double or triple in options premium and close it.  Never, to my recollection, did any of those deep OTM puts ever become ITM, so I can see how you are making this work for you so consistently.  I stopped though because it wasn’t worth it, using 1% or my port to get a 2-3% just meh returns and if you don’t exit perfectly you can get a zero.

 

I looked at selling puts before, I don’t really want to hold these positions for years so I didn’t bother on LEAPs, and the monthly or weekly had too little premium.  I figured that I needed a bigger capital base to make this work for me, I’d imagine you are playing with significantly more than I am.  But if you like a stock, i don’t think selling puts is that risky.

 

I almost never buy options on public equities; if I like a company I'll just buy the stock.  Plus, if the stock pays dividends long calls pay for them.  Options on real estate is an entirely different animal.  That's one of the secret sauces.

[Gregmal]

2 hours ago, Sweet said:

I’ve done ok buying deep OTM puts on stocks, I think the reason why it worked for me is that I was never too greedy - I’d get a double or triple in options premium and close it.  Never, to my recollection, did any of those deep OTM puts ever become ITM, so I can see how you are making this work for you so consistently.  I stopped though because it wasn’t worth it, using 1% or my port to get a 2-3% just meh returns and if you don’t exit perfectly you can get a zero.

 

I looked at selling puts before, I don’t really want to hold these positions for years so I didn’t bother on LEAPs, and the monthly or weekly had too little premium.  I figured that I needed a bigger capital base to make this work for me, I’d imagine you are playing with significantly more than I am.  But if you like a stock, i don’t think selling puts is that risky.

 

I think it’s just a matter of consistency really. Something like MSGE spent a few years just rangebound due to immaterial drama and selling $30-35 puts 1-3 months out and just rolling worked wonders for me. Occasionally when the stock would approach $30 you could hit up the $25s. Same with the JOE $35-50 puts. You don’t need a huge position. Say 2,000 shares and the stocks at $50, you can reliably roll a pyramid of say 1 $50, 2 $45 and 3 $40s with the closest strike being the shortest duration. This represents a modest 30% add to the original position if all are assigned. But rolling this all else equal should create an additional $2500+ in income off a 2,000 share base. But in no long term situation is the valuation sustainable that low, so the options are, happily take and hold the stock and just adjust and roll more puts, or take em and trade em/sell calls against them.
 

I guess the main thing is being confident in your valuation work. Someone always wanders in a goes “anything can happen”…sure, with that attitude you should just never invest at all. But investing is about calculated risks and if I can rationalize taking more stock or adding 30/50/100% to MSGE at 1/6 of its replacement cost or 5x AOI I’ll take that risk every day. That all this strategy so doing and I’m getting paid well to do it. The work on my part is understanding something I already understand and then pushing buttons. 

[Saluki]

5 hours ago, Sweet said:

I’ve done ok buying deep OTM puts on stocks, I think the reason why it worked for me is that I was never too greedy - I’d get a double or triple in options premium and close it.  Never, to my recollection, did any of those deep OTM puts ever become ITM, so I can see how you are making this work for you so consistently.  I stopped though because it wasn’t worth it, using 1% or my port to get a 2-3% just meh returns and if you don’t exit perfectly you can get a zero.

 

I looked at selling puts before, I don’t really want to hold these positions for years so I didn’t bother on LEAPs, and the monthly or weekly had too little premium.  I figured that I needed a bigger capital base to make this work for me, I’d imagine you are playing with significantly more than I am.  But if you like a stock, i don’t think selling puts is that risky.

 

 

What I like about options is that, like Lego blocks, you can create whatever payout you think will match your thesis. If you think it will trade in a range, you can sell puts and sell calls, and collect premium both ways. If you think it's bullish, sell puts, buy calls. Extremely bullish, buy deep OTM calls etc. 

 

I sold a bunch of $2 puts on POWW, expiring in April 2026 when it was ~$1.50, and my breakeven is like $1.44, which I would be really happy to buy the common at. It's $1.80, so if If get assigned, I'm already making money, and if it goes up a lot, I keep all the premium and didn't have to put up any cash. And I got use the premium to buy other things while I wait.

 

With Crox, the short term premiums were very attractive so I kept selling, and reloading at expiry, and it reduced the effective price on my shares on the times that I got assigned. The price in my brokerage says my basis is about $80, but if you add up the premium I collected along the way, it's probably below $70. 

 

The key is that it has to fit your strategy and temperament. I don't want to be a trader, I want to be an investor. So when I sell puts, it's because I would like the company enough to buy the common, but selling puts lets me do that at a discount. I love selling puts on Coupang, but I love owning Coupang. Fiserv dropped like 50% after earnings, but I didn't sell puts on it because I'm not convinced that I like the company enough to own it, so if I think it will bounce back quickly, I would buy some options and make a quick buck, but not own the shares if it was ITM at expiry.

 

With VG I sold puts because I thought the company was worth way more and the reason it was tanking (Shell appealing arbitration decision) was ridiculous. I've been a transactional lawyer for 25 years and I can count on one hand the times I've seen a binding arbitration award get overturned by a court. So if it was attractively priced last week when it was 25% higher, than the nothing burger makes it even more attractive. 

[Sweet]

Completely agree @Saluki.  @Gregmal I’m going to look at selling some puts again, last time I looked at this it was a few years ago but my capital base is much bigger now so maybe it’s worth it.  We’ll see.

[dipod]

6 hours ago, Gregmal said:

I think it’s just a matter of consistency really. Something like MSGE spent a few years just rangebound due to immaterial drama and selling $30-35 puts 1-3 months out and just rolling worked wonders for me. Occasionally when the stock would approach $30 you could hit up the $25s. Same with the JOE $35-50 puts. You don’t need a huge position. Say 2,000 shares and the stocks at $50, you can reliably roll a pyramid of say 1 $50, 2 $45 and 3 $40s with the closest strike being the shortest duration. This represents a modest 30% add to the original position if all are assigned. But rolling this all else equal should create an additional $2500+ in income off a 2,000 share base. But in no long term situation is the valuation sustainable that low, so the options are, happily take and hold the stock and just adjust and roll more puts, or take em and trade em/sell calls against them.
 

I guess the main thing is being confident in your valuation work. Someone always wanders in a goes “anything can happen”…sure, with that attitude you should just never invest at all. But investing is about calculated risks and if I can rationalize taking more stock or adding 30/50/100% to MSGE at 1/6 of its replacement cost or 5x AOI I’ll take that risk every day. That all this strategy so doing and I’m getting paid well to do it. The work on my part is understanding something I already understand and then pushing buttons. 

I have been quite surprised with how sometimes for an undervalued stock I don't mind owning, selling CSPs can give in some cases 20-30% annualized returns. CROX has been another good example. Days like today are probably good ones to sell CSPs.

[LC]

I'll tell ya - I've lost more opportunity cost selling puts versus buying calls or buying the underlying. Davita when it went down to the 70s was a huge one. I sold a ton of puts. But my god if I bought the same notional of calls...I try not to think about it. 

 

I echo the main point: know what assets you're buying and at at what prices you are comfortable holding for the long term. From there the options are just another mechanism/button to push.

[lnofeisone]

2 hours ago, LC said:

I'll tell ya - I've lost more opportunity cost selling puts versus buying calls or buying the underlying. Davita when it went down to the 70s was a huge one. I sold a ton of puts. But my god if I bought the same notional of calls...I try not to think about it. 

 

I echo the main point: know what assets you're buying and at at what prices you are comfortable holding for the long term. From there the options are just another mechanism/button to push.

One of my favorite strategies when I have strong conviction is to sell a spectrum of short-dated OTM and ITM puts and buy longer-term calls. 

[hardcorevalue]

Maybe we should move the options discussion to another thread at this point?

[backtothebeach]

On 12/23/2025 at 3:00 PM, sholland said:

My $6.60 per share of TTSH still has not arrived (Fidelity). I see the shares, but they have been reassigned a value of zero.

TTSH funds just arrived at IB.

[valueventures]

GFR.TO