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What are you buying today?


LowIQinvestor

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So I was thinking of adding some more SD any my usual pattern is to put in a limit order and see if it gets filled.

 

This time I looked at the PUT options, particularly the put options for Oct. Someone check me on my thinking about this but what I ended up doing was selling some 2.50 Oct cash secured puts (ira) at .80 - the current share price is 2.06. the way I looked at it there are two possible outcomes.

 

1. share price stays low and i would have picked up the shares at an effective price of 1.70 a 17% discount on todays price.

2. the share price goes up and they expire worthless. my return would be 75% annualized return on the cash that is held for the cash secured put.

 

So either I get the shares at 17% discount or I make 75% annualized return if they expire worthless.

 

My risk is that I could be missing a multi bagger.

 

What are your thoughts, is this a smart way of going about it?

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