With the recent plunge in the equity market, traders are often puzzled with what to do next. One strategy to employ, if you wish to get long a stock, is to sell cash secured puts or put verticals below the market at a price that you wish to buy the stock. This is a good way to collect premium and perhaps acquire a stock at a low price. Let’s go through an example. NFLX over the recent months has been on a meteoric rise up until it’s split a couple of months ago. Since then it has settled steadily above 100 dollars, except for the large down move day that took it down into the 80’s intraday. The stocks then bounced back up over a 100 where it has been since. With NFLX trading around 100 dollars per share today, a trader looking to get long at a lower price may wish to consider selling puts at the Oct. 80 strike. Premium The further out in time you sell this put, the more premium you would take in. Currently the trader could take in premium around $3.50 for selling the October 80 put strike that is 43 days away. If you […]