Why Aren’t More People Selling Puts?

The questions have been rolling in this week. Last week I talked about how you can get paid to buy stocks. It’s simple, real and more importantly, a great source for driving income on a monthly basis. There are so many advantages to using this simple strategy to buy stocks you want to own. Again, it’s a safe and reliable way to bring in income, but some investors simply use the strategy to lower the cost basis of their stock.

The Bull Put Spread

The goal of selling a bull put credit spread or vertical put spread is to have the stock finish ABOVE the put you sold at options expiration. Simply stated, you want the stock to stay above the short strike until it reaches expiration. I typically sell out-of-the-money puts, so that I have some room for error if my assumption is incorrect. Let me give you a simple example using a trade from the past.