How to Buy CSCO for a 2.5% Discount, or Achieve a 19% Annual Return

Group 1 - Selling cash secured puts is a strategy that allows investors to generate extra income while being prepared to take ownership of stocks they are interested in [1][2] - This strategy is considered bullish but less so than outright stock ownership, as it is typically employed when investors expect the stock to remain flat or rise slightly [2][3] - Cash secured put sellers must set aside enough capital to purchase the shares if assigned, contrasting with naked put sellers who do not intend to take ownership and focus solely on generating premium [3] Group 2 - The closer the strike price of the put option is to the current stock price, the higher the premium generated and the greater the likelihood of assignment [4] - An example involving Cisco Systems (CSCO) illustrates this strategy, where a put option with a strike price of $77.50 was trading at a premium of $1.86, obligating the seller to buy 100 shares at that price [5] - If CSCO's stock price remains above $77.50, the put option expires worthless, allowing the seller to keep the premium, resulting in a net cost basis of $75.64 if assigned, which represents a 2.46% discount from the trading price [6]