Selling cash secured puts on stocks an investor is happy to take ownership of is a great way to generate some extra income. A cash-secured put involves writing an at-the-money or out-of-the-money put option and simultaneously setting aside enough cash to buy the stock. The goal is to either have the put expire worthless and keep the premium, or to be assigned and acquire the stock below the current price. It’s important that anyone selling puts understands that they may be assigned 100 shares at the strike ...

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 bullish on [1][2][3] - Cash secured puts are considered a bullish trade, but less bullish than outright stock ownership, suitable for investors expecting the stock to remain flat or rise slightly [2][3] - Investors selling cash secured puts must set aside enough capital to purchase the shares if assigned, contrasting with naked put sellers who do not intend to take ownership [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 likelihood of assignment [4] - An example involving Rocket Companies (RKT) shows that selling a put option with a strike price of $20 while the stock trades at $21.22 allows the seller to receive a premium of $71 [5] - If RKT trades above $20 at expiration, the put option expires worthless, allowing the seller to keep the premium, resulting in a net cost basis of $19.29 if assigned, which is a 9.10% discount from the previous trading price [6]

Core Viewpoint - Selling cash secured puts is an effective strategy for generating extra income while being prepared to take ownership of stocks if necessary [1][2]. Group 1: Cash Secured Puts Overview - A cash-secured put involves writing a put option while setting aside enough cash to purchase the stock, aiming for the option to expire worthless or to acquire the stock at a lower price [1]. - This strategy is considered bullish but less aggressive than outright stock ownership, suitable for investors expecting the stock to remain flat or rise slightly [2]. Group 2: Investor Behavior - Cash secured put sellers are prepared to take ownership of the stock if assigned, while naked put sellers aim solely to generate premium without the intention of owning the stock [3]. - The closer the strike price of the put option is to the current stock price, the higher the premium and the likelihood of assignment [4]. Group 3: Example with PayPal Holdings (PYPL) - For PayPal Holdings (PYPL), with a trading price of $59.49, a December 2026 put option with a strike price of $45 was trading at $2.83, providing a premium of $283 for the seller [5]. - If PYPL trades above $45 by expiration, the put option expires worthless, allowing the seller to keep the premium, resulting in a net cost basis of $42.17 if assigned, which is a 29.16% discount from the current trading price [6].