When you sell a cash secured put:
You choose a strike price below the current QQQ price.
You collect premium upfront.
If QQQ drops to your strike price, you get assigned and buy it at that lower price.
If QQQ stays above your strike price, you keep the premium and can repeat the process.
It is the most disciplined way to say that you want to buy QQQ but only if it gets cheaper and you want income while waiting.
You do not need to own QQQ. However you need the cash to buy 100 shares if assigned. In other words you buy QQQ at a discount.
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- MojoStellarΒ·03-21 15:32well said1Report