Sell a Put to Buy a Stock

One very effective strategy of getting into a strong stock is to not just go right out and buy the stock, but to sell a put on the stock instead. This does give you some advantages that you would not have had you simply entered the stock.rnThe advantages are. 1. Money Up Front One of the most attracting aspects of selling a put in that you receive money up front. You don’t have to wait for your investment to go up (if it does at all) to make a profit. There are not many investments out there that give you this kind of advantage. 2. You Can Buy at a Lower Price If you find a stock that you really like at $30 you would probably love it at $25 rnright? Well if you sell a put that might just happen. If you sell a $25 put on a stock trading at $30 and that stock dips below $25 chances are you will be forced to buy it at $25. But that is ok if you think it is valued at a much higher level. 3. Lower Cost of Stock By selling a put you can lower the level at which the stock would have to go to for you to break even. For instance if you enter a stock at $15 but made $1 on the put the stock only needs to go to $14 for you to break even and any amount above that level is just profit. 4. It Can Add Up Einstein once said compound interest is 'the most powerful force in the universe'. Never underestimate how much selling premium can add up over time. It is really amazing and has done wonders for me in the past. For more on selling puts visit http://www.stocks-simplified.com/selling_puts.html For more on learning stock trading visit http://www.stocks-simplified.com