Comments on: Can We Use Deep-In-The-Money Puts to Buy a Stock at a Discount? https://www.thebluecollarinvestor.com/can-we-use-deep-in-the-money-puts-to-buy-a-stock-at-a-discount/ Learn how to invest by selling stock options. Wed, 27 Jan 2021 17:12:11 +0000 hourly 1 By: Kevin https://www.thebluecollarinvestor.com/can-we-use-deep-in-the-money-puts-to-buy-a-stock-at-a-discount/#comment-371949 Wed, 27 Jan 2021 17:12:11 +0000 http://www.thebluecollarinvestor.com/?p=13020#comment-371949 I know that this is a really old thread, but I have to say that selling deep ITM puts on TSLA in my 401K retirement account has been the greatest strategy I have ever stumbled upon. If you want to be long a stock more than you have money in your account, you can sell deep ITM puts, use a portion of that extra cash to sell more contracts, creating an extra long position without using margin, getting a decent premium and giving plenty of time for the stock to play out, while capturing all the upside gains on the stock.

I am surprised that this strategy is not used more to be long a stock more than you have cash to support owning that stock directly. Sure, you can buy calls, but not in most 401K accounts. Also, much less risk for selling long dated deep ITM puts. Yeah, the premium is less, but with a really bullish stock like TSLA that can jump 100% in a few months, you need deep ITM position to be able to keep capturing that upside while still being able to roll up as the price continues up and up. With this strategy, I have been able to long the stock an extra 30% or more and with no use of margin and still getting a pretty decent premium to boot.

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By: Nate https://www.thebluecollarinvestor.com/can-we-use-deep-in-the-money-puts-to-buy-a-stock-at-a-discount/#comment-25034 Fri, 11 Dec 2015 15:57:28 +0000 http://www.thebluecollarinvestor.com/?p=13020#comment-25034 In reply to Jay.

Congrats, way to snatch up that exit when the opportunity presented itself.

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By: Jay https://www.thebluecollarinvestor.com/can-we-use-deep-in-the-money-puts-to-buy-a-stock-at-a-discount/#comment-25033 Fri, 11 Dec 2015 14:57:10 +0000 http://www.thebluecollarinvestor.com/?p=13020#comment-25033 In reply to Jay.

Nate,
I got fortunate with the bounce above my low side strikes yesterday and closed that wing at a break even while the other will expire worthless so an OK week with a little luck getting out of the bear’s way! – Jay

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By: Nate https://www.thebluecollarinvestor.com/can-we-use-deep-in-the-money-puts-to-buy-a-stock-at-a-discount/#comment-25031 Fri, 11 Dec 2015 07:33:43 +0000 http://www.thebluecollarinvestor.com/?p=13020#comment-25031 In reply to Jay.

Jay,
Thanks for your clarification and your detailed example. It helped to see the strategy in action. I am accustomed to looking at a six month chart but a weekly chart makes much more sense in this strategy. Sorry to see that the ball didn’t want to stay in the fairway this week. That is not ideal but I know this isn’t your first rodeo and you will adjust accordingly. Thanks again for sharing your strategy.

-Nate

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By: Jay https://www.thebluecollarinvestor.com/can-we-use-deep-in-the-money-puts-to-buy-a-stock-at-a-discount/#comment-25014 Wed, 09 Dec 2015 00:48:59 +0000 http://www.thebluecollarinvestor.com/?p=13020#comment-25014 In reply to Nate.

Nate,

Thanks for your great post and great read as always!

I am more in Martin’s camp when it comes to cash secured puts: use them to acquire things you would like to own longer term.

GDX is a live snake difficult to hold. Better to just buy a call or debit spread on it a few months out if you like it limiting risk and capital invested.

And I love your coaching to not panic! There are many strategies when it comes to the market. I have never found panic, hope, fear or euphoria to be winners :). – Jay

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By: Alan Ellman https://www.thebluecollarinvestor.com/can-we-use-deep-in-the-money-puts-to-buy-a-stock-at-a-discount/#comment-25012 Tue, 08 Dec 2015 23:22:53 +0000 http://www.thebluecollarinvestor.com/?p=13020#comment-25012 In reply to Michael.

Michael,

If a stock in our current portfolio is “bumped” from our Premium Watch List, we do NOT automatically close the position. It is managed precisely as described in my books/DVDs. Now, if we sell a stock as part of our normal management techniques, a replacement stock is selected from the most recent stock or ETF report.

Alan

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By: Michael https://www.thebluecollarinvestor.com/can-we-use-deep-in-the-money-puts-to-buy-a-stock-at-a-discount/#comment-25011 Tue, 08 Dec 2015 23:19:45 +0000 http://www.thebluecollarinvestor.com/?p=13020#comment-25011 Alan,

When a stock like LGIH is on the running list for several weeks, then drops off mid-stream, in this case, two weeks before expiration Friday, would you normally buy the call back and sell the stock, rather than waiting until expiration of the call.

Thanks,

Michael

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