The Cash-Secured Put
Here's a discipline most investors never build: deciding what you'd pay for a stock BEFORE the market offers it to you. The cash-secured put doesn't just build that discipline — it pays you for it. You name your price, set aside the money, and collect a fee for your patience.
Pick a stock you'd genuinely want to own, at a price below today's — a price where you'd happily buy 100 shares. Set aside the full cash for that purchase. Sell one put at that strike, and collect the premium now.
The put expires worthless and you keep the premium — you were paid for being willing to buy at a discount that never arrived. You can make the offer again next month if you still want the stock at that price.
The stock falls through your strike and you're assigned: your set-aside cash buys 100 shares at the price you chose back when you were calm. And the premium you collected effectively lowers that cost further. You didn't get trapped — your plan executed.
The cash sitting there, earmarked, is what makes this a discipline tool instead of a time bomb. Selling puts WITHOUT the cash — hoping assignment never comes — is a different trade with a different name and a much worse worst case. In this school, the cash is non-negotiable.
If the stock truly collapses — your $95 strike gets assigned while the stock's at $70 — you own it at $95, just as you agreed. The premium softens that, but this strategy only makes sense on stocks you'd want to own through bad weather at the price you named. It's a tool for entries you believe in, not a slot machine for premium.
Name the price calmly, reserve the cash, get paid while you wait — and if the market ever hands you your price, take delivery like it was the plan all along. Because it was.
Not financial advice · Educational only