Buying stocks at lower price
By admin on October 26th, 2008
For example, suppose XYZ stock is trading at $40 and I think the fair value is $45. So the stock is not priced correctly and I want to buy it. But current price is not selling at deep discount. So I then sell a put with a strike price of $37. This would give me some money from selling option. If I had to buy the stock at $37, I would be happy because I think the fair value is $45. So I’m actually buying on discount.
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