2021 O P T I O N S

INCOME R E P O R T
 2021 OPTIONS INCOME REPORT
WRITING PUTS
This Motley Fool Options lesson covers how to sell, or
“write,” put options for better prices on stocks you’d
like to buy — or for income if your buy price doesn’t
materialize.
Let’s say a stock trades at $18, and you’d be a happy
buyer at $15 or below. In this case, you can write (“sell
to open”) put options with a $15 strike price. You sell
one put for every 100 shares of stock you’d like to buy,
and you’re paid the option premium — $1 per share in
this example — and are now on the hook to buy shares
if they fall.
If the stock drops to $15 or lower by the option’s
expiration, you’ll be “put” (sold) the shares to your
account. Including the $1 option premium you were
paid, your net buy price on the stock is $14, a great start
price. Now, if the stock isn’t below $15 by the expiration
date, the options simply expire — meaning you don’t
get to buy shares, but you’ve made income (the $1 per
share) in the meantime and can write puts again for a
future month.
WHEN TO WRITE PUTS
Put writing is a bullish, or at least neutral, strategy.
When you write a put, you’re saying you believe the
underlying stock will eventually increase in price
(hopefully after you’ve bought shares), or at least hold
steady — meaning you’ll earn income on your puts
when they expire.
Let’s use an example: Assume you’re bullish on
Stock XYZ. The stock increased from $20 to $25, so
you’re not as anxious to buy it. If the shares fell to $22
or so, however, you’d be happy to buy. Rather than
just sit and wait, you can write (remember, that’s “sell
to open”) the $22.50 strike price put options. You’ll
get paid while you wait, and you’ll potentially get that
lower buy price.
2021 OPTIONS INCOME REPORT 1
WHY WRITE PUTS?
Income: To make money while waiting for your
preferred buy price on a stock.
Advantage: To buy stocks at a lower net cost.
Profit: To earn income from stocks you believe will
hold steady or increase modestly.
FOOLISH FACTS TO KNOW
The trade command is usually “sell to open,” and
you’re paid the option’s premium the moment you
make the trade. That money is yours to keep, but its
value will fluctuate in your account until expiration.
Unlike covered calls, you do not need to own the
underlying stock to write a put. It’s the opposite, in
fact: You write puts on stocks you’d like to own
at lower share prices. Before you write a put,
you need to be ready and willing to buy the
underlying stock in the future.
Before placing this trade, make sure you have the
cash (or, for experienced investors, ample buying
power) in your account to buy a minimum of 100
shares. You can then write $22.50 puts that expire in a
few months. Let’s say the puts pay you $1.50 per share,
and you write two contracts representing 200 shares.
You’re paid $300 (minus commissions) up front. And
now you wait (cue the Jeopardy! theme).
If Stock XYZ ends this time period above $22.50,
your options simply expire, and you keep the $300.
You can then write new puts if you’d like. If the stock
dips below $22.50 at the option’s expiration, the puts
you wrote will be exercised, and you’re on the hook to
buy 200 shares at a strike price of $22.50. Including
the option premium you received, your start price is
actually $21. Nice! Now you own shares at an attractive
start price and can wait for appreciation.
 So, you write puts when:
▶ You’re ready and willing to buy a stock at a lower
price and you don’t believe the stock will soar away
from you in the meantime (otherwise you’d just buy
the stock)
or
▶ You just want to make income writing puts. You
don’t believe a stock will drop to your buy price, but
if it does, you’d still be happy to buy it.
9 TIPS FOR WRITING PUTS
1 Always choose a strike price at which you’d be happy
to buy the stock.
2 Focus on strong businesses that you’d be excited to
own for the long term.
3 Write “out-of-the-money” puts, meaning your strike
price is below the stock’s current share price.
4 Verify that the option premium payment makes the
trade worthwhile.
5 Remember, you often won’t get to buy the stock;
you’ll just get option income. That’s why we some-
times write puts on stocks in which we already own
partial positions.
6 Put writers do not collect dividends paid by the
underlying stock.
7 Never overextend yourself by writing too many puts.
Brokers allow put writing on margin, but we write
puts when we have the cash to buy the stock.
8 Vary the expiration dates among your individual
option holdings so they don’t all fall in the same
month — this staggers your risk.
9 You may write “in-the-money” puts with strike
prices above the current share price when you’re
especially bullish on a stock and want to capture
more upside potential with its options. This strategy
also increases the odds that you get to buy the stock.
When you write in-the-money puts, the guidelines
in our table don’t apply.
2 2021 OPTIONS INCOME REPORT
WHAT CAN GO WRONG?
Sounds perfect, doesn’t it? You’re paid to potentially
buy a stock you wanted to buy anyway — and at a price
you like. That’s beautiful.
But every investing strategy has some risk. Assume
Stock XYZ doesn’t fall below $22.50 by the time your
option expires, but instead jumps to $30 over the next
few months. You miss out on a $5 stock gain for only
a $1.50 gain in the put options, and you still don’t own
shares. Now what do you do? It might be a tough call.
The stock could also drop to $22 soon after you write
your puts, but then climb back to $25 just as your puts
hit their expiration date. Because almost all options are
exercised only at expiration, you won’t get the shares,
and you will have missed your buy price. Of course, you
keep the $1.50 option premium and can write new puts,
but what if you miss your buy price again?
There’s also the scenario that the stock drops and
doesn’t come back up for a long time. If the stock fell
to $17, your options would be far underwater. In this
case, you must be ready to just buy the stock at your
net price of $21 and hope for a rebound. At least you’re
getting a much lower start price than if you had simply
bought the stock outright at $25 on day one.
But if you no longer wanted to own Stock XYZ even
at $17 — say there’s a fundamental change in the busi-
ness — you would need to buy back your puts (“buy to
close”) early — and at a large loss. So when you write
puts, be confident that you want to own the stock.
MAKE PUT WRITING WORTHWHILE
When you like a stock enough to want to own it, be as
certain as possible that it’s a good strategy to write puts
rather than just buying the shares outright. In general,
don’t write puts when you believe a stock is greatly
undervalued and about to take off — just buy the stock.
Write puts when you believe a stock is a good buy at a
certain price yet is unlikely to leave you in the dust if
you don’t buy it anytime soon.
Once you’ve identified a put contender, calculate
whether the options are paying you enough to make the
risks worthwhile. Weigh both the risk of waiting to buy
the stock instead of buying today (missing potential
upside) and the risk if the stock falls sharply.
 You want a large enough cushion on your puts to
ensure a much better valuation on the stock you’ll
potentially buy. At the same time, you want enough
payment from the options to make the trade worth
your wait. The table below shows what to generally
seek on options expiring in four months or longer ver-
sus those that expire in a few months. (Note that these
guidelines are for when you’re mainly targeting income
from put writing; if you’re eager to own the stock, you
would usually write less stringent puts.)

Options expiring in Options expiring in

Factor to consider 4 months or later 3 months or sooner

Strike price Strike price should be at least Strike price should be at least
7% below current stock price 4% below current stock price

Today’s break-even price At least 14% to 17% below At least 8% to 9% below

(your strike price minus the current stock price current stock price
option premium paid to you)

Option premium payment At least 7% to 10% of your strike price. At least 4% to 5% of your strike price
(This is also your return on the cash you’ll be
keeping aside for the possible stock buy.)

Target time frame until No more than 9 months; For the above figures,
option expiration ideally, 6 months or less ideally, 3 months or less

Now let’s apply these guidelines to our example. As
of November 11, Stock XYZ was trading at $24.35 per
share — but let’s say you’d prefer to buy in the low
$20s. The $22.50 January options, which expire in just
two months, are bidding at $2.20 per share. The strike
price of $22.50 is 7.6% below the stock’s current price
of $24.35, and the option premiums pay a solid 9.7% of
your potential purchase price ($2.20 on a $22.50 strike
price). Your break-even price if you get the shares is
just $20.30 — 16.6% below the current share price.
These numbers are great, especially for an inex-
pensive-looking stock and options that expire in less
than three months. Even if you don’t get the shares at
expiration, you’ll earn $2.20 per share in two months, or
nearly 10% on the cash you have set aside for this trade.
CLOSING EARLY AND
ROLLING FORWARD
If you no longer want to potentially buy the underlying
stock, or if you’ve made most of your potential profit on
the options, you can close your puts early. Just “buy to
close” the puts you sold earlier; you’ll pay the going mar-
ket price, resulting in a gain or loss depending on what
you were paid for the puts at the start. In most cases, we
won’t close a put early at a loss unless we’re certain we
don’t want to own the underlying stock anymore.
You can also choose to close your put-writing
strategy early to write new puts that expire in a later
month, paying you a higher option premium. You might
do this if you’ve made most of the money you can
possibly earn on the trade (about 85% is our guideline);
if you want more time for your strategy to play out; or
if you simply want to be paid more now for keeping the
strategy in place. This is called “rolling forward.” Just
make sure you can find attractive new puts to write
before closing your old ones.
THE FOOLISH BOTTOM LINE
ON WRITING PUTS
Target healthy businesses with attractively valued
stocks, and your put writing strategy should leave you
happy, whether it generates income or you end up
buying the stock. Write puts on stocks you’d like to
own at cheaper prices, or on stocks that won’t likely
decline (but you’d happily own if they did) to generate
income. If you really want to own a stock, though, buy
at least some shares outright.

2021 OPTIONS INCOME REPORT 3

 OPTIONS RECOMMENDATION
WRITE PUTS ON REDFIN
This trade recommendation was published on November 24, 2020.
Be sure to consult up-to-date pricing and company information before following the strategy.
HOW YOU FOLLOW ALONG
▶ Action: Write (“sell to open”) February 2021 $40
puts on Redfin.
▶ Allocation: Write one put per $4,000 of Redfin you
can afford to buy and are happy to buy if the put is
assigned to you. Remember, this would happen if
the share price ends up being less than $40 at expi-
ration and we do nothing. Use the potential expo-
sure of $4,000 per put to determine the number of
puts to write. If 5% to 7% exposure is acceptable,
then for a portfolio of $100,000, one or two put
contracts suffice.
▶ Pricing guidance: Writing these puts will pay you
up front. Aim to receive $2.60 to $2.65 (with the
latter being the spread midpoint). This is a yield of
approximately 6.6% for the three-month exposure.
Remember to use a LIMIT order.
▶ Prices as of 1 p.m. on November 24, 2020:
Stock: $45.35
February 2021 $40 put (bid/ask): $2.45 / $2.85
WHAT I’M THINKING
Redfin’s third quarter was quite good. While revenue
was down slightly, costs were down even more, leading
to a sharp increase in gross, operating, and net profits.
Of course, a strong housing market contributes as well.
In fact, it’s been so strong that CEO Glenn Kelman said,
“Redfin’s increasing share of North America’s online
real estate audience, coupled with a strong housing
market, has generated demand faster than we can
recruit agents, lenders, and partners.”
Regarding that increasing market share, it now sits at
handling 1.04% of U.S. existing home sales. This is also
a resumption of the market share growth that Redfin
4 2021 OPTIONS INCOME REPORT
KEY TAKEAWAYS
We’re selling new puts against shares of Redfin.
If you’re new to options, I provide guidance on how
to approach and enter this position.
The underlying company had a strong third
quarter, so all is well on that front.
IS THIS ALERT FOR YOU?
This is for Options members who can afford to buy
$4,000 worth of Redfin [nasdaq: rdfn] and want
to generate income by writing puts against the
company. This is a continuation of the ongoing
strategy, but it is also appropriate for newcomers.
has enjoyed for years. Plus, Redfin’s mortgage business
turned in a profit — its first — this past quarter.
All the signs are pointing to an increasingly success-
ful disruptor in how homes are bought and sold in this
country. (Remember, if you want to capture that upside,
consider owning shares. Written puts — and covered
calls, for that matter — limit the upside.)
Turning to our strategy, our first round of written
puts expired worthless last Friday. The share price
(closing at $43.86) was well above the strike price of $35,
and that’s what happens. It’s now time to renew the
strategy by writing puts again.
We’re going with the February 2021 $40 puts. Three
months is a perfect balance between generating income
from being paid the premium and the speed at which
time value decays. The premium is large enough to
make it worthwhile. We also don’t have to sit around
a terribly long time for the time value to disappear.
(Shorter expirations pay less and require more activity.
If you receive the same amount each month, say, you
can make more in total compared to a three-month
 expiration, but that’s not guaranteed. Plus, it requires
more activity. Highly profitable option investing
doesn’t require all that much activity.)
IF YOU’RE NEW TO OPTIONS
I know we have many new people joining this service.
Welcome! You might be anxious to get into this strat-
egy and start earning all that money you’ve heard
that option investing can generate. Understandable.
However, as I wrote in this month’s “Always Have a
Plan” column a couple of weeks ago, go with patience,
even some caution. If you are new to option investing,
it can be easy to fall into some pitfalls.
First, size your position correctly. Do not look at
the premium of a few hundred dollars and desire more
“in order to make it worthwhile.” A written (“sold” or
“short”) put is a real obligation that requires you to
come up with enough money to buy 100 shares at the
strike price. In this case, that’s $4,000 per put contract
written. Only write the number of puts representing
the number of shares that comfortably fits into your
portfolio if you have to buy them. Being paid the
premium first is nice, but don’t succumb to the illusion
that it’s free money. It ain’t.
Second, the pricing of options is fluid. That means it
changes. And that’s because options derive their value
from the underlying shares, and the price of those
changes all the time. Therefore, do not be shocked,
dismayed, discouraged, or what have you that you
might not be able to get the pricing given in this alert. I
update that pricing as close to publication time as I can,
but it’s out of date just about the time I write it down.
The goal we’re after when writing puts is to be paid
a 1% yield per month as measured against the strike
price (the cost to us if we have to buy the shares).
Using the pricing given, we can expect to be paid 6.6%,
which is well over that goal.
When you go to enter your limit order price, look at
the bid and ask prices (during market hours!) and split
the difference. Check that against the strike price to see
if it comes close to what the alert’s pricing says can be
had. If it can, enter the order and wait for it to fill.
If some time has passed (or especially if the share
price has risen in the meantime), expect that you
won’t get the price in the alert. But if the price meets
2021 OPTIONS INCOME REPORT 5
the 1%-per-month guideline, it’s still acceptable. If it
doesn’t, then look to change the strike price.
Finally, it is perfectly fine, sometimes even pref-
erable, to wait for your price. We don’t know what
the share price will do in the future. Patience can pay
off. We’re Foolish investors here, which means we’re
patient, long-term investors. Just because we use
options doesn’t mean we stop following that plan.
MORE THAT MATTERS
▶ Maximum gain: Assuming shares are above the
strike price at expiration and we end the strategy
(and that 30% margin is required to hold open the
position), we’ll have earned a time-weighted return
of 22.2% in three months, assuming pricing as given.
For the entire strategy, we’ll have earned 38.7% in
five months across both written puts.
▶ Maximum loss: We own all the downside to zero
because we have to buy shares if the share price
is below the strike price at expiration and we do
nothing further.
▶ Follow-up: Depending on where the share price
ends, we’ll either re-up the written put following
worthless expiration or roll the put out three
months in order to extend the strategy.
ALTERNATIVE WAYS & MEANS
▶ Want more cash today? Instead of the $40 put,
you could write the $42 put for about $3.40. Note
that because the strike is closer to the share price,
there’s a higher chance that the put will end “in
the money” at expiration, requiring a move before
expiration.
▶ Want to use a covered call instead? This is the flip
side of writing puts. You buy the shares ahead of
time instead of promising to buy them in the future.
Set this up by buying shares in 100-share lots. For
each lot of 100 shares, sell the February 2021 $50 or
$55 call. Recently, this could be done for $42.50, or
$43.85 net debit.
The Motley Fool owns shares of Redfin.
 OPTIONS RECOMMENDATION
WRITE PUTS ON
INTERACTIVE BROKERS
This trade recommendation was published on December 22, 2020.
Be sure to consult up-to-date pricing and company information before following the strategy.
HOW YOU FOLLOW ALONG
▶ Action: Write (“sell to open”) the March 2021 $55
puts on Interactive Brokers.
▶ Allocation: Write one put for every $5,500 of shares
you can afford to purchase. Size your position by
how much $5,500 represents as a percentage of your
portfolio. If that amount is 2% of your portfolio and
your standard position size is 5%, write two puts.
▶ Price Guidance: Using a LIMIT order, aim to
receive $1.90 or better. This price gives a 3.4% yield
over the three months this option will be open,
meeting our 1%-per-month yield target. If you accept
less than that, you’re only hurting yourself. Please
note: You do NOT have to get into this position right
away. We have three months until expiration and it
is fine — normal, even — for it to take a week or two
to get the price you want. Practice patience.
▶ Prices as of 1:25 p.m. on December 22, 2020:
Stock: $59.74
March 2021 $55 put (bid/ask): $1.85 / $2.00
WHAT I’M THINKING
Interactive Brokers is a no-frills, professional-oriented
brokerage firm, founded by Thomas Peterffy as Timber
Hill in 1978. In 1993, he split that company in two —
market making and brokerage (which is when the
stand-alone Interactive Brokers arrived on the scene).
He was originally a computer programmer and
interested in electronic trading. It was faster, more effi-
cient, and less expensive than the way traders bought
6 2021 OPTIONS INCOME REPORT
ABOUT THE COMPANY
Interactive Brokers is an automated electronic
market maker and broker specializing in routing
orders and executing and processing trades
in securities, futures and foreign exchange
instruments.
Market cap: $4 billion
Annual dividend: $0.40 per share
IS THIS ALERT FOR YOU?
This is for Options members who want to start what
will hopefully become a series of written puts on
Interactive Brokers [nasdaq: ibkr] and can afford to
invest $5,500 in shares of the company.
and sold shares using paper and shouting on the floor
of the exchange. Remember the climactic scene of the
movie Trading Places? That’s what it was like.
In 1983, Peterffy convinced the American Stock
Exchange to allow electronic trading on the floor. Two
years later, he convinced the New York Stock Exchange
to do the same. In 1987, he finally convinced the
Chicago Board Option Exchange to allow electronic
trading as well. Today, exchange floors are silent as
the traders sit at computers, taking and filling orders
quietly and quickly, all electronically, and all thanks to
Peterffy’s vision and persistence.
By “no frills,” I mean exactly that. The expectation
is that the client knows exactly what they are doing. For
example, to sell an option, there’s a single choice: “Sell.”
Nothing about “sell to open” or “sell to close.” There is
very little in-person customer support. Further, margin
 calls are dealt with immediately, the moment the
condition for a margin call is hit. IB brings the account
back into compliance at once. (There’s no one- or
two-day delay to allow the customer to deposit cash or
sell something, though IB does issue a warning shortly
before dealing with it.) This has the effect of protecting
both IB and the client from excessive losses. Finally,
anything beyond delayed price data costs extra, a cost
other brokerage firms usually cover.
Traditionally, clients have been more of the pro-
fessional type (hedge funds, mutual funds, registered
investment advisors, and similar), but the brokerage
also hosts accounts of smaller retail clients.
The company’s technology is integrated into
exchanges around the world, providing consistency,
transparency, and extremely low-cost trade execution
for its customers. This results in higher trading volume
flowing through its systems and more revenue.
THE UPDATED OUTLOOK
Interactive Brokers’ third quarter was, in my opinion,
quite good. It definitely reflects what seems to be
everyone’s new hobby: trading shares. Accounts
grew by 47% year over year, and the amount in those
accounts rose 49%. Trading volume was up 58% for
options, 8% for futures, and 103% for shares. Average
trades per day from all its customers topped 2.8 million,
a 102% increase from the previous year. That’s good for
Interactive Brokers, as it collects (small) commissions
on all of that.
As a result, its pre-tax profit margin was a very
healthy 61% for the quarter, up slightly from a year ago.
We’re writing another round of puts on this com-
pany, bringing in a bit more than our 1%-per-month-in-
yield goal. As I mentioned in this month’s “Always Have
a Plan” column, we’re now on the regular three-month
cycle for these options.
IF YOU’RE NEW TO OPTIONS
This is a decent strategy for getting familiar with
writing puts. If you’ve never done this before, please
proceed cautiously. As with covered call writing, there
are hidden traps that can catch you by surprise, leading
2021 OPTIONS INCOME REPORT 7
to possible trouble before you know what’s happening.
Remember, a put is a contract between two parties,
you and someone else. The put gives the contract
owner (the long position) the right, but not the obli-
gation, to sell 100 shares per contract to the contract
seller (the short position — us) at any time up to
expiration. For that right, the buyer pays the seller (us)
a premium. The strike price is the price at which this
sale happens, so it should be obvious that it only makes
sense to exercise the option when the underlying share
price has fallen. (And when time value drains out.)
Think about this. If you cannot handle buying shares
at $55 when they’re trading in the market for $30 or
$40 (for example), do not write the put. This is the
put corollary to Rule No. 1 for covered calls. Having to
buy shares happens. It’s happened to us. In one (now
closed) strategy, we had to buy shares at $60 when they
were trading near $30. You must be Zen. If you don’t
think you can be, find a different strategy.
With that being said, the vast majority of the time,
the put expires worthless with the share price above
the strike price at expiration. This is our goal, and
we’ve been quite successful at doing it. However, this
introduces a different, more subtle potential trap: The
idea that writing puts is free money.
It ain’t.
You can be seduced by seeing puts expire worthless
over and over again and never following through with
the buying part. You can then forget about that buying
part and overextend yourself. At least until you have to
come up with tens of thousands of dollars to fulfill what
you contracted to do by selling too many put contracts.
(Please read the Weekly “It Ain’t Free Money.”) And
keep your put writing within reasonable bounds (I give
sizing guidance above). Slow and steady wins the race.
Moving on.
We write puts in order to generate cash flow, same
as with covered calls. Writing puts and writing covered
calls are two sides of the same strategy coin. They both
have capped upside and all the downside to a $0 share
price. The difference is when you buy the shares and
what that implies.
With a covered call, you buy the shares at the start.
A chunk of capital is involved from the get go, and you
write calls against those shares, eventually selling them
down the road. When you write puts, however, you are
not investing that chunk of capital today. Instead, you
 might invest it later when the share price falls. (This is,
I believe, what leads to the “free money” error, because
so often you never end up actually investing that chunk
of cash by buying the shares.)
If you’re working inside a cash account (a non-
margin taxable account or a tax-advantaged account),
the difference between the two strategies is not that
great. In this type of account, you must put up the
entire purchase price represented by the put in cash
and the broker prevents you from doing anything else
with that cash until the put is gone. Write a $55 put?
You must have $5,500 in cash in that account and it’s
reserved from any other use. (There are a couple of
nuances to this, but I’m not going into those at this
point.) In this case, there’s little difference between
writing puts and writing covered calls.
In a margin account, however, things are different.
In this type of account, you don’t have to put up any
cash to secure the potential purchase of the shares.
Instead, you have to have just a fraction of that value
in something called available margin. This lets you use
the value of the other holdings in your account (such as
stocks or bonds) to hold the short put open. You also
don’t need the entire value, but often just 30% of the
value. Writing a $55 put, for example, usually requires
only $1,650 of available margin.
There are potential traps here, too (such as a margin
call), but unless your account is on the small side or
you’re going hog wild in a way that I don’t condone,
then at this point they’re less likely to pop up and hurt
you. (Note: I’m not saying they can’t.) However, please
read the Weekly “Protecting Your Keister” to learn
how margin works. (Also, I’m not talking about margin
loans, which are something else entirely.)
Finally, unless you’re writing cash-secured puts and
you’re working in a margin account, you will need a
high-enough permission level in order to “write naked
puts.” If you’re new, you might not have that level, so
you’ll be limited to cash-secured puts (which is OK; it’s
a good way to learn). You can apply for a higher permis-
sion level (and if you’re rejected, you can apply again
later). Also, we’ve learned that accounts at Robinhood
(and possibly at other, similar brokers) do not allow
naked put writing at all. If you wish to pursue this
8 2021 OPTIONS INCOME REPORT
strategy, consider moving your account to a more reg-
ular discount broker, such as Schwab/TD Ameritrade,
Fidelity, or E-Trade. (They’re all essentially the same.)
We write a lot of puts around here, Fools. When
done carefully and with respect for the hidden traps,
they can be a great way to generate cash flow (income)
into your account. You can then use that cash to do
other things, such as invest in other positions or with-
draw and spend as needed. It behooves you to learn
how these work.
MORE THAT MATTERS
▶ Maximum gain: If the share price at expiration
is greater than $55, our put will expire worthless,
and we can count the entire premium as earned.
Assuming pricing given, that translates to an 11.5%
return on the margin required to hold the put open
(assuming 30%) or 3.6% if it’s a cash-secured put.
▶ Maximum loss: As with shares, we own the risk
down to a share price of zero. We’ll have to buy
shares (or roll our put) if the share price is below
$55 at expiration.
▶ Follow-up: Depending on where the share price is
at expiration, we’ll either let the put expire and then
re-up or roll the put out (or accept shares if the
share price is low enough to make rolling unfavor-
able). In the last case, we’d turn around and likely
start a covered call.
ALTERNATIVE WAYS & MEANS
▶ If you don’t want to write a put, you could set up a
covered call. To do this in a single order, you’d buy
100 shares and simultaneously sell the March 2021
$65 call for a net debit (cost of shares less premium
from the call) of $57.95 or better.
▶ If you want a lower risk of assignment in exchange
for less cash, you could write the $50 strike put
instead. That could be done for $0.85 recently. Note
that this doesn’t meet our 1%-per-month yield goal.