Every now and then the markets will take a beating. Almost every stock will fall plummet and all hope is loss. That is when many professional traders like to buy. I will show you a new technique for getting paid for buying stocks that have been depressed.

Let us say that stock XYZ is a good company. It will never go out of business in the known future. We all know stocks like these. It is continuously going up and finally peeks at $100. Than a market crash happens and this stock is trading at $50. You say to yourself that you would be willing to buy this stock at $50 and hold it long term. So, what if I told you, you could buy it at $45 and get paid to buy it too. Would you? Of course, but first I have to familiarize you with some things.

This strategy works by using put options. A put option gives the purchaser the right to buy a stock at a given price by a certain date. This price is called the strike price.

So, could you sell the $45 put on stock XYZ? Well, let's see. For every put buyer there must be a put seller right, makes sense. Selling puts is called selling a naked put. When you sell a naked put you have the obligation to buy the stock at a given price by expiration.

Let's say you sell a $45 put for $1.5. Now you have $1.5 and the obligation to buy this stock at $45. You already said you would be willing to buy this stock at $50, so buying it at $45 will be good. Let's look at all possible outcomes.

• 1. If the stock goes down below $45 buy it at $45. Remember this is a good thing, because you now have this high quality stock at a low price. You can hold onto it for the long term and let it pay off over time.
• 2. If the stock stays above $45 or even goes up. Well you didn't get into this stock but you did make the $1.5. Now you can try again next month by selling another put, or find another depreciate stock and sell a put for that one.

Just remember if you sell a put for a stock make sure you have adequate fund in your account to buy the stock.

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