EC Put Options: The Smart Way To Buy

The ability to name your own price for an item you want is a remarkable way to shop. It gives you a sense of control and guarantees you are not overpaying. It’s worked for travel specialist Priceline (PCLN) for years and insurance company Progressive is taking a stab at it as a way of getting your insurance premiums under control.

What’s even better than paying the price you want is getting paid while you wait for the price to fall to your target.

Honestly, it sounds too good to be true, but it’s not.

It’s a strategy called selling put options. Very few know it exists in the market today, and even fewer take advantage of it.

But I believe selling put options will change the way you look at the market. Instead of being forced to pay a high price today or wait and hope it falls to a price you want, you can get paid instantly by simply agreeing to buy it at a price you name.

It’s that simple.

To explain how it works, let’s consider a market everyone is familiar with — the housing market.

Get Paid to Wait

To be clear, this is a strategy to implement as a way to purchase stocks and collect income, but since real estate trades similarly to the stock market, it’s a clear analogy and something everyone can relate to.

Before you bought your current home, there was a price you were willing to pay to obtain it. Let’s keep it simple and say the home was worth $250,000, but you were willing to pay only $200,000.

Instead of checking every day to see where the price of the home is at and if you wanted to make an offer, you could set up a contract — in this case an option contract.

With that contract, you would agree to buy the house for $200,000 if the market value of the home fell to that price or lower during a set amount of months — let’s say four. By agreeing to buy this home for $200,000 over the next four months if the valuation falls, the owner would pay you upfront cash, maybe $6,000, or 3% of the full value.

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Author: Travis Esquivel

Travis Esquivel is an engineer, passionate soccer player and full-time dad. He enjoys writing about innovation and technology from time to time.

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