Options Trader Outlines Cash-Secured Put Strategy on Broadcom
Akshat Shrivastava describes selling a put option on Broadcom at a strike about 20% below its roughly 370 price to collect a premium of around 12% annualized. He argues the strategy suits investors willing to own the stock at a lower price.
Original post · 1 min read
1) I own 0 stocks of AVGO (Broadcom). The stock trades at 370.
2) Fundamentally, this is one of the best businesses in the world to own.
3) Now, I will sell a PUT option at around 280. This is 20%+ Out of the Money.
4) For this, I will be paid roughly 6% yield over 6 months. So 12%+ in 1 year.
5) Now: some of you would say: that cash secured put is a risky strategy. What if the price hits 280$. And, you are forced to buy?
6) I am okay with this. AVGO falling to 280 means, it is down 40%+ from its peak. I am happy to buy 100 stocks here. Therefore, I picked a firm like AVGO to begin with.
If the stock does not fall to this point, cool, I will collect my 12% rent in $ terms.
Most people make losses on options because they don't make it part of their core portfolio. And, neither understand how to manage risks.
If you use it sensibly (especially in good markets like the US), you can make decent cash flows.

