Writing a Put Option to BUY Shares That You Want To Own
     
  Share description      
  Share Symbol      
  Current Share price      
         
  Share Commission      
  Option Commission      
         
  Federal Ordinary Income Tax rate      
  State and Local Income tax Rates      
     
Writing a Put Option to BUY shares
         
    Option Sale Proceeds  
  Put Description   Premium Taxes Realized  
  Put Symbol    
  Premium on Put    
  Strike Price of Put   Share Purchase Costs  
  Out of the money   At Market On Exercise Discount  
     
       
                 
 
  This assumes that the investor wants to own the shares for the long term and the fact that the price may decline to  
  reach the lower purchase price is viewed as short term, and actually a good thing because it allows  
  the investor to buy at a lower price than the market price that existed when the decision to buy was made.  
 
  Such a plan is associated with portfolio rebalancing of indexes in which poorly performing shares  
  are bought with the proceeds of over-performing ones with the expectation that the market will turn around at some point.  
 
  For these sorts of investors, this strategy has the risk that the market may turn before the option strike price is reached.  
  A market order to buy would be better if such a risk is deemed significant.  
 
  This strategy is known as selling a "Naked" put and is risky because the share price may fall considerably further than the amount by  
  which the option is out of the money, which is the price you are required to pay. This risk is acceptable to investors who have   
  made the decision to own the shares for the long term and who view downturns as temporary.   
 
  The risk of the strategy shown here is NOT acceptable for investors who are not prepared to accept the possibility of a price decline.  

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