Selling puts is a way to buy a stock at prices cheaper than what you would have to pay if you bought it outright today. When you sell a put, you earn money now for taking on the obligation to buy the stock if the stock closes below the strike price of the put options at expiration. Here is a potential options-selling trade, a put write on down-but-not-out toy maker Mattel (MAT), which owns Barbie, Fisher-Price, Hot Wheels, and American Girl. El Segundo, Calif.-based Mattel is probably best known as the parent company of the popular Barbie doll franchise. If Mattel closes below $25 at expiration, you will be obliged to buy 200 shares at $25 apiece, although your cost basis would be $24.40, assuming you get $0.60 for the puts.

Source: Forbes March 03, 2017 20:30 UTC