Cash-Covered Put Selling: 1 Response To Zero Returns On Cash

Tue, 02/21/2012 - 12:56 EDT - Seeking Alpha

By John D. Thomason:Anyone with a brokerage account knows that cash held in an account, awaiting better stock-buying opportunities, is earning effectively nothing these days. One way to realize a return on some of that cash is to sell puts on stocks that are "covered" by those funds. In this article I will review the basics of this strategy, and offer my own opinions on when it is appropriate, and to what extent. I will then review five put sales that I have entered and exited over the past two years on one stock, ConocoPhillips (COP), to illustrate how I have employed the strategy, and the results achieved.Most income investors are familiar with the strategy of selling calls on stock owned for additional income. If the call expires worthless, the realized call sale income adds to the dividend income, assuming the stock is a dividend-paying stock, boosting the over-all return. If theComplete Story »

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Cash-Covered Put Selling: 1 Response To Zero Returns On Cash

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