Just a note to say thank you Travis. I invested in SODA back in 2014 after reading about it here. My rationale was that SODA had some trend tailwinds (such as disposable plastic bottle reduction), and had a credible takeover story that would happen at some time. Well, it happened. Pepsico has agreed an offer of US$144 per share. I bought in the $30s. I only wish I had bought more!
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That just means selling put options — you sell a put and are promising to buy 100 shares at whatever the strike price you choose might be, at any time before the expiration date for that contract.
That can be a good way to acquire more shares and to put your “I’ll buy more if it dips” sentiment into action… but it takes some discipline and you have to REALLY want to buy the stock at that lower price… the risk is that if you sell a put at $20, you’re buying the stock at $20 even if an accounting scandal or market crash (or whatever) drives the shares down to $3. You can also bracket that trade to reduce the risk (and income) by selling that put at $20 but also buying one at, say, $15… so you know you’ve limited your theoretical loss to $5 per share or $500 per contract.