Part 3/10:
When you sell a put, you pick a stock that interests you and choose a strike price where you’re willing to buy it. Instead of buying at the current market price, you can choose a lower strike, giving you a margin of safety and a better entry point.
For example, if a stock trades at $27.42, you might want to purchase it at $21. By selling a put at the $21 strike price, someone pays you now for the right to sell the stock at $21 in the future. If the stock stays above the strike at expiration, you keep the premium and don’t have to buy the stock. If it falls below, you’re obligated to purchase the stock at $21, which might be below the current market value, allowing you to acquire quality shares at a cheaper price.