Short Put: How I build my own entry price and make money in the process.

Reading time: 3-5 minutes

Many people think of options as a wild gambling instrument - but they can be used in a wonderfully down-to-earth way to cleverly manage your portfolio. A perfect example of this is my current short put on Arbor Realty ($ABR (+2,68 %) ), which you can also see in the embedded screenshot from my Swissquote account.

At the beginning of May, ARBOR stood at around USD 10.24. It was clear to me that I only wanted to buy more if the share fell below USD 8. Instead of placing a classic limit order, I preferred to sell a plain vanilla put option - without any frills. This was my signal to the market: If ARBOR falls below 8 dollars by mid-July, I will buy the shares at that price. I received a premium of USD 0.34 per share for this promise, which amounts to USD 34 for one contract (100 shares). (You can find out what the buyer of the option thinks at the end of the post).

If you look at the screenshot, you can see under "Last price" the current value of the option - just USD 0.01. This means that it is extremely unlikely that the option will go into the money. It will expire worthless. The volatility is also exciting: at 97%, it is extremely high - which benefits me, because the higher the expected fluctuation, the higher the premium paid by the buyer. So I got more money for my promise thanks to the high level of uncertainty. After all, when I sold the option, it was 20% away from the strike (option price / market price = ~3% for 2.5 months)

In the screenshot you can also see the current price of ARBOR (10.99 USD) - well above my strike at USD 8. As long as this remains the case, my put option will expire worthless on July 18 and I can keep the entire premium. If ARBOR does fall below USD 8, I will have to buy - but even then, thanks to the premium, I have effectively only paid USD 7.66 per share.

This is how I use short puts: On the one hand, I control my desired entry priceon the other hand, I earn a little extra while I wait. This is exciting for me because I want to stay invested for the long term anyway. I don't want to gamble away this share, but rather add to my holdings when the price is good.

If you look closely, you can also see the key figure in the screenshot Leverage 17.29 - which shows how strongly the option reacts to price movements. For me as a seller, however, this does not play a major role because I am not speculating but "selling" the leverage: I collect the premium because someone else buys this leverage. Furthermore, the leverage is invalid at the end of an option, shortly before the practically worthless expiry.

So a plain vanilla put option is anything but complicated: fixed strike, fixed expiry, no barriers or special rules. This is precisely what makes them so easy to plan for strategies like mine: either I buy at my price - or I simply take the premium.

If you already own shares or are planning to add to them in the long term, you can cleverly boost your cash flow with short puts. Important difference to gambling: I only sell puts on shares that I really want. This keeps the risk manageable - even if the share price drops sharply.

Current puts in my portfolio:

$MAIN (+1,59 %) AUG25 49.7P & SEP25 44.4P

In the past I have successfully $HELN (-0,14 %) stocked up. With $MPW (+2,94 %) selling the puts even made up for large parts of my book losses.

So options don't have to be wild or complicated. With a simple short put, you can practically build the purchase price yourself and get paid for waiting. This is exactly what you see here in black and white in the Swissquote account.

Finally, if you're wondering whether it's worth it because of the "small" USD 34: I deposit via Lombard credit and have no liquidity to deposit as collateral. So it doesn't restrict me personally. I pay nothing for the part of the Lombard loan blocked by the option, as it is not actually used. Selecting an option doesn't take me 5-10 minutes. So it's worth the time for me. At times it was 100-150 per month as an "extra". However, as I only want to buy fewer shares at the moment, or the targeted entry prices are too far below the market price and the premium is correspondingly unattractive, there is less activity on my part. :-D

SO - What do you want to know and should I also shed more light on the put's long position? (The entry point is at the end of the post).

• The "loss" described here results from the purchase (strike 8-.) and the possible market price of e.g. 7.50 - but the option premium still has to be offset.

The buyer of the option:

The buyer of the put expects - or wants to hedge against - the price falling below $ABR (+2,68 %) falls below 8 dollars by July. For him, the put option is something like an insurance policy. If the price falls significantly below 8 dollars, he can still sell the share at 8 dollars, even if it is only worth 6 or 7 dollars on the market. This limits his downside risk. Some also buy puts purely speculatively in order to profit from falling prices without owning the share itself. In the best case scenario, the buyer then sells the put later at a higher price if the price really does fall and the option is worth more. In any case, the following applies: I receive the premium because the buyer wants either security or speculation - and I make this option available.

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Happy investing!

GG

I love selling options, so I "sell to open" a call option.

Currently I have short call options on $MAIN (+1,59 %)
$ABR (+2,68 %) only, but used to sell calls on $MPW (+2,94 %) , $HELN (-0,14 %) and $NVDA (-2,07 %) .

My reasoning: They are expensive at current price X, but i'd love to take them at PRice X - 20% for example. So I receive an option premium, and if the stock does tank like 30%, a buyer is happy to make the margin trade in between, the Market Price X - 30% and the Option PRice of X - 20% (= ~ 10%).

That does generate income if the options does expire worthless. But for GetQuin I can only insert the wins by creating a buy-order for an investment vehicle "other", and then sell it on the expiration day for the options premium I got.

This creates the problem of having the income at the wrong date as well as "exaggerated" single-trade-returns. Also slightly tedious...

It's not a huge amount. It's not a major effect on the performance. However, it's rather annoying. I'm curious if I'm the only one doing it, since most people prefer to buy structured products rahter than buying the option straight.

If I'm not the only one, I'd dare to tag customer support to ask for a development of enabling selling short.

Happy Investing

GG

------------DE:

I love selling options, so I "sell to open" a call option.

Currently I only have short call options on $MAIN $ABR, but I used to sell calls on $MPW , $HELN and $NVDA regularly.

My reasoning: they are expensive at current price X, but I would like to buy them at price X - 20%. That way I get an option premium. If the stock falls by 30%, a buyer is happy to margin trade between the market price X - 30% and the option price of X - 20% (= ~10%).

This generates income when the options expire worthless. But with GetQuin, I can only insert the profits by creating a buy order for an "Other" investment instrument and then selling it on the expiration date for the option premium received.

This leads to the problem that the income is received at the wrong time and the returns for individual transactions are "exaggerated". It's also just a bit more time-consuming ^^

It is not a large amount. It doesn't have a significant impact on performance. It is quite annoying though. I'm curious if I'm the only one doing this, as most people prefer to buy structured products rather than buying the option outright.

If I'm not the only one, I would venture to contact customer support to request a development to allow the short sale.

Depot presentation - hope for constructive criticism and inspiring opinions

• Beginnings

Started with 25€ Q4 2021, now Q4 2024 my portfolio exceeded 50k for the first time, which was an amazing feeling for me not to be one of the people with mountains of Klarna debt. But to have built up something.

• Strategy & goal

My investment horizon is still very long, I'm 27 and still have plenty of time.

My strategy is definitely the dividend strategy. I want to slowly but surely have a constantly growing payout. So that I can draw on it as early as possible. After all, I'm living in the here and now and don't want to wait until I'm old to have some of the money. Finding the balance between living and saving is the art, I think.

• Self-assessment

I'm quite happy with my position, a few mistakes from the beginning like $MPW (+2,94 %) or $BAYN (+1,4 %) are also included. I lost a small amount of money on the Beer coin, but I believe that this experience has helped me to avoid making such mistakes in the long term. But also a lucky hand like $NVDA (-2,07 %) 300%, or holding on to the $BTC (+1,49 %) since 2022 make me feel positive. So far, however, my rational and conscious decision has confirmed me. 2000€ capital gains and well over 2000€ realized profits make me feel positive. An internal interest flow of approx. 25% (according to financial flow Copilot All Time).

• Diversification

I think my diversification is good, many strong stocks, a healthy amount of crypto, call money, ETFs, whereby the percentage should still grow. Physical gold is also included in a healthy weighting. A cash reserve of 5k is always available (emergency overnight money)

• Deposits

My cryptos and a few shares are with Bitpanda. (I started there because of a friend)

My main account is with Trade Republic (I'm very happy with this broker and have tried others that didn't convince me any better)

• Current situation

At the moment I think my German share is too high and would like to do something about it, as well as gradually clearing out the legacy assets mentioned above, which I don't believe in in the long term.

I am currently interested in $AMD (-0,35 %) in terms of AI and turnaround. Stocks such as $UNH (+1,12 %) in relation to FOMO are also worth watching. As well as $PEP (+1,07 %) to better cover the consumer staples sector.

In the hope of constructive criticism of the overall situation and stimulating opinions on it.

Especially in stressful times, it is important to relax, not have FOMO and collect dividends $OHI (+0,03 %)

$MPW (+2,94 %) is also in the portfolio and will be held!

The second month of 2025 is already over. Time is flying by again at breakneck speed and one event or statement follows the next this year. It's crazy what's going on at the moment and at the same time the market is somehow saying "I don't care".

Up down, up down, the markets are becoming more volatile and yet, or precisely because of this, my February was almost at +/-0.

But one thing at a time.

In February I achieved a plus of 0.8%. With my portfolio size, this corresponds to a value of almost €900. Not particularly good compared to the Dax (+3.77%), but still very respectable compared to the HSBC MSCI World (-2.49%).

Unfortunately, things do not look any better over the year (YTD).

The Dax is running away with 13.3%, while the MSCI World is bobbing along at 1.6%. Here, too, I was at least able to beat the World, but I still lag miles behind the DAX.

Overall, however, I am still very satisfied. As I don't have a lot of tech in my portfolio and my stocks are (mostly) rather stable, there is often no outperformance of the stocks and if there is, it is only marginal.

My high and low performers in February were (top 3):

$HSY (-0,77 %) Hershey +15.63%

$T (+1,05 %) AT&T +14.07%

$NESN (-0,2 %) Nestle +13.10%

$ADM (-1,62 %) Archer Daniels -8.57%

$UNH (+1,12 %) United Health -13.16%

$TSLA (+1,37 %) Tesla -27.59%

Dividends:

In February, I received a net €123.62 from a total of 10 distributions.

Compared to February 2024 (€99.26), this was an increase of 24.54%

Investments:

Due to the construction work on the house last year, the focus continues to be on building up the nest egg and saving up a "leisure account" again, as everything was really used up completely last year and only the custody account remained.

The savings plans will of course continue unabated, but individual investments are probably not possible for the time being.

Purchases and sales:

I have parted with Mercedes ( $MBG (-0,76 %) ) and Medical Properties ( $MPW (+2,94 %) ).

I then added to Lockheed Martin ( $LMT (+0,34 %) ), Hershey ( $HSY (-0,77 %) ) and Petroleo Brasileiro ( $PETR4 (+0,35 %) ).

My savings plans remain unchanged, but it is quite possible that I will stop them for the time being in order to build up investment cash again.

Savings plans (350€ in total):

• Realty ($O (+0 %) )
• STAG Industrial ($STAG (-1,16 %) )
• Gladstone Invest ($GAIN (+0,93 %) )
• Hercules Capital ($HTGC (+0,99 %) )
• Cintas ($CTAS (+1,1 %) )
• LVMH ($MC (+0,31 %) )
• Monster Beverage ($MNST (+1 %) )
• Microsoft ($MSFT (+0,36 %) )

Goals 2025:

My goal is to have €130,000 in my portfolio at the end of the year. The goal is to be achieved by reinvesting the dividend, making payments and, of course, increasing the share price. The share price increase is of course impossible to predict in any way, so the motto is: if the share price falls or does not rise enough, more cash is needed.

This comes from selling useless stuff on eBay, additional income from e.g. "neighborhood help" etc. The worse the share price, the more additional cash has to be raised.

Target achievement at the end of February 2025: 37.41%

So I'm on the right track (so far). I'm curious to see what else will happen in 2025 and hope that the crash, which seems to be getting closer and closer, will take a little longer (so that I can continue to accumulate cash).

How was your February? Are you happy so far? I think that, due to the volatility, the portfolios in February are far more spread out than they were in January or even at the end of last year.

Comes $MPW (+2,94 %) and rises. How far will it go or will it fall again like last time when we were at 5.70 euros?

Only 40% down 🫡

Just received 2x dividends within 30 minutes from the $MPW (+2,94 %) received. Have I missed something? Or is Trade republic up to mischief again?

$MPW (+2,94 %) I'm a little worried about the euphoria over the share price rise in the last month, perhaps driven by the recent news that one of the tenants, if not the biggest one, is in recovery, but the truth is that the company has an absurd debt and I honestly don't see them generating enough revenue/cash to fight this debt that reaches 3B by 2026.

I really like this type of segment but for now I'll stay out of it and keep watching!