Selling cash secured puts on stocks allows investors to generate extra income by writing put options and setting aside cash to potentially buy the stock. This strategy is less bullish than outright stock ownership and requires understanding the risk of being assigned 100 shares at the strike price.

Investors sell puts on stocks they believe will stay flat or rise slightly. Cash secured put sellers are willing to take ownership of the stock, while naked put sellers aim to generate premium without acquiring the stock.

The more bullish the investor, the closer they should sell the put to the stock price to maximize premium and assignment chances. Selling deep out-of-the-money puts generates less premium and lowers the likelihood of assignment.

An example with Rocket Companies (RKT) shows how selling a put option can lead to a discounted purchase of 100 shares if the stock price drops. If the stock price remains above the strike price, the put expires worthless, and the trader keeps the premium.

Investors can achieve a 44.8% annualized return or buy a high-growth stock at a discount using cash secured puts. The Barchart Technical Opinion rating for RKT is 100% Buy with a Strengthening short term outlook. Long term indicators support the current trend.

Rocket Companies Inc. is a holding company with various personal finance and consumer service brands. This strategy involves risk but can be a profitable way to generate income from stocks you want to own.

Remember to start small and understand the risks involved in options trading. Consult a financial advisor before making investment decisions. This article is for educational purposes only and not a trade recommendation.

Read more at Barchart: How to Buy RKT for a 9% Discount, or Achieve a 45% Annual Return