Stock A is trading at $100. I'm starting with 10,000
Selling Put Strategy -I sell a $95 put two weeks out for $5 in premium. -I get paid 500 dollars. I now have 10,500 dollars. (9,500 is being used to secure the put)
Scenario E: Stock goes way down to $90 -Put expires and you get assigned -You now have 100 shares worth $9,000 and $1,000 -You technically broke even here. You just lost time -Alternate: You can roll your position here. I will go over this another time.
So you own the stock at $90 even though your put was at $95? And why do you have $1,000 instead of $500?