You sell a put option and set aside enough cash to buy the stock if assigned. If the stock stays above the strike, you keep the premium. If it falls below, you buy the stock at an effective price of strike minus premium. A way to get paid to wait for a lower entry.
Limited to: Premium received
Strike Price - Premium received (substantial, to $0)
Strike Price - Premium received
Short 1 Put + Cash reserve equal to strike × 100
Limited profit (premium). Substantial downside risk if stock drops significantly below strike.
When you want to buy a stock at a lower price and are willing to wait. When you want to generate income from cash positions. best in neutral to mildly bullish markets.