Let's Add Another Silver Stock By Selling a Put Option
Silver is still correcting…
… which gives us a chance to pick up the silver miners we missed during the 2025 run-up. Last week, I explained the “low-ball bid” strategy. Now let’s consider another, in some ways better, way to play a correction: a put option sale.
Here’s an excerpt from the February 2023 post that introduced this concept:
Write Puts To Buy Stocks At A Discount
Most of the stock recommendations I’ve posted here have come with a version of the following disclaimer: “Stocks might crash in the coming recession, so place low-ball bids, sell puts, or dollar cost average, but do not jump in with both feet until the monetary/geopolitical dust settles.”
The “sell puts” part may not be familiar to everyone. But since it’s both easy to do and a great way to shave a few bucks from the price of the stocks you buy while lowering your overall risk, it’s definitely worth learning. Here’s a quick primer:
A put option is a contract that allows its owner to sell a stock at a pre-set (“strike”) price during a fixed period of time. When the stock price falls, the put option’s value rises.
Selling (or writing) a put throws the process into reverse. You as the writer are obligated to buy the underlying stock at the strike price, but — here’s the kicker — you get paid to accept this obligation, which means you can end up with a stock you want in any event, but at a lower total price than if you had just used a fixed-priced bid.
Your broker has a quick primer on put options. Spend a few minutes with it before executing one of these trades.
Which Put Should We Write?
There’s a big silver miner that’s doing well operationally and financially. I didn’t add it to the original Gold/Silver Producers portfolio because I assumed subscribers would get exposure to it via the SIL silver miners ETF.
Since then, it’s made some positive moves (including a major acquisition) and is generating massive cash flow. So let’s upgrade it to “core holding” and buy some shares directly. Here’s an overview: