A strategy where you sell a put option while keeping enough cash in your account to buy the underlying stock if the option is assigned. This means if the stock price falls below the strike price, you will be forced to buy shares at that price, so you need cash available to cover the purchase.
You sell a put option on a stock with a strike price of $100 per share, collecting a $5 premium. To sell this put, you must have $10,000 in cash available in your account (100 shares times $100 per share). If the stock price falls to $80, you will be assigned and forced to buy 100 shares at $100 using your cash, so you must have that money ready.
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