$Reddit (RDDT.US)$ here's how I'm going to be profiting from...

I'm going to be selling in August 16th 49.5 put in the spread for a 1.00. for every 10 contracts it's $1,000 that's equivalent of a thousand shares so you need to have $49,500 in buying power available in your account or cash to cover the transaction. if by the 16th the stock is below 49 and a half I get put the stock which is 10% below the market right here so I've hedged any profit taking, and lowered my cost basis to 48.5. so many people will say wait a second you're risking 49,500 if you do 10 contracts and you're only making $1,000 that's stupid. I could just buy the stock here and it's probably going to go up another dollar $2 today and I'll make more money than you.

my responses yeah you could and it may and it probably will because we're in rally mode again however at any point in time there's going to be another cell program another algorithmic rug pull event or an economic indicator or global event that's going to cause a market reversal and that's where I want to be risk-averse about in the short term not long-term cuz I think you can buy the stock here and hold it for a year to year and a half you're going to make a lot of money you'll see 75 $80 however in the short term there's going to be volatility.

so I make a buck assuming I don't get put the stock I'll do it again for the next two weeks cycle. so I'll make $2,000 by selling puts twice a month and I'll continue this for many months. after 3 months in theory I would make $6,000. I know it's not always linear like this because sometimes you do get put the stock sometimes it trades lower you have to wait till the next cycle to either sell it or write a call against it I get that however selling puts below the market is a very tactical cautious hedge approach and it can generate over time 3 months 6 months a year significantly better returns then buying the stock outright and holding it. because if I were to carry this approach out for 12 months that's $24,000 on a $50,000 stock so that's just under a 50% rate of return. so this is the approach I'm going to be using on Reddit in the near term if we do get a $23 sell-off I will buy the stock out right but in the short term I'm selling puts below the market by $5 to hedge any potential Market reversal.