UK Stocks Making A Comeback? How To Buy Shares For A Discount | IBD | Summary and Q&A

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February 28, 2023
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Investor's Business Daily
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UK Stocks Making A Comeback? How To Buy Shares For A Discount | IBD

TL;DR

Learn about the cash secured put option strategy, which allows investors to potentially buy the iShares MSCI United Kingdom ETF (EWU) at a reduced price.

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Key Insights

  • 💐 Cash secured put option strategy is a less bullish approach for acquiring stocks or ETFs at a reduced price.
  • 🤙 Selling put options is a beginner-friendly options strategy, similar to covered calls.
  • 🤑 Practicing with a virtual account before risking real money is advised for those new to options trading.
  • 😚 Investors can lose 100% or more of their investment in complex options trades.
  • 🇬🇧 The iShares MSCI United Kingdom ETF offers exposure to notable UK stocks from various sectors.
  • ❓ Consolidation in EWU shares provides an opportunity for moving averages to catch up.
  • 👻 Selling a put option on EWU can potentially generate income or allow for acquiring the ETF at a lower price.

Transcript

foreign ERS for today's trade we're looking at an option strategy known as a cash secured put in the ishares msci United Kingdom ETF this is a great strategy to use if you're looking to buy a stock or ETF at a price below the current one or it can give you a nice boost in the yield the ETF contains a number of notable stocks including oil and gas g... Read More

Questions & Answers

Q: What is a cash secured put option strategy?

A cash secured put option strategy involves selling a put option while setting aside enough cash to potentially buy the stock at the strike price if the option is assigned.

Q: How does the cash secured put option strategy benefit investors?

This strategy allows investors to either keep the premium if the put option expires worthless or acquire the stock below the current price if the option is assigned.

Q: What is the potential return on capital for the cash secured put option strategy?

If the stock stays above the strike price at expiration, the trader can earn a roughly 4% return on capital at risk, or approximately 10.3% annualized.

Q: What is the main risk associated with the cash secured put option strategy?

The main risk is if the stock falls quickly, causing the trade to suffer a loss. However, the premium received from selling the put option can help offset this loss.

Summary & Key Takeaways

  • The iShares MSCI United Kingdom ETF contains notable stocks like Shell, AstraZeneca, Rio Tinto, BP, and GSK.

  • EWU shares have been consolidating since mid-January, providing an opportunity for moving averages to catch up.

  • Cash secured put option strategy involves selling a put option while setting aside cash to potentially acquire the stock at a reduced price.

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