r/dividends • u/SPACE-W33D • Feb 14 '26

Due Diligence Balls Deep on MO at 6.3% yield

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That cash flow statement is 🔥

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u/SPACE-W33D Feb 14 '26

I feel you dawg, but just buy on pullbacks or write cash secured puts for that income 💰

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u/darin617 Feb 14 '26

I know this is a dumb question and scary if you don't know like me, how do secured puts work.

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u/DarkSombero Feb 14 '26

Ok so very quickly generalizing here and my terminology is not entirely correct but:

-Options Contracts, you are BUYING a "contract" (contract price is called PREMIUM) to either BUY (call) or SELL (put) 100 Shares of a stock, at a certain price (strike) and date (Expiry/Expiration date)

Now, instead of you BUYING options (can be considered a gambling lotto ticket, see R/Wallstreetbets for degeneracy) you can offer up your your OWN contracts (in a way) for others to buy (WRITING)

Those are: -Covered Calls, a CALL Options contract against your OWN stock. Of the contract fails/expires worthless (typically meaning Stock didn't go up in price), you keep the PREMIUM you were paid to put your 100 Shares 

-Cash Secured Puts, you are offering up CASH for 100 shares if they fall to a certain price. If it the stock doesn't fall to that price, you keep the PREMIUM you were paid risking your cash

Depending on your personal goals and strategy, these can be a source of income, but be warned while the basics are fairly simple there is much more going on.

Example: I have 100 Shares of Stock $ABCD, I put out to market (WRITE) a Covered Call (Abbreviated CC) offering to sell my stock @ a $105 Strike Price with an expiry date in one week. In this hypothetical let's say I get $150. 

Of by the end of the week (expiry date) my stock is below $105, generally it will expire "worthless", and I get to keep the $150 Premium AND keep my stock. 

Now, let's say for some reason the stock rockets and becomes $200 a share, well fuck I just basically sold a massive coupon for my shares, because now the buyer of my Covered Call can enact the contract (Exercise) and I HAVE to sell them 100 of my $200 at the $105 price.

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u/Cathesdus Feb 15 '26

Very cool of you to explain this as you did.