Why Your Put Strike Price Matters More Than the Premium

During their recent episode of the Value Options Letter and Acquirers Podcast, Travis and Carlisle discussed Why Your Put Strike Price Matters More Than the Premium. Here’s an excerpt from the episode:

[Tim] Exactly. And Toby, I’d rather be more conservative on the entry price into the stock. I know sometimes people will say, okay, I want to sell a put on like, let’s say a HubSpot or something like that.
And you’re looking at the valuation of the company and what price you’d be comfortable owning it at. And maybe the premiums are way more attractive at 200 or 210 or 215 or something like that. But maybe in our valuation metric, we’re comfortable owning it or buying it at 170, let’s say hypothetically.

Even if you’re getting less premium, it’s worth it to get in at a price you truly want to own the stock at because stocks can go a lot lower. I mean, HubSpot’s 52-week highs like 525 and it’s lows, something like 150 or something like that. So yes, the discipline is an important part of this and kind of monitoring it.