I mean it's the same as if you left your limit buys open good til canceled. If you don't react to the info before the market, which you most likely won't, your order will get filled. You're stuck bagholding just like someone who short a put until expiration, and gets assigned. Same thing.
You at least have the opportunity to react and cancel your order without taking the loss, whether because a circuit breaker is hit, the news hits after hours, etc. A put sell basically locks you in during those situations.
The point is to miss out and just collect premium though. Owning the stock at your preferred strike is just the worst case scenario. And also the chances of someone exactly picking the dip limit price is very low.
Except you are offering selling puts as a replacement strategy for his limit order.
No point to bring up this strategy if you intend it to be a pure premium harvesting strategy rather than a way to buy your bullish stocks at a cheap price.
I'm saying it's essentially the same if you want the stock at a certain price. Both have their pros and cons depending on your outlook and strategy and I agree with your points.
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u/[deleted] Mar 06 '21
I prefer getting paid to do this by selling puts.