To The Moon

Micron was getting crushed last month. Most investors were focused on the downside. some Tigers saw an opportunity.

Instead of buying MU shares outright, They sold put options during the selloff. As the stock recovered, the position eventually delivered a gain of more than 100%.

• Congrats to @BillionaireN , who made a 100% gain by selling Micron put options.

• Congrats to @珺临 , who also scored a 100% gain selling Micron puts.

• Congrats to @olYlo , who made US$5,048 from selling Micron put options.

At first glance, it looks like a high-risk options bet. But the idea behind the trade is actually pretty simple: if you already want to own a stock at a lower price, selling a put allows you to collect a premium while you wait.

Why sell puts after a big drop?

Suppose MU is trading at $868 but you think $700 would be a much more attractive entry point.

You could simply place a limit order at $700 and wait for the stock to come down. Or you could sell a $700 put and collect a premium upfront.

If MU stays above $700 through expiration, the option expires worthless and you keep the premium. If MU falls below $700, you may be assigned and required to buy the shares at $700.

Because you already collected the premium, your effective purchase price would be lower than the strike price.

That is what makes the strategy appealing. You are essentially saying, “I am willing to buy this stock at this price, and I am happy to get paid while I wait.”

A sharp selloff can make the setup even more attractive because volatility usually rises when stocks fall quickly. Higher volatility often means higher option premiums, which gives put sellers more income upfront.

That was part of the opportunity in this MU trade. The investor sold puts when the stock was under pressure and option premiums were elevated. Once MU stabilized and rebounded, the value of those puts fell quickly, allowing the position to generate a strong return.

Buffett used a similar strategy with Coca-Cola

Warren Buffett has used put selling as part of his investing playbook before.

One well-known example came in 1993, when Berkshire Hathaway sold put options on Coca-Cola with a $35 strike price, covering roughly five million shares. Berkshire collected about $7.5 million in premiums.

The logic was straightforward. Buffett was already comfortable owning Coca-Cola at that price. If the stock stayed above $35, Berkshire would simply keep the premium. If the stock fell below $35 and the puts were exercised, Berkshire would buy the shares at a price Buffett considered attractive.

The option was simply another way to enter a position he already wanted.

Can regular investors copy the strategy?

In theory, yes. But the important part is not copying the trade itself. It is copying the discipline behind it.

Selling puts works best when you already want to own the stock, you have a clear price at which you would be comfortable buying, and you have enough cash available to take delivery of the shares if you are assigned.

The biggest mistake is focusing only on the premium. Imagine you sell a $700 MU put and collect a decent premium, but MU later falls to $600. You could still be required to buy the stock at $700.The premium lowers your effective cost basis, but it does not protect you from a major drop in the share price.

That is why cash-secured puts are very different from selling puts with heavy leverage. If you have enough cash set aside to buy the shares, the strategy can be a disciplined way to enter a stock at a lower price. If you are relying heavily on margin, a sudden selloff can turn the trade into a much bigger problem.

The Tigers’ 100% gain on MU are impressive, especially because the trade were placed during a sharp selloff. But the more important question is what would have happened if MU had kept falling.

If the stock dropped another 20% and you were assigned at your strike price, would you still be happy to own it? If the answer is yes, selling puts can be a useful strategy. If the answer is no, the premium probably is not worth the risk.

Would you sell puts on MU after a big drop, or would you rather wait and buy the stock directly? $Micron Technology(MU)$ $Coca-Cola(KO)$ $Berkshire Hathaway(BRK.B)$

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