How to buy shares at a certain price

How to buy shares at a certain price 

To know what to do, when you do like the stock too expensive? Then read on. 

Because the stock market is just a "market", "stock performance can sometimes be associated with the performance of the disconnect between companies or businesses, for example, a company might have done good profitability and growth aspects, but due to the overall weak market, the stock market may be into the fall, perhaps due to a huge rally, your favorite company is a bit too expensive at the current price of the acquisition. how should you do if you know you want to have a number of companies, but stocks of these companies a little more price in your opinion it? 

From my perspective, you have three choices. I will briefly describe the first two go into more detail of the third, more complex strategies. 

In this case the first method is that you totally wait, be patient, and the purchase price down. Risk is that, of course, the price will not move down, you hold the stock will never end. Therefore, considering the second approach, which is to buy half or one third of the purchase of the position you want. This allows you to participate in the upside in the short term, but in the future the opportunity to purchase half or more to keep your powder dry. Both methods are very simple. 

At the price you want to buy stocks 

The third method is options trading. Now, before you stop reading, because the options are terrible, let me explain, this is a super-conservative strategy. If you know you want to have a stock, but only want to buy it at a lower price than it is currently trading, you can actually get paid to wait for a better price. Please allow me to explainâ

Sell ​​your favorite stock put option, you can earn a premium (cash), only to buy the stock, if it drops, the price you want to play. If there is no € ™ t dropped the price, it remains a premium. Does not make sense, right? 

So, what is the risk? The only risk is that if the stock fell far below the price you want (the exercise price), you are still committed to the agreed price may be higher than the transaction price, which is re-purchase it when you need to buy. However, if you plan to own stock anyway, this is still a better solution than it is today at a higher price to buy. 

A simple example 

As options can be confusing to new investors, let's look at a simple example. Leta € ™ s say you want to have the number of shares literati Life (symbol: TDL). The current share price of $ 50 per share, in your opinion, a bit too high. 

You decide to sell the put option (1 contract = 100 shares), $ 1.00 each at an exercise price $ 40. Option expires one year from now. You pocket $ 100, now obliged to purchase TDL decline, hitting $ 40. 

The following results are possible: 

If TDL staying more than $ 40, the option expires worthless, you keep $ 100 

If TDL falls below $ 40, You are obliged to buy 100 shares, you will still remain $ 100. This is still an acceptable result, because you now have in stock, you want to own in the first place (in a better entry point). As I mentioned above, the only risk is that you need $ 40 to buy the stock, there is a chance, TDL may be less than the $ 40 deal. 

Through the sale of put options, you earn cash rewards, you're going to buy stocks and wait for the stock market closer to a better price. 

The important thing to remember this strategy 

You need to have cash in your account, you are obliged to purchase the shares of the exercise price. If you are obliged to buy 100 shares at an exercise price $ 40, please make sure you have $ 4,000 cash discount broker account. 

Implementation of this strategy, if you are absolutely sure that you want to have such a company's shares. There is a very real exercise price of the stock will reach, you will be forced to buy shares opportunities. 

Finally, although this is a conservative investment strategy, options trading involves risk. Make sure you do a lot of research, and have a complete understanding of the method before execution.