Covered Put
January 9th, 2010
A covered put is a short put option position where the writer (seller) also has a short position in the underlying security.
I would use this strategy as a trade adjustment. If I were already short the stock I might add a short put position if I felt the stock was ready to rise again. Adding a short put to a short stock position provides an exit strategy as well as a credit. If the put expires in the money it will close out the short stock position.