You could also use a bull put spread, where you buy one lower put (insurance) and sell one put at the price it will never drop to. That way you could load up more contracts, less margin to maintain.
NLY trades at 16.91 sep put @16 = 0.59 sep put @15 = 0.36 Scenario #1, naked put; Sell 1 @16 = $59 profit, = $309 maintenance margin Scenario #2, bull put spread; Sell 1 @16 = $59 Buy 1 @15 = $36 Net = $23, = $17 maintenance margin You could then load up on number of contracts to outperform the naked put scenario. Only do this if you are sure offcourse. Br Gustaf
"If you are sure stock will never go below X, what options would you use?" Buy Puts with a strike of X. If you are sure the stock will never reach X then it will more than likely drop to X - and lower - fairly quickly.