<p>A trader who is short 100 shares of stock may sell (or write) a <a href="https://unusualwhales.com/option-strategies/covered-put">Covered Put</a>. The trader receives a credit for selling the Put, and is obligated to buy those 100 shares at the strike price of the Put.</p><p>There are a few common applications of the Covered Put: 1. Reduce the cost basis of shares 2. Generate a yield from short shares 3. Systematic profit-taking.</p><h2>Related Articles</h2><ul><li><a href="https://unusualwhales.com/information/what-is-a-call-credit-spread">What is a Call Credit Spread?</a></li><li><a href="https://unusualwhales.com/information/what-is-a-spread">What is a Spread?</a></li><li><a href="https://unusualwhales.com/information/how-to-spot-and-understand-contingent-trades">How To Spot and Understand Contingent Trades</a></li><li><a href="https://unusualwhales.com/option-strategies/protective-call">What is a Protective Call?</a></li></ul>

This article covers the Covered Put strategy and how some traders utilize it

What is a Covered Put? 

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