Value Investing With Options
Value investing first. Options second. That is the Wall St Yardie way.
Options do not replace a value thesis. They sharpen it. When you find a quality business at the right price, cash-secured puts, covered calls, and LEAPS give you disciplined tools to improve entries, generate income, and use capital more efficiently.
Analyze Stocks in the AppThe Wall St Yardie Framework
Good company first. Fair price second. Option trade third. That order matters every time.
Find quality
Durable advantages. Consistent earnings. Manageable debt.
Estimate fair value
Free cash flow, earnings yield, and intrinsic value models.
Set your buy price
Build in a margin of safety. Know the price that makes the deal sensible.
Choose a strategy
Only add an option when it genuinely improves the plan.
Manage the risk
Size positions properly. Never chase premium at the cost of the business.
Three Strategies That Fit a Value Thesis
Each strategy serves a specific purpose. Pick the one that fits the situation, not the one with the highest premium.
Cash-Secured Puts
Get paid to wait for your buy price. Sell a put at or below fair value and collect premium while you wait. If assigned, you own the stock at your target price minus the premium received.
"A limit order that pays you."
Calculator →Covered Calls
Generate income from shares you already hold. Sell calls above fair value so you are comfortable if the stock gets called away. Never sell below what the business is worth.
"Income without selling cheaply."
Calculator →LEAPS
Long-dated calls for high-conviction ideas where you want exposure but not full capital commitment. Only use LEAPS when business quality and upside justify the premium and time horizon.
"Leverage for patient investors."
Calculator →When Not to Use Options
The goal is not to trade more. The goal is to invest with more discipline.
You do not want to own the stock
A cash-secured put is a commitment to buy. If you would not buy the shares outright, do not sell the put.
The stock is overvalued
Premium is not profit if the underlying business is weak. Overvalued stocks can fall far below any put strike.
The call strike is below fair value
A covered call should not sell away a wonderful company below what it is worth. Know your number before setting the strike.
You are chasing premium yield
High premium usually means high uncertainty. Use options to express a value thesis, not replace one.
Go Deeper in the Blog
These articles build on the framework above. Start with the fundamentals, then pick the strategy that fits.
Start With a Quality Company
Wall St Yardie helps you score business quality, estimate fair value, and build a disciplined buy price before you touch the option chain.
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