Nasdaq On June 6: Sell Puts On Tech Stocks Because “A Selloff May Never Come”

You know in retrospect, this probably should have been a warning sign.

Or perhaps we might just add it to the growing list of evidence to support the contention that they do indeed “ring bells at the top.”

Just six short days ago – so that would be just three days ahead of the brutal “tech wreck” that began on Friday and bled (figuratively and kind of literally) over into Monday – none other than Nasdaq itself ran a piece in the “MarketInsite” section of their website that offered hope to anyone feeling left out of this year’s tech rally. To wit:

If you missed out on the run in large-cap tech stocks, there is a strategy that can keep you in the game.  

That strategy: sell puts on large-cap tech stocks.

Here’s Nasdaq:

For investors that missed out on the year-to-date performance in stocks like Alphabet, but would be willing to buy at lower levels, selling puts rather than just sitting on cash waiting for a selloff that may never come or take several months to play out is an option. The two main reasons to employ this strategy are:

1. Potential source of income generation; and
2. Stock replacement.

And here’s Luke Rahbari, CIO of Stutland Volatility Group and Equity Armor Investment, who Nasdaq quoted on the way to explaining why this is a good idea for retail investors:

Instead of always having cash on the sidelines, I can pick a price that I am willing to buy the stock and collect some income.

Got it.

Now let’s just hope anyone who took that advice was indeed “willing to buy the stock” and didn’t decide to swim into this naked…

Meanwhile, Nasdaq is undeterred.

They retweeted the same article this morning:

Unsure about selling puts? Here are two reasons that may change your mind: https://t.co/inoSH4O5P5 pic.twitter.com/rZh3xKO4bS

— Nasdaq (@Nasdaq) June 12, 2017