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I have a margin account that charges me 6.5% annual interest.
I want to buy 1000 shares of MSFT. Instead of spending $397k today and paying monthly interest of $2,140. I want to write a June $450 put and collect $58k premium. For one I don’t have to pay interest for 4 months, secondly if stock moved up in next 4 months I have locked in today’s price.
I understand that if stock moves down I take the downside (but that similar to owning a stock) and I am ok if I get assigned in June or before that. I will also lose out on a $0.90 dividend but I am saving lot more.
What am I missing here? Am I thinking about this wrong?