You already bought the stock. You know the target will take a while. The question is what you do in the meantime — and the answer is that you can get paid for waiting. If you were going to place a limit order below the market and wait for the stock to drop anyway, why not get paid for that same wait instead of waiting for free?
The scenario: you’re already in, now it’s time to wait
There are two very common situations for anyone who invests in stocks. First: you already bought and you’re waiting for the price to rise to your target, doing nothing in the meantime. Second: you want to buy a stock, but only if it drops to a price you like, so you leave a limit order in place and wait for it to fill. In both cases, you’re waiting for free. Options offer a way to get paid for that same wait.
Bonus 1: sell a call on what you already own (Covered Call)
If you already own 100 shares of a company and you’re waiting for them to rise, you can sell a call on them with a strike above the current price. This is what’s known as a Covered Call — in essence, you’re renting out what you already hold in exchange for a premium.
How it works while you wait
You collect the premium immediately, simply for selling the call
If the stock rises but doesn’t reach the strike sold, you keep both the shares and the premium
If the stock rises above the strike, you sell your shares at that price — plus the premium already collected
The “price” of that premium is giving up the upside above the strike sold, if the stock does climb that high. In exchange, you collect something while the stock does whatever it’s going to do — instead of just watching the chart with no income at all.
Bonus 2: sell a put instead of placing a limit order
If what you want is to buy a stock lower, the alternative to a plain limit order is selling a put at the price you’d be willing to buy at. You set aside the cash needed to buy 100 shares at that strike, just as you would with the limit order — but unlike the limit order, you collect a premium just for leaving that “offer” out in the market.
The difference versus a traditional limit order
You collect the premium right away, whether the stock reaches your price or not
The premium collected is deducted from your purchase price if you get assigned — you buy cheaper than with the limit order alone
If the stock never reaches that price, you don’t buy — but you keep the premium either way
This is the big difference versus waiting for free: with a regular limit order, if the price never drops to your level, nothing happened — you neither gain nor lose. Selling the put, on the other hand, pays you the premium whether the drop happens or not, simply for having left the offer out there.
Options as a tool, not a bet
Neither trade actually changes your original plan: you were still willing to sell your shares if they rose a lot, or still willing to buy if the price dropped to your level. The only thing that changes is that, during the time you were going to spend waiting anyway, you now get paid for it. If you place these trades on ProRealTime, you can set up both the covered call and the put sale directly from the options chain, on the same stock you already hold or are watching.
Conclusion
Waiting doesn’t have to be free. If you already own shares and are waiting for them to rise, selling a call on them pays you for that wait. If you want to buy lower and were going to place a limit order anyway, selling a put pays you for leaving that offer out there — whether the price gets there or not. Either way, the underlying plan doesn’t change: you just stop waiting empty-handed.
