I was wondering if this is a poor strategy for investing.
I have $60k to invest and I want to buy 12 solid stocks which pay dividends. Would it be a good idea to sell puts on them until I have to buy when the put option is called in? When I actually have to buy the stock I'll hold until value increases at least 5% then sell and start over with the same stock or another quality stock. The goal will be to make money from selling puts until I have to buy and then collect dividends until time to sell and then start over.
The biggest risk I see is a total collapse of a company for which I'm selling puts. Another risk is a long bear market in which case I would just hold the stock. Some examples of stock I would like to sell puts on would be IBM, Abbott, Chevron, Exxon, Intel, Wal Mart, Aflac to name a few.
Is this a bad idea? What am I missing?
This post was edited on 2/11 at 7:55 am