Selling a
put option at an
exercise price that would represent a good
investment by an
option writer who believes a
stock's value will fall, so that the writer cannot lose. If the stock price unexpectedly goes up, the
option will not be
exercised and the writer is at least ahead the amount of the
premium received. If the
stock loses value, as expected, the
option will be exercised, and the writer has the
stock at what he had earlier decided was originally a good buy, and he has the premium income in addition.