One strategy that investors often use is the Cash Covered Put sale. This is also referred to "selling naked puts."  The object here is that if you like a stock and plan to own it, you sell a "cash covered" put for that stock instead to collect the option premium or lower your cost basis. Let the seller beware, however, that you will need to have a decent minimum cash reserve in your brokerage account to be cleared for this trade (cash equal to the strike price value minus the premium received). The benefit of selling the naked put on a stock you want to own is that you effectively take part in the trade at a discount. On a move above the strike price sold, you collect the premium. If you were wrong about your price entry point, and the stock drops, you have lowered your cost basis on the stock you would have otherwise bought at a higher cost. 

So for example: you like XYZ stock at 100 per share and want to buy 100 shares. The cost would be $10,000.00 plus commissions. By using the cash covered put selling strategy, you would sell the April 100.00 (strike) Put for 5.00 (on stock XYZ) and take in $500.00 into your account. This trade effectively brings your cost at $9,500 (10,000-500). If the stock rises above your strike price, you collect the premium and move on. If the stock drops below the strike, it will be "put" to you at the effective 95.00 level or you can excercise the option and become an owner at this lower price.

There is no margin requirement on the cash covered put and its gain or loss scenario is almost he same as the covered call strategy. This leads us to a follow up trade if the Stock does drop below the strike and you end up owning the shares. Many investors turn around and write the covered call on those shares to gain even more premium or protect themselves from further downside while trying to lock in solid returns.

Investors should remember not to go "overboard" when selling naked puts. If your comfortable with buying and selling 100-200 shares or a certain total monitary value (say 10,000 per trade), then only trade 1-2 call in this put selling scenario or stay within your 10,000 cap risk. * It is important to always trade based on your risk tolerance and with selling cash covered puts, the potential loss is substancial, but limited to the strike price (if the stock should happen to go to Zero).