Mike Khouw wants stability. Mike Khouw wants cash flow. Mike Khouw wants to sell volatility instead of buying it. Mike Khouw has apparently just discovered that stable businesses with predictable earnings are better vehicles for premium collection than whatever dogshit meme stock his clients have been forcing him to hedge for the last three years.
This is the strategy. Find a company that generates cash. Sell options against it. Collect premium. Repeat until something breaks or the Fed changes its mind or a pandemic happens or literally anything occurs that makes implied volatility spike forty percent in a week. Then watch your stable cash-generating position turn into a margin call while you explain to your wife that selling puts on a utility stock was supposed to be the safe play.
The headline says he's eyeing one stable stock. One. Singular. As if the entire S&P 500 isn't packed with boring companies that print money and pay dividends and have existed since before your grandfather learned what a mutual fund was. But Mike needs volatility to surge before he remembers that Johnson & Johnson exists. Mike needs the VIX at thirty before he thinks maybe I should look at companies that sell things people actually need.
Retail traders are currently Googling what selling volatility means. They're reading that you collect premium when nothing happens. They're thinking this sounds like free money. They're about to sell cash-secured puts on the most stable stock they can find, which will somehow be a leveraged ETF or a SPAC that merged with a company that doesn't have a product yet.
Mike Khouw manages money for a living and just now decided stable businesses might be worth owning when the market's having a seizure. The rest of us have been buying Procter & Gamble and falling asleep. But sure, let's call it a strategy.
Photo by Maxim Hopman on Unsplash
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