How I make money while waiting for my favorite stocks to get cheaper

A smart way to turn waiting into earning

After so many years of investing, I've learned that finding great companies is only half the battle. The other half? Getting them at the right price.

I spend most of my time building a watchlist of businesses I'd love to own. Companies with solid fundamentals, competitive advantages that actually mean something and management teams that don't make me cringe. The global markets are packed with these opportunities. A solid blue-chip in the US, an overlooked gem in Europe, maybe a growing company in Asia.

But here’s the hard part: many of these quality companies are trading at prices that make no sense for a value investor who actually cares about value.

The problem: great companies, crazy prices

We've had years of cheap money and everyone's been throwing cash at anything that moves. Stocks are priced like they can do no wrong. The margin of safety I need as a value investor? It's basically disappeared.

It's tempting to just buy anyway. But after two decades of doing this, I know better. My discipline tells me to wait for the right price. A price that gives me some cushion and real potential for long-term gains.

Here's the thing though: patience is brutal. Watching your watchlist climb higher while you sit there with cash burning a hole in your pocket? It's frustrating as hell. Sometimes it feels like you're missing the party while your money earns nothing.

So why not make money while you wait?

This is where I use a technique that changed how I think about waiting: selling put options on my watchlist stocks. Instead of just sitting around hoping prices will drop, I'm actually earning income on the very companies I want to own.

Let me show you exactly how I do this.

My put-selling process

Step 1: Pick a company from my watchlist
I start with a business I've already researched and would happily own long-term. But it's trading maybe 15-20% above what I think it's actually worth. This part is crucial: I only do this with companies I genuinely want in my portfolio.

Step 2: Sell Puts at my target price
I look for put options with a strike price at or below my estimate of the company's true value. Think about it this way: if the stock drops and I get assigned, I'm buying the stock at a price I already decided was attractive.

Step 3: Choose the right contract
I usually go with options that expire in 30-45 days. This gives me a decent premium without tying up my money forever.
I also look for options with a delta around -0.20 or higher (e.g. -0.15). It just means there's a good chance the option expires worthless, but also a real possibility I'll get to buy the stock at my target price.

Why this works so well

Best case scenario: the stock stays above my strike price. The option expires worthless and I keep the premium. Then I can do it again next month, earning steady income while I wait.

Worst case scenario: the stock falls below my strike price and I'm "forced" to buy it. But this is exactly what I wanted! I end up owning a great company at a price I'm comfortable with and I got paid to wait for it.

Not only does this strategy generate income, but it also puts me in position to buy quality stocks at attractive prices.

A word of caution

Selling puts isn't without risk. If the stock crashes way below your strike price, you could be sitting on a paper loss for a while. But as a value investor, you should already be comfortable buying great businesses at a discount and holding through the ups and downs.

My take

This strategy simply pays you for having patience and discipline. Two things that should come naturally if you're serious about value investing.

So why not get paid while you practice it?

Selling puts on your watchlist stocks is a smart way to turn waiting into earning…

…and it also keeps you ready when the right opportunity finally shows up.

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