TSL: Yes, I agree. Someone can buy right now at $8.5 and then, if by chance the stock hits $8, they can sell $8 Oct puts to lower their cost average.
Say you buy 1000 shares at $8.5.
Stock hits $8.
You can then sell 10 contracts of the Oct $8 put for $1+.
Your cost basis will then be $7.5 on either 1000 or $7.75 on 2000 shares, depending on if the stock closes above $8 at expiration.
Easy way to lower the cost-avg, alot more effective than if you just buy more common :).
As long as you have a small position and are willing to double the position (or quadruple since you can repeat the tactic again later with the $7 put, etc) this is one way to get yourself into a stock like this.
-Fernando
