Some may take exception to my simplistic explanation but Selling a Put options means you can be obligated to buy the stock. So I sold the 10 contracts October 19th, 2018 $12.50 for 55 cents (Total $550). So as long as the stock stays above that, I have no worries. For me to lose money, the stock would have to fall below $11.95 ($12.50 strike price minus the 55 cents).
If you are bullish on a stock and have no concerns with buying the stock at that given price, you are good to go. I would happily buy NGL between $11.95 to $12.50. It is not a sure deal because as Jugs has pointed out, time and time again, we can have a soft 6 weeks post div payment, I would be surprised if we fell below $11.95 but not too shocked.
I forgot to add, a big downside is cash/margin is reserved against the trade in the event you have to buy. To be clear (at least for my account), when I sell the Puts, my buying power is reduced as if I actually bought those shares.
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