Monthly Income Through Put Selling Strategy

Mar 17, 2025

Lecture on Put Selling Strategy for Monthly Income

Introduction

  • Focus: Teaching how to use put selling to generate monthly income safely.
  • Example: The speaker made about $1,400 using only $5,000 in 3 months, a 30% return.
  • Longevity: Strategy back-tested over 10 years; assisted over 600 people.

Topics Covered

  1. Why Trade Put Selling Strategy?
  2. Structuring the Put Selling Strategy
  3. Managing the Strategy
  4. Risk Understanding and Mitigation
  5. Market Adaptation
  6. Advantages and Disadvantages
  7. Real Trading Example
  8. Automation for Strategy
  9. Disclaimer on Trading Risks

Why Trade Put Selling Strategy?

  • Consistency: Simple, mechanical trade repeated weekly.
  • No Expertise Needed: No need to understand charts, support, or resistance.
  • Scalability: Suitable for accounts ranging from $5,000 to $100,000+.
  • High Win Rate: 95% or higher.
  • No Upside Risk: Multiple ways to enter and exit trades.

Structuring the Trade

  • Goal: Generate passive income from time decay and bullish markets.
  • Expiration Date: 90 days out is common, but 45 days is average.
  • Strike Selection: 16 Delta put.
  • Target Credit: $20 to $40 per trade.
  • Ideal Assets: Futures (ES, GC, CL); Spy or SPX for non-futures.

Managing the Trade

  • Take Profit Rules: 50% return.
  • Stop Loss Rules: 200-300% depending on risk tolerance.
  • Early Management: 21 Days To Expiration (DTE).

Risks and Mitigation

  1. Market Risk: Use indicators for high-risk markets.
  2. Manipulation Risk: Avoid stop-loss or limit orders.
  3. Volatility Risk: Adjust buying power based on VIX.

Account Sizing and Scaling

  • 30% Rule: No more than 30% of account in trades.
  • Scaling by Account Size:
    • <$10,000: Once a week on MES.
    • $10,000-$25,000: Once a week on ES.
    • $25,000-$100,000: Twice a week on ES.

    • $100,000: Twice a week, scale contracts based on the 30% rule.

Personal Trading Method

  • Extended Expiration: 120 DTE to lower risk and increase win rate.
  • Strike Selection: 10 Delta put.
  • Target Credit: $3 to $50.
  • Take Profit: 25% for faster trade turnover.
  • Management: 21-day rule.
  • Preferred Assets: Futures options.
  • Back Test Results: Smooth performance curve with high win rate but significant drawdown risk.

Market Conditions Adaptation

  • Bullish Markets: Follow ideal strategy.
  • Bearish Markets: Consider staying out.
  • Sideways Markets: Maintain normal setup.

Advantages and Disadvantages

  • Advantages:
    • Consistent income, easy setup, minimal adjustments, stackable for continuous income.
    • Good for buying stock at a discount.
  • Disadvantages:
    • Potential for large losses, complexity for beginners, strict buying power management required.
    • Hedging, uncapped downside risk, assignment risk if not on futures.

Real Trading Example

  • Put Selling Mechanics: Betting the stock stays above a certain level.
  • Trade Process: Enter at $20 credit, exit at 25% take profit.

Automation

  • Automation Tools: Option Alpha, Trade Steward, Options Auto Trader.
  • Steps:
    1. Sign up for automation software.
    2. Connect broker account.
    3. Build the bot with provided rules.
    4. Let the bot generate income.
  • Options Auto Trader: Supports multiple brokers, offers paper trading.

Final Notes

  • Automation Demo: Demonstrates setting up a bot for the put selling strategy.
  • Encouragement: Utilize the strategies and tools provided, whether manually or through automation.

Full transcript