Video summary

If Selling Put Options Is So Great, Why Doesn’t Everyone Do Them?

Main summary

Key takeaways

Finance

Finance-focused summary (selling put options)

What selling put options is (core idea)

  • Selling a put option means you receive premium today in exchange for giving the option buyer the right to sell you 100 shares at a specified strike price on (or before) the expiration date.
  • Common outcomes:
    • If the stock stays above the strike price: you keep the premium and generally do nothing.
    • If the stock falls below the strike price: you may be assigned to buy shares at the strike price (or you can roll/repair to avoid assignment).

Why some people don’t use put selling (and the author’s framing)

The speaker argues many reasons people avoid selling puts are the same reasons the strategy works when done by educated traders:

  1. Fear of assignment if the stock crashes.
  2. Fear of big losses / “unlimited downside”, without understanding sizing and risk control.
  3. Misuse of margin (losses happen mainly when leverage is abused).
  4. Psychology (fear/greed)—unwillingness to commit to buying after price declines.

Risk management / “how to do it” framework (explicit steps/rules)

The video emphasizes selecting quality names, choosing appropriate strikes, and controlling exposure.

Selection rules

  • Only sell puts on companies you’d be proud to own (fundamentally strong, historically successful across market conditions).
  • Before selling, check: If assigned tonight, would you be okay owning the shares tomorrow?
  • Choose strike prices where you’d be comfortable buying the stock—ideally at undervalued to fairly valued levels (speaker’s preference).

Position sizing rules

  • Larger account: if all sold puts were assigned, the position should be about 2–3% of the overall portfolio, with an implied maximum around 5%.
  • Smaller account:
    • Maximum exposure per single stock: 5–10%
    • If it’s an ETF, exposure may be higher: about 20–25% (per the speaker)

Margin / cash framework

  • For newer/inexperienced traders: avoid margin and use a cash account (i.e., cash-secured puts), ensuring you have enough cash set aside for potential share purchase.
  • Consider spreads (e.g., credit spreads) as additional protection versus naked exposure.

“Repair” / management plan when trades go against you

The speaker outlines three scenarios:

  1. Roll out in time and roll down the strike to improve the position, ideally for a credit.
  2. Accept assignment and convert to a covered call if you’re willing to own the stock.
  3. If the company breaks fundamentally, close the position and move on (do not sell puts against a broken company).

Four simple starting rules (explicit recap)

  • Only sell puts in companies you’d be happy to own.
  • Sell at strike prices you’d be happy to own at (not fearful of).
  • Keep position sizing small enough that assignment wouldn’t scare you.
  • “Slow money” (steady premium) is real money; not a get-rich-overnight strategy.

Key examples & numbers mentioned

Small account example: ARCC put spread (risk cap demonstration)

  • The speaker uses a spread to cap risk:
    • Sold $19 put
    • Bought $16 put
  • Risk disclosed:
    • Only $3 per share at risk (difference between strikes).
  • With 2 contracts:
    • Total risk shown as $200 × $3 = $600 if the stock drops below $16 before expiration.

Amazon “cash collected over time” example (performance framing)

  • Spreadsheet tracking Amazon put selling since Aug 4, 2021 (multi-year, described as ~4 years).
  • Reported totals:
    • At points: about $4,000, then fluctuating (e.g., $3,700–$3,800 range).
    • Currently: “net of over $7,000” in collected cash from put selling over the multi-year period.
  • Additional note:
    • They mention being short Amazon puts at the 205 strike price at the time of the video.

PayPal roll example (explicit trade math)

  • Prior position: Dec 19 $65 put (sold earlier).
  • When it went against them:
    • Bought back Dec $65 puts for $6.81 (per share).
    • Sold Feb 20 $62.5 puts for $6.92 (per share).
  • Result:
    • Received about a 10-cent per share credit (~$0.10 credit), while improving the strike by $2.50/share.

Tyson (TSN) example: assignment → covered call + dividend

  • Ticker: TSN (Tyson Chicken).
  • Reported outcome:
    • After assignment, they “turned them into a covered call,” collected dividend, and ended with net profit of $14,889.
    • Timeline described as “been selling… eventually… they were assigned…”

Instruments / tickers explicitly mentioned

Option strategies

  • Put options
  • Credit spreads
  • Cash-secured puts
  • Covered calls

Stocks / tickers

  • AMZN (Amazon)
  • PYPL (PayPal)
  • TSN (Tyson Chicken)
  • ARCC (example spread)
  • EPD (Enterprise Products Partners)
  • G (Genpact—ticker “G”)
  • GIS (General Mills)
  • MPW (Medical Properties Trust)
  • Merc (mentioned; ticker not explicitly confirmed)
  • Campbell Soup (ticker not explicitly stated)
  • “AZ??” (none indicated; not present)

ETFs

  • Mentioned generally; no specific ETF ticker provided.

Timelines and time horizons

  • Amazon: tracking since Aug 4, 2021 (multi-year, ~4 years described).
  • PayPal: trade described as “about a week ago.”
  • Example expirations:
    • PayPal: Dec 19 and Feb 20
    • ARCC example: strikes discussed with a reference to moves occurring before expiration

Disclosures / cautions

  • No explicit “not financial advice” statement appears in the provided subtitle text.
  • Main cautions are practical and risk-based:
    • Don’t use margin (cash accounts encouraged for beginners).
    • Don’t sell puts on companies you wouldn’t want to own.
    • Cap risk with position sizing and spreads when needed.
    • If fundamentals break, close and move on.

Presenter / source attribution

  • Presenter: Subtitles refer to the speaker by first name Randy (no last name provided). The speaker references “my own personal experience” and working with traders.
  • Sources: No external data provider is cited in the subtitles; references appear to rely on the speaker’s own accounts/trackers and a referenced charting system (TC2000).

Original video