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Welcome to a website dedicated to an investment strategy involving writing cash-secured puts. These are also known as “naked” Puts.
Disclaimer: This website is for is strictly for educational purposes and does not amount to professional advice. We are not financial advisors. The content on this website merely cites our own personal opinions. Know that all investments involve some form of risk and there is no guarantee that you will be successful in making, saving, or investing money; nor is there any guarantee that you won’t experience any loss when investing. Shortthevix.com is not responsible for any losses incurred with any educational advice on this website.
Rules for writing puts:
1. 100% Discipline
2. 15% off market price (Current Stock Price x .85 = Strike price to write – within reason) (10% for ETFs)
3. Use Implied Volatility (Imp Vol) to dictate position sized (see below)
4. Write a maximum of 7 issues open at one time (individual stocks), max. 2 positions per stock at one time
5. 30-40 days from expiration
6. Min of 1% of strike in premium (preferred or within reason of 1%)
7. Treat it like a business
8. Use the Certainty Criteria Method to help find stocks (See above link)
9. Close at +50% profit (or before, owner’s choice)
10. Only write stocks you want to own
11. Always sell out of the money puts
12. Write only what you need to make your weekly minimums (set weekly gain minimums)
13. The goal is collect premiums not invest in stocks. You don’t want to own the stock.
14. Learn from your mistakes.
15. Don’t over extend; stick to the plan.
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Example of contract sizes:
Maximum 2 contracts/position – Imp Vol > 42% (if stock is over $90 per share) *
Maximum 3 contracts/position – Imp Vol > 42% (if stock is under $90 per share)
Maximum 5 contracts/position – Imp Vol between 23% and 41% (up to 55% Imp Vol if stock dividend >3%)
Maximum 10 contracts/position – Imp Vol between 10% and 22% (extend days from expiration)
| Strike Price | Implied Volatility | % Off Share Price | Max. Contract Size (based on 1 contract)* |
| $90 + | Greater than 42% | 15% | 2 |
| $0 – $89 | Greater than 42% | 15% | 3 |
| $1+ | Between 23% and 41% | 15% | 5 |
| $1+ | Less than 23% | 15% | 10 |
* – Consider a Bull Put Credit Spread if the Implied Volatility is over 60% – Especially if over 70% – Write the put and buy a lower put further out of the money (both out of the money)