I wanted to share a personal update on how I’m using options strategies—specifically covered calls and cash-secured puts (CSPs)—to generate income and manage risk in my portfolio. Here’s a look at my current positions, how I’m thinking about different scenarios, and what these strategies mean for my investing approach.
Cash-Secured Puts (CSPs): Earning Premiums While Waiting
What I’m Doing:
I’m selling puts on stocks I’d like to own, keeping enough cash on hand to buy them if assigned. This way, I get paid to wait for a potential dip.
:
If these puts expire worthless, I pocket the premiums—best case! If assigned, I’ll own stocks I like at prices I’m comfortable with, minus the premium received.
:
I’m writing calls against stocks I already own to generate extra yield. If the calls get exercised, I’m happy to sell at the strike price and keep the premium.
: $26,968
Total Value Received (if all executed): $192,250
:
If these calls are exercised, I’ll realize solid gains and keep the premiums. If not, I keep the stocks and can write more calls.
:
I keep all $1,853 in premiums, with no obligation to buy shares.:
I buy stocks at my chosen strike prices, with my effective cost basis reduced by the premium.:
My shares are sold at the strike price, and I keep all the premiums—locking in a total profit of $26,968.Covered Calls Expire Worthless:
I keep my shares and all the premiums, ready to write new calls.
: Every premium collected adds to my returns, whether or not options are exercised.
: I’m comfortable owning the stocks I sell puts on, and I’m happy to sell stocks I already own at the covered call strike prices.
: I can adjust strikes, expiries, and quantities as my market outlook or portfolio changes.
This options strategy gives me a steady stream of income and helps me manage my portfolio with a disciplined, rules-based approach. I’ll keep updating as positions evolve!
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