Cash-Secured Puts vs Holding Cash: Which Strategy Generates Better Returns?

During their recent episode of the Value Options Letter and Acquirers Podcast, Travis and Carlisle discussed Cash-Secured Puts vs Holding Cash: Which Strategy Generates Better Returns? Here’s an excerpt from the episode:

And this is really a third way of doing that. You identify the stock that you really want to own, and then you find an option that gives you sufficient premium where if you don’t get put the stock, you’re very happy with the internal rate of return on the premium.

[Tim] Correct. Exactly, Toby. And we actually have some statistics that we can say.

And so folks listening to this, this is an investment publication. It’s not an investment advisory and past performance is not indicative of future results, of course. But so far we’ve had 12 closed trades on the site and 12 of 12 have been successful.

There’s two trades that are open wheels. So one, for instance, we sold a put on Amazon at $250. We got exercised in June at $250.

We collected $308 of premium. And now Amazon’s at like $256 and we sold calls on that Amazon stock as well. So that’s a great point where just because you get exercised on a put does not make it a losing trade.

It’s actually just you’re manufacturing your cheaper entry price into the stock and now we’re selling calls, kind of manufacturing a dividend on that stock. So very pleased with that so far. As far as open positions, we promised three to five trades a week was our promise.

But out of respect for our subscribers, we’ve done a lot more than that, Toby. So we’ve been busy on the recommendation side on the website. So there’s 114 positions.

Currently, as of the end of the day today on July 15th, 90 of 114 are in the green. So that’s really encouraging. And the ones that are in the red are pretty mild.