Why We Sell Puts Only on Stocks We’d Own
Tuesday, September 22, 2026 · Johnny Hopkins
During their recent episode of the Value Options Letter and Acquirers Podcast, Travis and Carlisle discussed Why We Sell Puts Only on Stocks We’d Own. Here’s an excerpt from the episode:
So as part of our process, we sold puts on businesses that we want to own. That’s a key criteria. So each strike sat 11% to 38% below where the stock traded that day.
So relatively conservative trades here, Toby. I mean, a bear market’s defined by a 20% downturn. We’re building in quite a cushion, and we collect that premium up front.
And it’s the most the trade can ever make, assuming the option expires worthless. So our target profit is always the full premium. Ideally, the stocks go up when we sell puts on them, but even if they stay flat or if we end up getting exercise, that’s okay.
And then the reason we’re exiting is because we made most of the money. And so the annualised return was way higher than what we targeted. And so it made sense to free up the capital.
So the first one was Devon Energy. So on July 10, the stock was at $42.23. We sold a $37.50 put for January, and we collected $2.24 a share. And the target profit was 6.35% on the capital, and that’s 12.3% annualised on over 189 days. So 12.3% annualised is good. I mean, it’s over our double-digit hurdle that we target generally, but you can see what happened. So energy prices went up, the stock of Devon rallied.
And so we were able to exit with $190 of that $224 profit for a 29% annualised return. And we’re freeing up that capital that was required, and we can set a new trade. So that’s an example in the energy sector.
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Value Options Letter combines value investing with conservative Buffett-style options strategies, including cash-secured puts, covered calls and disciplined “get paid to wait” opportunities on undervalued businesses.
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