Selling 10-Delta Puts with 4-Day Expirations + 2 Free Webinar Registration Links

Can we sell 10-Delta weekly cash-secured puts and still generate significant annualized returns on a week where there is a market-recognized holiday reducing the number of days to expiration from 5 to 4? The answer is yes. This article will highlight 4 put sales I executed on the week of 12/20/2021 – 12/23/2021 where the market was closed on 12/24/2021 because Christmas Day fell on a Saturday.

What is the 10-Delta cash-secured put strategy?

This is an ultra-low risk put-selling strategy where we sell deep out-of-the-money puts with Deltas of 10 or less. Since share and put value are inversely related, Delta is signified as -10 or less. One of the definitions of Delta is the approximate probability of an option expiring in-the-money or with intrinsic-value. This means our trades have a near 90+% chance of success.

4 securities used on 12/20/2021 for 12/23/2021 expirations

• Vaneck Vectors Semiconductor ETF (Nasdaq: SMH)
• Invesco QQQ Trust (Nasdaq: QQQ)
• NVIDIA Corp. (Nasdaq: NVDA)
• Etsy, Inc. (Nasdaq: ETSY)

All options expired deep out-of-the-money.

Brokerage statement showing the 8 put contract sales

4-Day, 10-Delta Cash-Secured Put Trades

Final calculations after all contracts expired out-of-the-money

• Cash generated after commissions: $452.77
• Cash required to secure the put trades: $210,818.00 [(put strike – put premium) x 100 x #contracts]
• 4-day return: 0.214% ($452.77/$210,818.00)
• Annualized return: 11.2% (based on 52 weeks)

Advantages of using weekly options with the 10-Delta put strategy

• Greater annualized returns
• Avoid weekend risk
• Easy to avoid earnings reports

Disadvantages of using weekly options with the 10-Delta put strategy

• Smaller pool of underlyings to select from
• More frequent rolling decisions
• 4x the number and amount of trading commissions compared to monthly options (reduced commissions make this a minor factor)
• Less opportunities for management mitigation

***Both weekly and monthly options will work well with this strategy

Discussion

On a holiday week (4 trading days), we can still generate significant annualized returns using the ultra-low risk 10-Delta put-selling strategy. As always, we must be prepared with our exit strategy arsenal should the trade(s) turn against us or allow us to enhance our gains to even higher levels.

Our recently updated online put-selling course

Our best spreadsheet for calculating initial & final returns

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Over the years, the BCI community has been incredibly gracious by sending our BCI team email testimonials sharing stories as to what our educational content has meant to their families. Moving forward, we have decided to share some of these testimonials in our blog articles. We will never use a last name unless given permission:

Hi Alan,

I’m glad you do the things you do. I listened when you did a talk for Michigan AAII. So glad I did. You are making me some money.

Thanks,

John

Upcoming events

1. Mad Hedge Investor Summit

Wednesday June 15th, 2022

12 PM ET – 1 PM ET

Covered Call Writing Dividend Stocks to Create a 3-Income Strategy

 Dr. Alan Ellman, President of The Blue Collar Investor Corp.

Barry Bergman, BCI Managing Director

Covered call writing is a low-risk option-selling strategy that generates weekly or monthly cash-flow. By mastering the skill of strike price selection and adding dividend distributions, a potential 3-income strategy can be crafted with a goal of beating the market on a consistent basis.

Topics covered in this webinar include:

• Strategy analysis
• Option basics
• What is covered call writing?
• Dividend distribution
• Stock selection
• Option selection
• Trade management

Real-life examples will be highlighted with Dow 30 stocks using option-chains and calculation spreadsheets. Attendees will have the opportunity to participate in written Q&A during the entire webinar.

Registration link 

2.American Association of Individual Investors: Greensboro North Carolina Chapter

Saturday June 18, 2022

10 AM – 12 PM ET

The PCP (put-call-put or wheel) Strategy

Using both covered call writing and selling cash-secured in a multi-tiered low-risk option-selling strategy where we either generate cash-flow or buy a stock at a discount.

Zoom webinar for Chapter members

3. Wealth365 Summit

Tuesday July 12th, 2022

4 PM ET – 5 PM ET

Selling Cash-Secured Puts 

Exit Strategy Choices After Exercise of Cash-Secured Puts 

Selling cash-secured puts is a low-risk option-selling strategy which generates weekly or monthly cash flow by agreeing to buy shares at a price we determine, by a date we determine. In return for undertaking this obligation, we are paid a cash premium. We only sell puts on shares we would otherwise want to own and, if exercised, and shares are put to us, they are purchased at a discount from the price when the put trade was initiated.

This presentation includes an introduction to option basics, defines selling cash-secured puts and provides real-life examples. The focus of the webinar details the steps available to put sellers should the put be exercised, and we now own the discounted stock or ETF shares. The seminar includes a discussion of the PCP (put-call-put or wheel) Strategy and the Stock Repair Strategy among other exit strategy opportunities.

Register for free here

4. Money Show Orlando live event

October 30th – November 1st, 2022

OMNI ORLANDO RESORT AT CHAMPIONSGATE

Visit Alan, Barry and members of the BCI team at Booth # 415

Masters Class

Comprehensive Course on Selling Cash-Secured Puts

Detailed start-to-finish 6-part program

This presentation will provide all the information, with real-life examples, necessary to master the strategy of selling cash-secured puts. The program is divided into 6 sections:

• Section I:
  • Option basics
• Section II
  • Traditional put-selling
• Section III
  • PCP (wheel) strategy
• Section IV
  • Buy a stock at a discount instead of a limit order
• Section V
  • Ultra-low-risk put/Delta strategy
• Section VI
  • Ultra-low-risk put/Implied volatility strategy

This presentation was developed to benefit both beginner and experienced option traders and will provide all the information needed to initiate the strategy and elevate returns to the highest possible levels.

45-minute presentation

Covered Call Writing: Multiple Applications Based on Current Market Conditions

Real-life examples with Invesco QQQ Trust (Nasdaq: QQQ)

Covered call writing is a low-risk option-selling strategy geared to generating cash flow with capital preservation a key requirement. This presentation will demonstrate how the strategy can be crafted to benefit in all market environments. Market situations highlighted are:

• Normal to bull markets
• Bear and volatile markets
• Low interest-rate environments

A popular large-cap technology exchange-traded fund, Invesco QQQ Trust, will be used to establish rules and guidelines to benefit in these market circumstances.

Registration link and more details to follow.

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Market tone data is now located on page 1 of our premium member stock reports and page 1 of our mid-week ETF reports.

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