How to Generate Monthly Income Selling Cash Secured Puts
- Rise
- Mar 2
- 2 min read
If you want to generate income in the market without chasing breakouts or gambling on short-term price swings, cash secured puts are one of the cleanest strategies you can use.
This strategy is simple:
You agree to buy a stock you already like — at a price you’d be happy owning it — and you get paid upfront for making that commitment.
That’s it.
Let’s break it down.
What Is a Cash Secured Put?
When you sell a cash secured put:
You collect a premium immediately
You agree to buy 100 shares at a specific strike price
You must keep enough cash in your account to cover that purchase
If the stock stays above your strike price by expiration, you keep the full premium and move on.
If the stock drops below your strike price, you buy the shares — but at a discount because of the premium you collected.
What You Need to Start Generating Income with Selling Cash Secured Puts
Enough cash to secure 100 shares
Options approval from your brokerage
A stock you’re comfortable owning
This is not a “quick flip” strategy. It works best when you’re selling puts on companies you would not mind holding long-term.
Choosing a Strike: How the Math Works
First, we must pick a Strike price. The Strike price is the price that you will buy the stock at, should it go below the agreed upon price. I recommend using a stock charting tool to help you choose a Strike price. We like to use TradingView and have an indicator suite of tools to help you do exactly that to help take the guess work out.
In this example, based on recent trends and our indicators, I chose a strike price of $10.
Example:
Stock price: $11
Strike price sold: $10
Premium collected: $1.00
You collect $100 (because options control 100 shares).
If assigned:
Your effective cost basis is:
$10 – $1 premium = $9 per share
That’s downside protection built in.
Understanding Risk
The only real risk with trying to generate income with selling cash secured puts: The stock drops. If it goes to zero, you still must buy it. But that risk exists if you were buying shares outright anyway.
The difference? You get paid first.
Weekly vs Monthly Puts
Shorter expirations:
Higher annualized return
More management
Longer expirations:
Less work
More patience
Often better downside protection
Both work. It depends on your style.
High IV vs Low IV Stocks
High implied volatility (IV):
Higher premiums
Higher risk
More likely to be assigned
Lower IV:
Smaller premiums
More stable
Lower drama
Your returns are largely driven by volatility.
The Power of Buying to Close Early
You don’t have to wait until expiration.
If your option drops from $1.00 to $0.10 quickly, you can:
Buy it back for $10
Lock in $90 profit
Free up your capital
That’s capital efficiency.
Why This Strategy Works
You’re not predicting price. You’re selling probability. And over time, consistently selling premium on quality stocks can generate steady income.
Cash secured puts are one of the most repeatable income strategies in options trading. If you treat trading like a business, this is a tool you need to understand.
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