Best Stocks for Selling Cash Secured Puts: My Top Picks for 2024

 

If you have read “Harnessing the Power of Cash Secured Puts: My Proven Income Strategy” you likely know how cash-secured puts work. Now you are ready to place a trade. Great! But which stocks should you choose to sell cash-secured puts against in 2024?

best stocks for selling puts

In this article, I will go over the following:

  • Show you a list of conservative stocks that I have personally sold cash-secured puts on. These offer low to mid premiums, around 15-25% annualized returns.
  • Highlighting stocks that offer higher premiums and sharing my personal trading experiences with them.
  • Provide a list of stocks suitable for cash-secured put selling for those with smaller account sizes (10,000 to 30,000 USD / GBP).
option selling roadmap

Options Selling Roadmap Course $97

Learn to sell options the right way with my flagship course.

Table of Contents

My Key Takeaways On Choosing The Best Stocks For Selling Put Options: 

– When considering the best stocks to sell cash-secured puts, choose stocks you would be happy to own to begin with. This is one of the golden rules for option sellers.

– Consider blue-chip dividend-paying stocks if you want to be more conservative.

– Diversification and position sizing are important.

– Stay away from stocks that have earnings releases before the put option expires.

The Best Stocks For Cash-Secured Puts 2024

Right out of the gate, you need to do your research and pick a company you like enough and would like to own. This is the key when choosing the best stocks to sell put options.

 

If you were to be assigned the shares it’s always more comfortable owning a stock you would happily own anyway.

 

There are many factors in choosing a stock to sell puts against. Many conservative investors—myself included—find that large blue-chip dividend-paying stocks are a great place to start.

 

These don’t pay the highest premiums but they are less volatile. If you are a conservative investor these are the stocks you will like.

Author Note:
For me, the best stocks to sell puts on are the Dividend Aristocrats. These are good solid companies that have a long track record of increasing their dividends year after year for at least the last 25 years.

I have curated a list of them here, available in a GoggleSheet. Click the link and make a copy so you can make changes to the sheet yourself.

In my experience, these offer some of the best stocks to sell puts against.

Understanding Cash-Secured Puts

Key Put Selling Terms

Stock: A type of investment that represents an ownership share in a company.

Option: A financial contract that gives the holder the right, but not the obligation, to buy or sell an asset at a specific price within a certain period.

Strike Price: The price at which the option’s holder can buy or sell the underlying asset.

Expiration: The date on which the option contract becomes void and expires.

The Best Dividend Stocks For Cash Secured Puts 2024:

The best stocks for cash-secured puts in 2024 can vary, but some top picks I have included below. I have sold puts against all these companies and come away with a tidy profit. Some of these are UK-dividend stocks.

Here are my dividend plays which I have sold puts on in the past and will continue to do so this year: 

TROW
BARC
LLOY
LGEN
GLEN
SGRO
WFC
LAND
WBA
JBHT
SWK
HPQ
AMGN
VZ
TXN
CVS
IIPR

why sell put options

The Best High Premium Stocks For Selling Cash Puts In 2024:

I have traded a few of these names below by selling puts against them. These stocks tend to pay higher premiums than the blue-chip dividend aristocrats. Usually, you can make a 2%+ return a month on these stocks. 

Here are my higher premium plays for 2024: 

AFRM
AMD
AMZN
ARKK
BILL
COIN
CRWD
DDOG
ENPH
GOOG
GTLB
MARA
MNDY
NET
PLTR
RIOT
ROKU
SNOW
SOFI
SQ
TSLA
ZS

A Real Life Example Of Selling Cash Secured Puts In Zscaler

Here is a screenshot of a short put trade in Zscaler, ticker symbol ZS, in July 2023.

I closed this out early after capturing over 75% of the profits 13 days before expiration.

July 12, 2023 | Sold to open the August 18, $130 cash secured put option in ZS for $3.99 per share.

July 25, 2023 | I bought to close the August 18, $130 option for $0.79 per share

I collected 81% of the profits in this option and closed my position out early a day before the FOMC meeting.

This resulted in a 57.97% annualised return.

Read Also: When and How to Exit a Cash Secured Put Option

selling put on Zscaler

For every put option that you sell you should record each trade in a spreadsheet. Here is how I recorded my cash secured put option in Zscaler. Notice I record when I open the position and when I close the position.

how to record option an trade

The Best Stocks For Selling Cash Secured Puts With A Smaller Account Size

With a small account size, you are limited to which stocks you can sell options against.

For example, if you wanted to sell cash-secured puts in British American Tobacco, ticker symbol BATS. You would need £26,000 to sell 1 contract. This is not possible and not advisable if you have for example a £30,000 account size.

The art of selling options is to try and keep a diversified portfolio and to manage position size.

With a smaller account, it’s recommended you try to keep position sizes to 10-20%. This means you are managing 5-10 positions at any given time.
In my options trading account, I try to keep position sizes to 2.5-5%, and I manage around 20 positions.

Here are some stocks to sell puts on if you have a smaller sized account:

SOFI
AFRM
LEG
WBA
VZ
OZK
LLOY
GTLB
LITE
PLUG
PLTR
MARA
RIOT
ARKK
FLIC
T
HR
FLO
EPD
ALLY
BAC
HPQ
INTC
LAZ
CPB
KR

The Best Stocks For Selling Put Options

Choosing an expiration month:

If you are selling cash secured puts and don’t want to be assigned you should stay away from options that have earnings releases before the option expires. 

The other consideration is to realize that an option’s value decays quicker in the final 30 days of its life (as the seller, this is to your advantage). So you need to consider if you want to be selling weekly put options or ones with a monthly expiration. 

Choosing A Strike Price

If you are happy to own a stock at the current market price and are looking for maximum premium income, it would be wise to choose a strike price at the money. 

If you weren’t looking to be assigned the shares then try to choose a strike price with a low delta and 8-10% below where the stock is currently trading. 

 

In conclusion, the best option trades are the ones where you make money consistently. Choose stocks you would be happy to hold for the long term. Then increase their annual yield by selling covered calls against them every week or month if you were to be assigned. 

It’s crucial to keep in mind that what you consider your “best” may not align with someone else’s definition of “best.” This is due to varying risk tolerances, levels of experience, tax considerations, time horizons, and personal opinions regarding the stock’s potential at expiration. Find your edge and trade with it. 

Happy investing! 

learn to sell options

Amazon Kindle E-Book

Get my 90-minute guide to selling options for just $0.99 / £0.99.

Frequently Asked Questions

Exiting a cash-secured put position can involve various strategies, such as:

– Closing the put position by buying it back before expiry
– Allowing the option to expire worthless, and retaining the premium
– Rolling the put to a later date or lower strike price

Each strategy may have different implications on your risk management and potential returns, so it’s crucial to analyse each case individually.

Selling cash-secured puts can generate income by collecting premiums when you write the option contracts. If the stock stays above the strike price at expiration, the option will expire worthless, allowing you to retain the premium received.

If the stock falls below the strike price, you may be obligated to buy the shares at the agreed-upon price. In this case, you can benefit from the potentially discounted price and enjoy dividends or future stock appreciation.

The ideal duration for selling puts depends on various factors, including market conditions, your risk tolerance, and the expected stock price movements. Short-term options (e.g., one to two months) tend to have higher premiums due to their time decay, providing greater income potential.

I tend to favour more monthly options because you get larger premiums which gives you a bigger financial buffer if you were to get the put option assigned.

Some disadvantages of cash-secured put selling include:

– Limited upside, as you only profit from the premium received
– Downside risk from potential declines in the underlying stock
– Obligation to purchase the stock if the option is exercised
– The need to set aside cash to secure the put, which may impact portfolio diversification

Despite these drawbacks, cash-secured puts can still be a valuable addition to your investment toolbox if implemented wisely.

A cash covered put is an options trading strategy where an investor sells a put option contract and holds enough cash to cover the obligation if the contract is exercised. This strategy allows the investor to generate income by collecting the premium from selling the put option, while also being able to purchase the underlying stock at a discounted price if assigned.

Kevin S

Kevin S

Greetings, I'm Kevin! I am now a full time options trader and investor. I am thrilled to have the opportunity to share my knowledge and expertise with you. My objective is to assist you in navigating the complexities of option trading, regardless of whether you're a beginner or an experienced trader looking to enhance your skills. I'm excited to accompany you on your journey to mastering the art of option trading. Let's make this year an extraordinary one for you!
Kevin S

Kevin S

Greetings, I'm Kevin! I am now a full time options trader and investor. I am thrilled to have the opportunity to share my knowledge and expertise with you. My objective is to assist you in navigating the complexities of option trading, regardless of whether you're a beginner or an experienced trader looking to enhance your skills. I'm excited to accompany you on your journey to mastering the art of option trading. Let's make this year an extraordinary one for you!

About DividendOnFire.com

Welcome to Dividend On Fire, we are a site dedicated to options trading! We specialize in helping investors generate passive weekly or monthly income through selling cash secured puts and covered calls.

Recently Published Guides