Option Selling for Income Strategy

Option Trades Strategy Performance

+21.05% Annualized Return Since Inception

Year	Annualized Return	Annualized, Since Inception (2009)	Value of $10,000 Invested 1-Jan 2009	S&P 500 Return with Dividends Reinvested
2026	13.51% (return through July 2026)	21.05%	$187,657	TBD
2025	15.76%	20.98%	$165,326	17.88%
2024	19.31%	21.31%	$142,817	24.91%
2023	35.81%	21.44%	$119,706	25.02%
2022	-2.98%	20.42%	$88,146	-18.11%
2021	31.81%	22.22%	$90,849	28.71%
2020	-23.35%	21.42%	$68,925	18.40%
2019	64.25%	25.49%	$89,921	31.49%
2018	-34.39%	21.61%	$54,746	-4.38%
2017	28.33%	27.83%	$83,442	21.83%
2016	14.81%	27.77%	$65,022	11.96%
2015	-4.40%	29.62%	$56,634	1.38%
2014	29.25%	35.29%	$59,241	13.69%
2013	42.14%	36.50%	$45,834	32.39%
2012	52.42%	35.09%	$32,246	16.00%
2011	8.13%	29.31%	$21,156	2.11%
2010	37.30%	39.90%	$19,565	15.06%
2009	42.50%	42.50%	$14,250	26.46%

*Unaudited results. Past performance is no guarantee of future results. Review the disclaimer for details. S&P 500 returns with dividends reinvested provided for comparison. Source https://www.slickcharts.com/sp500/returns/details.

How to Sell Options for Income

Selling puts and calls is an options trading strategy often used by investors to generate income. This approach is sometimes referred to as the “Wheel Strategy” or “Triple Income Strategy.” It is a combination of selling put options, getting assigned the underlying asset if the option is exercised, and then selling call options against the shares you own.

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A Multi-Step Process That Can Be Repeated for Consistent Income Generation

1. Sell Put Options

You begin by selling (or writing) a cash-secured put option on a stock that you are willing to own at a lower price. By selling the put, you receive the premium, which is the income in this step. If the stock price remains above the strike price at expiration, the put option expires worthless, and you keep the premium.

2. Assignment and Purchase of Shares

If the stock price falls below the strike price at expiration, the put option will likely be exercised, and you will be assigned to buy the shares at the strike price. Since you sold a cash-secured put, you already have the cash set aside to purchase the shares.

Option Sales Income Strategy - Put Selection

3. Sell Call Options

Once you own the shares, you can sell (or write) a covered call option against your stock position. This involves selling a call option with a strike price higher than your purchase price. You receive the premium from selling the call, which is the income in this step.

4. Possible Scenarios at Expiration

a) If the stock price remains below the call option’s strike price at expiration, the call option expires worthless, and you keep the premium. You can then repeat the process by selling another call option against your shares.

b) If the stock price rises above the call option’s strike price at expiration, the call option will likely be exercised, and you will be required to sell your shares at the strike price. In this scenario, you will have made a profit from the difference between the stock’s purchase price and the call option’s strike price, plus the premiums received from selling the put and call options.

5. Repeat the Process

If your shares are called away, you can start the process again by selling a new cash-secured put option on the same or a different stock.

This strategy is best suited for investors who are comfortable with owning the underlying stock and have a neutral to slightly bullish outlook on its price movement. The primary risk comes from potential losses if the stock price declines significantly or if the stock price rises too rapidly, limiting your upside potential.

My version of this strategy involves focusing on selected ETFs instead of individual stocks and a proprietary method for selecting the strike prices of the options sold.