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Clear, plain-English definitions and risks for the core strategies behind our approach.
Cash Secured Put
What it is
A cash secured (naked) put is a moderately conservative options strategy that can deliver returns above the market, especially in flat to down markets. It involves selling a put option without owning or shorting the underlying stock. The goal is for the stock to close above the strike price on expiration; if it does, the seller keeps the premium.
If the stock closes below the strike on expiration, the seller is assigned (purchases) 100 shares per contract at the strike price. Traders generally sell out-of-the-money (OTM) puts on stocks they'd be happy to own at lower prices.
By collecting option premiums upfront, investors get natural downside protection and a lower buy price for the stock.
To sell puts, you typically need Level 1 (Cash-Secured Puts) or Level 2 (Standard Margin) options trading approval in your brokerage account.
Cash Secured Put Risks
Downside risk is similar to owning a stock without a stop-loss. If the stock drops significantly, you must buy 100 shares at the strike, which can create a paper loss.
Because selling the put creates an obligation to buy, it's critical to maintain sufficient cash to cover potential assignment.
How it works
Selling a Put
Pick your stock
Choose a stock you genuinely wouldn't mind owning. This is the most important step. If the stock gets put to you, you're buying it, so make sure you actually want it.
Choose your strike price
This is the price you're agreeing to buy the stock at if it falls there. Most people sell puts slightly below the current price—out of the money—so there's a cushion before you'd actually get assigned.
Choose your expiration
Shorter expirations (7–21 days) decay faster, which works in your favor as the seller. Most put sellers stay in the 2–4 week range.
Sell the put contract
In your brokerage, select “Sell to Open” on your chosen put. One contract controls 100 shares, so size accordingly.
Collect the premium
The cash hits your account immediately. That's yours to keep regardless of what happens.
Wait
You want the stock to stay above your strike through expiration. Time decay (theta) works for you every single day.
At expiration, one of two things happens:
Stock stays above your strike — the put expires worthless, you keep the full premium, done.
Stock falls below your strike — you get assigned 100 shares per contract at your strike price. Your real cost basis is the strike minus the premium you collected.
Your broker requires you to have enough cash in your account to cover the purchase, called a cash-secured put. That's the margin requirement sitting behind this trade. Beyond that, you'll need your broker to approve you for options trading before any of this is possible. Most brokers require you to fill out an application, answer questions about your investing experience and financial situation, and get approved for the appropriate options level. Selling puts typically requires Level 2 or Level 3 approval depending on the broker, and not everyone gets it automatically. If you haven't done this yet, that's your first step.
Covered Call
What it is
A covered call is an income strategy that often outperforms flat to down markets. For every 100 shares you own of stock, you sell one call option.
If the stock closes below the strike on the expiration date, you keep the premium and your shares. If it closes above the strike, your shares are called away at the strike price—you keep the premium and any appreciation from your purchase price up to the strike. Covered calls suit investors seeking income with a neutral to modestly bullish outlook.
Covered calls are generally solid in 3 different instances…
(1) When the shares owned are overbought and in danger of a pullback
(2) When an investor's stock has fallen and effort is being made to make the trade profitable more quickly
(3) When an investor is happy to sell his stock
Covered Call Risks
The primary risk is opportunity cost: upside is capped at the strike price. While the call is open, you generally cannot place an effective stop-loss on the shares, so downside risk from stock depreciation remains similar to owning the stock outright without a stop-loss.
How it works
Selling a Covered Call
Own the stock first
Unlike selling puts, you need to already own at least 100 shares of the stock before you can sell a covered call. Those shares are what “cover” you—meaning if the stock gets called away you have the shares to deliver.
Choose your strike price
This is the price at which you're agreeing to sell your shares if the stock reaches that level. Most people sell calls slightly above the current price—out of the money—so there's room for the stock to run before you'd lose your shares.
Choose your expiration
Same logic as selling puts. Shorter expirations decay faster, which works in your favor. The 2–4 week range is the sweet spot for most covered call sellers.
Sell the call contract
In your brokerage, select “Sell to Open” on your chosen call. One contract covers 100 shares, so if you own 300 shares you can sell up to 3 contracts.
Collect the premium
Just like with puts, the cash hits your account immediately and is yours to keep no matter what happens next.
Wait
You want the stock to stay below your strike through expiration. Every day that passes, time decay works in your favor.
At expiration, one of two things happens:
Stock stays below your strike — the call expires worthless, you keep your shares and the full premium, and you can do it all over again next month.
Stock rises above your strike — your shares get called away at the strike price. You still keep the premium, but you've capped your upside and no longer own the stock.
The covered call is generally considered one of the most conservative options strategies, which is why most brokers require only Level 1 approval to sell them—a lower bar than selling puts. That said, you still need options approval from your broker before you can execute the trade, so if you haven't applied for options access yet that remains your starting point.
Trade String
What it is
A “Trade String” refers to the complete trading sequence for a given security, beginning with the sale of a put option. The trade string may then progress to stock ownership if the put is assigned and can further include the sale of covered call options while the stock is held.
All reported return percentages reflect the combined performance of every component included in the trade string—whether consisting of put options alone, put options plus stock ownership, or put options with stock ownership and covered call strategies.
Trade String Risks
A Trade String approach can enhance income potential, but it also compounds exposure to a single security over time. If the underlying stock experiences a prolonged decline, initial put premiums may offer only limited downside protection, and subsequent stock ownership can deepen capital risk.
Selling covered calls may generate additional income, yet it caps upside during strong recoveries. Because returns combine multiple components, investors should evaluate total capital at risk, not just premium received. Liquidity, volatility shifts, and concentration risk should also be carefully considered.
Triple Income Strategy
What it is
Our Triple Income Strategy refers to the core components of our trading process that generate returns within each trade sequence. These components include: (1) selling put options, (2) equity ownership, and (3) selling covered call options.
By actively managing this process and strategically executing each return-generating element, PutsPlus™ seeks to achieve a high probability of success and attractive risk-adjusted returns that, over time, aim to outperform broader market benchmarks.
Triple Income Strategy Risks
The “triple income” strategy—selling cash-secured puts, taking assignment, then selling covered calls—can generate consistent premium income, but it carries meaningful risks. If the stock declines significantly after you sell a put, you may be assigned shares well above current market value, tying up capital and creating unrealized losses.
Covered calls limit upside potential if the stock rallies sharply. In volatile or bear markets, premiums may not fully offset price declines. This strategy works best with quality stocks you're willing to own and proper position sizing.
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Educational content only, not individualized financial advice. Options involve risk and may not be suitable for all investors. Past performance does not guarantee future results.
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