If you’ve ever said: “I’d love to own that stock… just at a lower price.”
Then cash-secured puts might be one of the most practical options strategies you’re not using.
In options strategist Rick Orford’s latest educational video, he breaks down how cash-secured puts work — and more importantly, how to screen for consistently high-quality setups using Barchart’s option tools.
This isn’t a leverage-heavy options strategy. It’s a disciplined way to generate income while positioning yourself to buy stocks you already believe in.
What Is a Cash-Secured Put?
A put option gives the buyer the right — but not the obligation — to sell shares at a specific strike price before expiration.
When you sell that put:
- You collect a premium upfront.
- You agree to buy shares at the strike price if assigned.
- You set aside enough cash to fully fund that purchase.
That last part is critical. Unlike naked puts, a cash-secured put does not rely on margin. The downside risk is fully funded from the start, and there are no surprises if assignment happens.
Why This Options Strategy Is Considered Conservative
Cash-secured puts are often misunderstood as “risky options trades.”
In reality, they’re often used by long-term investors because:
- Risk is defined upfront
- There’s no leverage
- Income is generated with each trade
- It’s possible to “name your price” on quality stocks
If the stock never falls to your strike price, you keep the premium as your profit on the trade. If it does fall and you’re assigned, you buy the stock at an effective discount (strike minus premium collected).
Either outcome can align with a long-term investing strategy.
The Strategic Advantage: Getting Paid to Wait
Conversely, most investors looking to buy shares simply place limit orders and wait. Cash-secured puts improve that process. Instead of waiting passively, you’re collecting income while waiting.
This is especially attractive in markets where volatility is elevated and high-quality stocks are consolidating. Higher volatility means higher option premiums, and Rick’s screener framework focuses on capturing that edge.
Who Should Use Cash-Secured Puts?
This strategy works best for investors who:
- Already have a stock watchlist.
- Want to build positions gradually.
- Prefer defined risk.
- Want options income without leverage.
- Are comfortable owning the underlying stock.
It is not ideal for traders looking for fast capital appreciation. It’s structured, measured, and intentional.
The Bigger Picture
In volatile markets, many traders chase upside.
Experienced investors often focus on:
- Risk definition
- Entry price discipline
- Probability management
- Income layering
Cash-secured puts combine all four. It’s not flashy, but it’s a durable and repeatable strategy.
Watch the clip to see Rick walk through the strategy:
- Stream the full video for the complete framework
- Explore more lessons in our Options Tutorials & Resources library
On the date of publication, Barchart Insights did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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