Hey traders,
I’ve said it a hundred times: selling puts is one of my favorite strategies.
You get paid up front, you control your risk, and if the stock comes to you, you own it at a discount.
But the question I hear over and over is: “Jack, how do you pick the right strike?”
The Two Things I Look At
When I’m choosing a strike price for a naked put, I keep it simple.
First, I look at return on capital. How much premium am I collecting versus the buying power the broker’s holding? I want that payout to make sense — something that’s worth my time.
Second, I look at support levels on the chart. If a stock has bounced off a certain price three or four times, chances are that level will act like a floor again. Selling puts just below that support stacks the odds in my favor.
A Quick Example
Let’s say a stock’s trading at $70. The 65-strike puts are paying $1.50.
If I sell those, I’m committing to buy at an effective cost basis of $63.50.
That’s not bad if the chart shows buyers stepping in around $64–65. It means I’m being paid up front to take on stock where others have already proven willing to step in.
Why This Works
Picking strikes isn’t about magic formulas. It’s about combining the numbers with common sense.
- The premium tells you if the trade is worth it.
- The chart tells you where the stock is likely to find a floor.
Stack those two together and you’ve got a logical, risk-defined trade.
The Takeaway
When I sell naked puts, I’m not throwing darts at a board.
I’m looking for the sweet spot where the premium makes sense and the chart gives me backup.
That way, if I get assigned, I’m owning stock at a price I can live with. And if I don’t, I still keep the cash.
That’s how I pick my strikes — and it’s why selling puts has been a cornerstone of my trading for decades.
Trade well,
Jack Carter
P.S. September has a long history of tripping up tech stocks. That’s why I held a prep class — to walk through what happens if the leaders stumble and how to position smartly. Get your front-row access here.
