Selling puts is the cornerstone of the WSP framework. Instead of buying options and hoping, you sell time and let probability work in your favor.
What Does Selling a Put Mean?
When you sell a put, you collect a cash premium up front. In exchange, you agree to buy 100 shares of the underlying stock at the strike price if the option is assigned before expiration. If the stock stays above your strike, the put expires worthless and you keep the full premium.
Why Sell Puts?
- Income — you are paid a premium the moment you sell the put.
- Entry at a discount — if assigned, you buy a stock you already wanted at a lower effective cost basis.
- Defined risk — when cash-secured, there is no leverage and no margin call.
The Risk to Understand
The primary risk is assignment. If the stock falls below your strike, you may be required to buy shares. That is why WSP only sells puts on stocks you are genuinely willing to own, at strikes you are comfortable buying, with the cash set aside to cover the purchase.
Key Takeaways
- Selling puts converts patience into income.
- Only sell puts on quality stocks you want to own.
- Cash-securing the put removes leverage and defines your risk.