Saturday, March 6, 2021

Cash Secured Put ETF Trading Plan


The primary objective is to generate monthly income with a high probability of success.


The sell out-of-the-money (OTM) Cash Secured Puts (CSP) on Exchange Traded Funds (ETF's) with an 80% and/or 90% probability of expiring OTM.


The main ETF's traded will be DIA, IWM, QQQ, & SPY, which are index funds that represent that overall market, and ARKK, which is an actively managed fund that represents innovative technology companies.


Positions will be established at 1 contract (i.e. 100 shares) per underlying per strike. For each ETF, up to 2 puts will be sold at different strikes/probabilities.


Before entering a trade, use Ichimoku Cloud to determine the trend and the support levels. Preferably the trend should be neutral to up. Key indicators of an uptrend:

  • The cloud is Green (Senkou Span A > Senkou Span B).
  • The stock price is above the cloud .
  • The Base Line (Kijun-sen) is above the cloud.
  • The Lagging Span (Chikou Span) is above the cloud.

Support is at the top and bottom of the cloud. So look for strikes in that range.


Every week, enter positions with expiration within 14-18 days. This is a continuous strategy with options expiring every week at different strikes.

Sell an OTM Put with a delta of 20 (80% Probability OTM) and/or sell an OTM Put with a delta of 10 (90% Probability OTM). Ideally the strikes should be at support levels at or below the cloud.


At or before expiration, close each position when it can be bought back for $.05 or less to take off the risk and margin requirement.

As soon as the positions are closed, enter a new position for the next 14-18 days.

If the stock price reaches or breaches the strike, consider rolling out, and down if possible, for a net credit to avoid assignment.

If assigned early, then sell Covered Calls at or above the assigned strike. However, the goal is to avoid assignment by closely monitoring the positions and rolling when the strikes have been breached.