Reference

Options Basics & FAQ

Everything you need to understand cash-secured puts before you touch the screener. Click any question to expand it.

Options Basics

What is an options contract?

An options contract gives the buyer the right — but not the obligation — to buy or sell 100 shares of a stock at a specific price (the strike) before a certain date (the expiration). The buyer pays a premium for this right. As a seller, you collect that premium in exchange for accepting an obligation.

What is a put option?

A put gives the buyer the right to sell shares at the strike price. If you buy a $150 put on Apple, you can force someone to buy your Apple shares at $150 even if the stock drops to $100. As the put seller, you take the other side: you agree to buy 100 shares at $150 if the buyer exercises.

What makes a put "cash-secured"?

When you sell a put, you have the obligation to buy 100 shares if assigned. A cash-secured put means you hold enough cash in your account to cover that purchase — strike × 100. This makes the strategy conservative: you're not using leverage, and you genuinely could and would own the shares at that price.

How do I make money selling puts?

You collect the premium upfront. If the stock stays above your strike at expiration, the put expires worthless, you keep the full premium, and you're done. If the stock falls below your strike, you get assigned — you buy 100 shares at the strike price. Your effective cost basis is strike − premium, which is lower than the strike itself.

What is delta and why does it matter?

Delta (Δ) for a put is a negative number between −1 and 0. Its absolute value is roughly the probability the option will be in-the-money at expiration. A delta of −0.20 means about a 20% chance you get assigned (and ~80% chance it expires worthless). The screener targets |Δ| 0.15–0.30 — aggressive enough to generate meaningful premium, conservative enough that most trades expire profitably.

What is IV Rank?

IV Rank measures where current implied volatility sits relative to its past year. A rank of 0 means IV is at its 52-week low; 100 means it's at its 52-week high. Selling options when IV Rank is high (≥ 30 here) means you're selling premium that is rich relative to recent history — vol tends to mean-revert, which works in the seller's favour. Since Tradier doesn't provide historical IV data, this screener uses realized volatility as a proxy.

What is theta and why does it help put sellers?

Theta (Θ) is the daily decay of an option's time value. A theta of −0.05 means the option loses about $5 per day, all else equal. As a seller, theta works for you: every day that passes without the stock moving against you means the option is worth less and closer to expiring worthless. The 30–45 DTE window captures the period where theta decay is fastest without the liquidity risk of ultra-short expirations.

What does DTE mean?

Days to Expiration. The screener targets 30–45 DTE — long enough to collect meaningful premium, short enough to keep your capital cycling several times a year.

What is the breakeven price?

breakeven = strike − premium. Below this price at expiration you are in a net loss. Above it, you profit (or expire worthless and keep everything).

Cash-Secured Puts as a Strategy

Why cash-secured puts instead of just buying stock?

You collect income from the premium even if the stock stays flat. You also get a built-in discount: if assigned, your cost basis is below the stock price at the time you sold. The trade-off is you cap your upside — if the stock rockets, you only keep the premium, not the full appreciation.

Why cash-secured puts instead of covered calls?

Covered calls require you to already own 100 shares per contract. Cash-secured puts let you generate income on capital you haven't deployed yet — useful if you want to accumulate a position at a lower price. Many traders do both: sell puts to acquire shares at a discount, then sell covered calls on those shares (the "wheel" strategy).

What happens if I get assigned?

You buy 100 shares at the strike price. This is not a catastrophe — it's the intended outcome of selling puts on stocks you actually want to own. From there you can hold, sell, or sell covered calls on the position. The screener only covers names that are broadly considered investment-grade or highly liquid — you should still research each one before trading.

How much capital do I need?

One contract requires strike × 100 in cash. A $150 strike requires $15,000 per contract. The capital calculator on the home page shows exactly how many contracts fit each position under a 5% concentration cap. As a rough heuristic, $20,000–$50,000 gives enough capital to hold 2–4 positions simultaneously with meaningful diversification.

What are the main risks?

The stock falls sharply and you're assigned at a much higher-than-market price.
Earnings or macro events during the option's life spike volatility against you (the screener tries to exclude earnings windows, but not all events are predictable).
Opportunity cost: capital is locked as collateral, not free to deploy elsewhere.
Tax treatment varies by jurisdiction — short-term options income is often ordinary income.

What is the "wheel" strategy?

Sell a cash-secured put → if assigned, sell covered calls on the shares until called away → repeat. It's a systematic way to generate income from a position you're comfortable holding long term. Works best on stable, high-IV names. This screener covers the first step.

Why only 38 tickers?

Breadth without noise. All names are highly liquid with active options markets, meaning you can actually get filled near the mid-price. The bucket weighting (40% defensive, 25% index, 20% cyclical, 15% tech) creates a built-in conservative tilt — high-beta names like NVDA or TSLA only get 15% of the universe weight even though they often generate the juiciest premiums.

Quick Glossary

Strike: The price at which the option can be exercised
Premium: The price of the option — what you collect as seller
Expiration: The date the option contract ends
DTE: Days to Expiration
Delta (Δ): Rate of change of option price vs. underlying; ≈ probability ITM
Theta (Θ): Daily time decay — works in the seller's favour
IV: Implied Volatility — market's expectation of future vol
IV Rank: Where current IV sits vs. its 52-week range (0–100)
OTM: Out of the Money — strike is below current price for a put
ITM: In the Money — strike is above current price for a put
Assignment: Obligation triggered: you buy 100 shares at the strike
Breakeven: strike − premium — your floor before you lose money
Open Interest: Total outstanding contracts — proxy for liquidity
Collateral: Cash held to cover potential assignment

Not financial advice. This FAQ is for educational purposes only. Options trading involves significant risk. Consult a licensed financial professional before making any investment decisions.