Getting Paid to Wait. The Options Strategy Most Investors Ignore.

Most investors approach buying a stock the same way every time. They decide they want it, they check the price, and they buy it. If it's too expensive, they wait – unpaid – for it to come down.

There's a better way to wait.

Selling a cash-secured put means agreeing to buy 100 shares of a stock at a price you choose – your target entry – in exchange for a premium collected upfront. If the stock stays above that price, you keep the premium and never buy the stock. If it drops to your target, you buy it at the price you wanted anyway – and you already got paid for agreeing to do so.

How It Works

Say you want to own a stock currently trading at $100, but you'd really be comfortable buying it at $90. You sell a put with a $90 strike expiring in 30 days and collect a premium upfront. Two things can happen.

The stock stays above $90. The put expires worthless. You keep the premium and sell another put next month. Annualized, that's a meaningful yield on cash that would otherwise be sitting idle.

The stock drops below $90. You buy 100 shares at $90 – the price you already decided you were happy with – and your effective cost basis is lower because you collected premium upfront. You're in the position you wanted, at a better price than you would have gotten by simply waiting.

The Yield Angle

For investors who aren't necessarily looking to own the stock but want income, cash-secured puts function as a yield strategy on capital held in reserve. The key is selling puts only on stocks you'd genuinely be willing to own at the strike price. This is not a strategy for stocks you're indifferent about. If the put gets exercised, you own the position – so you need to mean it.

Done consistently on a handful of high-conviction names, the strategy generates a steady stream of premium income while keeping you positioned to enter at prices you've already decided make sense.

The Tax Angle

Premium received from selling puts is taxed as short-term capital gain in the year the position closes. If the put is exercised, the premium reduces your cost basis – which matters for your eventual exit. At STQ, every options strategy is evaluated through a tax lens before execution, because the pre-tax return and the after-tax return are rarely the same number.

Selling puts is one of the more straightforward options strategies to implement. It requires no leverage, no complex hedging, and no view on market direction beyond a price level you'd already be comfortable buying at. The risk is the same as owning the stock outright – you just get paid more to take it on.