That being said, a fast transition between a bull and bear market, like we've seen, can whipsaw some put sells - and mine are no exception. That's why it's key that we follow two general guidelines to maintain a win rate above 80%. We will sell puts only on companies that we want to own. We will sell puts with a goal of covering our position before expiration... usually long before expiration.
In a volatile market with a downward trend, we'll pick up more premium and have shorter holding periods. The opposite is also true. In a less volatile, upward-trending environment, we will have fewer opportunities. I try to find a balanced combination of volatility, premium and expiration. When we sell a put on a stock, if the share price stays the same, goes up or doesn't go down much, the option value can decrease quickly. The goal is to buy that put back when we hit 20% to 50% of the potential return. For example, if we sell a put for $1, we will buy it back when the price drops to $0.50 to $0.70. If it's a $0.20 put, we may hold until expiration, and sometimes we may take a 30% or 40% return. But rarely will we hold beyond 50%. We will also take advantage of time value to get the return we want when we sell longer-term puts. Time value is one of the biggest factors in options prices, especially options with expirations that are further out. Regardless of the stock's performance, a long-term put will lose time value every day. YOUR ACTION PLANBear markets scare the heck out of investors. But I think they are the best times to establish positions in stocks for the future. In a bear market, stocks are cheap and hated. The two best words an investor can hear! Selling puts is just one of the winning strategies we've used in The War Room to maintain an impressive track record - even in the midst of this bear market. For a limited time, we are offering a $500 discount on War Room membership. Click here to learn more! | 
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